Carbon dioxide emissions intensity of Portuguese industry and energy sectors: A convergence analysis and econometric approach

Given the relevance of energy and pollution issues for industrialised countries and the importance of industry and energy sectors to the achievement of their economic and environmental goals, it is important to know if there is a common pattern of emissions intensity, fuel intensity and energy intensity, between industries, to know if it justifies a more specific application of energy policies between sectors, which sectors have the greatest potential for reducing energy use and which are the long term effects of those specific variables on the mitigation of emissions. We found that although there is literature on decomposition of effects that affect emissions, the study of the convergence and of the relationships between these variables does not include ratios or effects that result from the decomposition analysis. Thus, the above questions are not answered, much less for the Portuguese reality. The purpose of this paper is to study: (i) the existence of convergence of some relevant ratios as Carbon Dioxide (CO2) emissions intensity, CO2 emissions by fossil fuel consumption, fossil fuel intensity, energy intensity and economic structure, between industry and energy sectors in Portugal, and (ii) the influence that the consumption of fossil fuels, the consumption of aggregate energy and GDP have on CO2 emissions, and the influence that the ratios in which CO2 emissions intensity decomposes can affect that variable, using an econometric approach, namely Panel corrected standard errors estimator. We concluded that there is sigma convergence for all ratios with exception of fossil fuel intensity. Gamma convergence verifies for all ratios, with exception of CO2 emissions by fossil fuel. From the econometric approach we concluded that the considered variables have a significant importance in explaining CO2 emissions and CO2 emissions intensity.