Carbon intensity as a proxy for environmental performance and the informational content of the EPI

• Published in: Energy policy Vol. 94; pp. 179 - 190
• Main Authors: Thomakos, Dimitrios D., Alexopoulos, Thomas A.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.07.2016; Elsevier Science Ltd
• Subjects: Carbon; Carbon intensity; Developing countries; Economic development; Economic growth; Economics; Emissions; Emissions control; Energy consumption; Energy policy; Energy sources; Environmental performance index; Environmental quality; LDCs; New technology; Panel regression; Policy implications; Power; Renewable energy; Renewable energy sources; Social welfare; Studies; C33; Q56; C23; Economic growth; Carbon intensity; Panel regression; Environmental performance index; Q42; Policy implications
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2016.03.030

We analyze the relationship between carbon intensity and EPI and find that the informational content of EPI is in large part explainable by the state of economic growth and level of carbon intensity, with the second variable being already an increasing function of emissions and a decreasing function of economic well being. Carbon intensity has the largest explanatory power for EPI rankings and consistently produces the correct, anticipated, negative sign in its relationship to EPI. Second in importance are the renewable energy sources, which also produce consistent results with respect to their impact on the EPI but with much lower explanatory power. Our results suggest that advanced countries should, as they are doing already, implement measures of high quality environmental content while measures for increasing economic growth, while controlling emissions, are appropriate for developing countries. A number of other energy policy implications and the use of new technologies are also discussed in the context of our analysis. •Informational content of EPI is in large part explainable by the level of carbon intensity.•Carbon intensity produces the correct, anticipated, negative sign in its relationship to EPI.•Advanced countries should implement measures of high quality environmental content.•Increasing GDP, while controlling emissions, is more appropriate for developing countries.