...Despite the policy relevance of the discussion, little quantitative analysis has been done. In this paper we address these questions in the context of the G7 by applying a pair of simple quantitative methodologies: decomposition analysis and allocation of fossil fuel production emissions to end-users instead of producers. According to our analysis and available data, climate and geographic size---both inflexible national characteristics--can have a significant effect on a country's GHG intensity. A country's methods for producing electricity and net trade in fossil fuels are also significant, while industrial structure has little effect at the available level of data disaggregation.

1. INTRODUCTION

Interest in understanding the long-term malleability of individual countries' greenhouse gas (GHG) emissions intensities has grown in step with the seriousness of the international commitment to reduce emissions. In particular, it is important to understand whether some countries have "national circumstances" that make reducing their GHG emissions intensity relatively harder or easier compared to other countries. (1) If so, this may have ramifications for emission reduction negotiations. In this paper, we analyze the national circumstances affecting GHG intensity for each of the Group of 7 (G7) countries in 2002; this year was chosen because it is the latest for which all necessary data was available. We base our analysis on the G7 countries because data are relatively available and they form a good basis for deriving more general conclusions: while the G7 share a similar level of income and technological sophistication, their GHG intensities vary significantly.

Figure 1 presents end-use emissions per capita per sector for each country. Emissions from land use change and forestry are included for comparison; these are most substantial in Italy and the US. Electricity production emissions are reported separately from the sectors that consume the electricity; each of the other sectors is thus allocated only its direct emissions from fossil fuel combustion and GHG emitting processes. Electricity production by source for each of the G7 countries is provided in Figure 2; France uses the least fossil fuels, followed by Canada, while they dominate the generation mix in the rest of the G7.

[FIGURES 1-2 OMITTED]

One of the most striking results from Figure 1 is that the two North American members of the G7, Canada and the US, have emissions per capita roughly double those of the European members and Japan. These differences are mainly in transportation, industry, electricity production, agriculture and fossil fuel production. There are also significant sectoral differences between the emissions per capita for Canada and the US, despite their general similarity. Canada's emissions per capita for making electricity are roughly half those of the US, due to Canada's reliance on hydropower and nuclear energy. Canada also has much larger emissions per capita from fossil fuel production.

The G7 countries are relatively equal in terms of GDP per capita and technological sophistication; despite this, the US and Canada's GHG intensities are significantly higher. Can this difference be reduced through policy, or are there specific national circumstances that will keep US and Canadian intensity high relative to the rest of the G7? For the purposes of this article, we define a national circumstance as a characteristic of a nation that significantly influences its GHG emissions and is not easily adjusted by government policy. For example, Canada's cold climate causes it to expend significant energy on space heating and emit GHGs in the process. Canada's cold climate cannot be altered by government policy, and so Canada's climate might be considered a national circumstance affecting its GHG emissions. National circumstances may also include somewhat malleable national characteristics, such as economic structure. These are characteristics that could be altered by government policy, but only in the long term, and only at a slow rate that prevents undue harm to a country's inhabitants compared to the benefits of GHG reductions.

We analyze five possible national circumstances, and quantitatively assess their contribution to explaining differences in per capita GHG emissions in the G7. (2) In the discussion, we also explore the degree to which each of these national circumstances is malleable by policy. The five potential national circumstances we evaluate are:

* The effect of structure on the industrial sector. The energy intensity of industrial sectors can differ widely. Countries that produce and export more energy-intense goods would be expected to have a higher energy and GHG intensity. Given that industrial structure is unlikely to be dramatically modified by policy pressures in the short term, this national characteristic might be considered a national circumstance.

* The effect of climate on the commercial and residential sectors. Colder countries have higher space heating requirements, which is the largest component of energy use in the residential and commercial sectors. Consequently, colder countries should have higher energy use and C[O.sub.2] emissions compared to countries with more moderate climates. We wished to include space cooling in this analysis, but there was insufficient data for all the G7 countries. (3)

* The effect of population distribution on the passenger and freight transportation sectors. In larger countries and those where the population is more broadly dispersed, transportation energy requirements and C[O.sub.2] emissions may be higher.

* The effect of imports and exports of fossil fuels. Production of coal, oil, and natural gas is energy and GHG intensive. Countries that are net exporters are likely to have relatively higher emissions than those that are net importers. Ideally, we would consider trade in all products, or at least a subset that included the most GHG intense products; we found adequate data only for trade in fossil fuels.

* The effect of access to low GHG electricity. In the future, renewable power from direct solar, wind and ocean energy may provide significant amounts of electricity, but low GHG electricity has historically come in two forms, hydropower and nuclear energy. Hydropower necessitates specific hydro-geographical conditions, while nuclear energy necessitates a significant policy commitment with a long lead-time. Access to low GHG electricity might be considered a national circumstance because it is either a function of geography, or it is not easily malleable in the short term.

2. PREVIOUS LITERATURE

To date, very few studies have compared the GHG intensity of countries using quantitative methods. Schipper et al. (2001) present perhaps the most intensive and relevant international comparison to date. Using a method they describe as "Mine/Yours" analysis, they begin with a standard mathematical identity, where GHG emissions are the product of activity, structure, sectoral energy intensity and the carbon intensity of a sector's fuel mix, to describe GHG emissions in each end-use sector in each country in their data set. They then substitute the average characteristics of all other countries in the data set in place of those of the country being analyzed; this allows them to compare how individual characteristics of end-use sectors in each country differ from the data set average, and what influence this has on the emissions of each country. They found that per capita activity levels, particularly in the transportation and service sectors, electricity production GHG intensity, and energy intensity were the components that most differentiated international GHG intensity. Schipper et al.'s study noted limitations with their "Mine/Yours" methodology. Most importantly, it does not account for interactions between different terms. As a result, it cannot be used to make conclusions about why total GHG emissions differ between two countries, since there will be significant unexplained errors or residuals.

There are, however, several methods available to decompose changes within an identity such as that used in Schipper et al. that account for interactions between the terms (e.g., the Paasche, Laspreyes, Refined Laspreyes, Simple Average Divisia, Arithmatic Mean Divisia, Adaptive Weighting Divisia, Fisher Ideal, and LMDI methods)....

NOTE: All illustrations and photos have been removed from this article.



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