Analyzing the Driving Forces behind CO2 Emissions in Energy-Resource-Poor and Fossil-Fuel-Centered Economies: Case Studies from Taiwan, Japan, and South Korea

Abstract

Based on the strong similarities between energy-resource-poor and fossil-fuel-centered economies (e.g., Taiwan, Japan, and South Korea) in terms of economy, culture, and energy usage characteristics, they should be analyzed collectively. This study adopted two-tier input-output structural decomposition analysis to identify the driving forces behind CO2 emissions to these countries to the formulation of effective environmental policy. Data from the World Input-Output Database was used to decompose relative changes in CO2 emissions into a range of technological advances, factor substitution, and final demand effects. Technological advances in energy (direct) contributed to a 77% reduction in Taiwan and a 34% reduction in South Korea. This is a clear indication that improving energy efficiency via technological advances should be a priority. In Japan in particular, there was a 22% reduction in CO2 emissions attributable to technological advances in materials; hence, it is recommended that Taiwan and South Korea work to extensively develop eco-industrial parks to create industry clusters to promote resource/energy efficiency and reductions in CO2 emissions. Decomposition results based on factor substitution revealed that a variety of strategies will be required, such as switching to fuels that are less carbon intensive, promoting the adoption of renewable energies, and implementing clean-coal technologies.