Forecasting carbon dioxide emissions in the EU28, China and the US using ARIMA prediction model

Abstract

The significant rise in the carbon dioxide emissions worldwide over the last decades is raising concerns about global warming and other irreversible climate change catastrophes.

China and US have historically been two of the largest carbon dioxide emitters in the world: according to Statista, in 2019 carbon dioxide emissions of China and US accounted for about 42 percent of the global carbon dioxide emissions (Tiseo , 2021). The third largest carbon dioxide emitter is the European Union with Germany emitting the largest amounts of carbon dioxide inside the union (Jamet, 2019).

            The European Union or EU28 (EU27 as of 2021) in September 2020, set the target to cut the greenhouse gas (GHG) emissions by 65 percent together with funding climate action abroad and therefore, complying to the Paris Agreement (Climate Action Tracker, 2020). As a part of carbon dioxide mitigation, 18 EU countries have implemented carbon tax and also in a year 2005 carbon market  or Emission Trading Scheme (ETS) in EU was created (Asen, 2021). A part of EU’s future plans in climate change mitigation is to increase Emission Trading Schemes, where companies and firms pay the cost of polluting. Moreover, Carbon Border Adjustment mechanism (CBAM) will be enforced in the EU that will make the importers of steel, aluminium and fertilizer  to pay carbon cost (Khan, 2021).  Another target that was set by EU in July of this year is to raise the final consumption of renewable energy from 20% in 2019 to 40% in 2030 (Chestney, 2021).