Prof. M.Shahidul Islam
Universiti Malaysia Sarawak
Research area: Operations Research in Engineering for Achieving Economic and Environmental
Assoc. Prof. Muhammad Jawad Sajid
Xuzhou University of Technology
Research area: Carbon emission, Carbon footprint, Carbon policy, Embedded carbon emission, Environmental management, Macro-economics, Green technology
Speech Title: Consumer demand and the industrial supply stimulated carbon emissions and linkages
Abstract: According to supply-side economics, economic growth is determined by producers' willingness to create goods and services, whereas demand-side economics believes that consumers' demand for goods and services is the primary economic driver. While some argue that both sides equally simulate economic growth, the same is true for a country's or region's industrial carbon emissions, where industrial supply capacity and final consumer demand are the primary stimulators of industrial carbon emissions and inter- and intra-industrial (sectoral) carbon linkages (interconnections). There is a dearth of literature on consumer demand and industrial supply-stimulated carbon emissions, as well as their interconnections. As a result, little is known about the concurrent effects of consumer demand and industrial supply-driven carbon emissions and industrial linkages. Subsequently, the equitable allocation of responsibility for industrial carbon emissions between producers and consumers based on their stimulation of industrial upstream and downstream emissions is also not well known.
The Leontief demand and Ghosh supply models are the two primary models used to estimate industrial demand and supply-stimulated carbon emissions. The Leontief model makes use of the direct input coefficient matrix and industrial final demand as the primary multiplier. On the other hand, the Ghosh supply model makes use of the direct output coefficient matrix and industrial supply factors (labor and capital) as the primary multiplier . Industrial downstream linkages with other sectors are determined by production factors (labor and capital); industrial upstream linkages with other sectors are determined by final demand for industrial products; and an industry also supplies (sales) and purchases internally, referred to as its internal linkage . Industrial carbon linkages are mostly estimated using two approaches: the classical multiplier and the hypothetical extraction method (HEM) . In comparison to traditional multiplier approaches, HEM provides a significantly superior method for calculating an economy's inter- and intra-sectoral linkages . The hypothetical extraction method overcomes the limitations of the classical multiplier method by estimating the value of a sector by removing its linkages from the economic system .
The purpose of this keynote speech is to clarify the concept and implications of consumer demand and industrial supply-induced carbon emissions and their linkages. The author will begin by explaining how to estimate consumer demand and industrial supply-induced carbon emissions using the Leontief demand and Ghosh supply models. A breakdown of emissions resulting from various sources of consumer demand (e.g., households, government, and final trade) and industrial supply (e.g., workers and capital) will be discussed after that. Following that, demand-induced inter- and intra-sectoral upstream industrial carbon linkages, as well as supply-induced downstream industrial carbon linkages, will be discussed. In addition, the procedure for estimating these linkages using the HEM method will be presented. Finally, the implications of consumer demand and supply-induced linkages for a fair allocation of upstream and downstream carbon emission responsibilities to final consumers and industrial producers will be discussed in this keynote speech.