Co-fluctuation patterns of per capita carbon dioxide emissions: The role of energy markets

a r t i c l e i n f o This paper applies principal component analysis to investigate the linkages, or dominant co-fluctuation patterns, of per capita carbon dioxide emissions across countries for the time period 1950–2000. Energy resource world markets are investigated as an offsetting mechanism possibly coordinating emission fluctuations between countries. The results of the analysis provide evidence that world energy resource markets are acting as a coordinating mechanism for emission fluctuations in most cases. The results also suggest that until recently the dominant emission co-fluctuation pattern for developed countries differs from the dominant emission co-fluctuation pattern for developing countries. The common fluctuation pattern found in the 1984–2000 time period suggests that an offsetting mechanism does exist and will help contain global per capita emissions into the future. The strong degree that emissions are linked between countries and energy markets acting as an offsetting mechanism suggests that to be successful a global agreement to address climate change must require emission reductions by all major emitters, not just the developed countries. There has been a significant amount of research into the statistical characteristics of national per capita carbon dioxide (CO2) emissions. This topic is important for projecting future global emissions and forecasting changes in the distribution among countries. Many studies have focused on tests of convergence of national per capita CO2 emissions (e. Stationarity at the global and/or national level has been examined by McKitrick et al. (in press) and Romero-Avila (2008). A key question at present is the extent to which emissions growth in one country or region affects emissions elsewhere. McKitrick et al. (in press) find evidence that offsetting effects occur between countries, and may constrain global per capita emissions in the future. The purpose of this paper is to investigate more closely the extent to which national per capita CO2 emissions are linked across countries, and whether those linkages can be explained based on energy markets, openness to trade, and other factors. This paper applies principal component analysis (PCA) to investigate the co-fluctuation patterns of per capita carbon dioxide emissions across countries. PCA allows for extraction of ranked orthogonal vectors from a data matrix, where ranking is by the percentage of underlying explained variance. If all countries' emissions respond linearly to the same external shocks, the first principal component (PC1) will explain a high proportion of variance in the whole data set. If countries' emissions …