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Carbon emission post-coronavirus: Continual decline or rebound?

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  • Li, Rongrong
  • Li, Shuyu

Abstract

Studies have shown that the COVID-19 pandemic has led to a significant drop in carbon emissions in 2020, however, it is an open question whether carbon emissions continue to decline after the COVID-19 pandemic. To forecast the changes in carbon emissions after the pandemic, this study analyzed the long-term relationship between the extreme events and carbon emissions since 1960, and short-term drivers of the changes in carbon emissions before and after the 2008 financial crisis. Extreme events cannot change the upward trend of carbon emission in the long run. Specifically, the extreme events (1973 oil crisis, the American Reserve Loan Association crisis, the disintegration of the former Soviet Union, the Asian financial crisis and the 2008 financial crisis) led to a decline in carbon emissions temporarily, however, a retaliatory rebound of carbon emission were occurred after the extreme events. The long-term relationship between extreme events and carbon emission indicate that this unfolding extreme event (COVID-19 pandemic) cannot change the trend the carbon emission, and carbon emission will be rebound after the pandemic. In addition, the decomposition results showed the main contributor to the retaliatory rebound of carbon emissions after the 2008 financial crisis was the decline in energy efficiency. The decline in energy efficiency was caused by the economic recovery plan post 2008 financial crisis, which stimulated the economy and employment at a cost of energy efficiency and environmental protection. The current economic recovery plans to deal with COVID-19 pandemic also prioritizes economic development and job creation, while ignoring energy efficiency. Therefore, the post-pandemic carbon emissions will repeat the carbon emissions after the 2008 financial crisis, i.e., there will a retaliatory rebound. To avoid the retaliatory rebound, improving energy efficiency should be included in these economic recovery plan to cope with COVID-19 pandemic.

Suggested Citation

  • Li, Rongrong & Li, Shuyu, 2021. "Carbon emission post-coronavirus: Continual decline or rebound?," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 57-67.
    • Handle: RePEc:eee:streco:v:57:y:2021:i:c:p:57-67
    DOI: 10.1016/j.strueco.2021.01.008
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