The catalan economy towards the New European energy policy: Through accounting of greenhouse emission multipliers

Abstract

The aim of this paper is to study the effect that implementing the agreement signed by the European Union at the end of 2008 will have on reducing greenhouse gas emissions in Catalonia. Emission multipliers and the impact of reducing emissions by 10%, in sectors not covered by the EU ETS (EU Emissions Trading System) and reducing those that are covered by 21%, are analysed. More specifically, the effects on the endogenous income of the multiplier model (production, factorial and private income) is studied, while reducing and increasing endogenous income and the decomposition of emission multipliers into open, own and circular effects is analysed to include the different channels of the process of generating CO2 equivalent emissions. The empirical application is for the Catalan economy and uses economic and environmental data for the year 2001. The results show that increases in greenhouse gas emissions will essentially depend on the account that receives the exogenous inflow in demand. Greenhouse gas emissions in Catalonia are affected very differently at the sectoral level and the effects of production activities, factors of production and consumption on air pollution are very heterogeneous. The analytical approach used in this paper provides interesting results that can help to design and implement policies to reduce emissions.