The data contains detailed information on plant-level use of various energy inputs (both in value and physical units) and thus can be used to calculate the expected CO2 emissions using standard conversion factors specific to each type of energy. The study is based on plant-level data from the Indonesian Manufacturing Census, covering the period 1983-2001. 2019), we contribute to this discussion by examining the impact of foreign acquisitions on energy consumption and CO2 emissions of acquired plants. With the spectacular growth in FDI flows and the increasing importance of developing nations as host countries, the potential effect of FDI on the natural environment remains controversial (Kellenberg 2009, Cole et al. In contrast, supporters of globalisation point out that FDI has a positive effect on the natural environment because multinationals tend to use more efficient and cleaner technologies than their domestic counterparts. In this way, they increase pollution levels not only in host countries but also globally.
Can multinationals be part of the solution? Can flows of foreign direct investment (FDI) help put a brake on emissions? Or would they exacerbate the already worsening global climate condition?Įnvironmentalists argue that highly polluting multinationals relocate to countries with weaker environmental standards to circumvent costly regulations in their home country (Hanna 2010, Millimet and Roy 2015, Cai et al. Keeping emissions below the crucial threshold would require widespread changes in energy, industry, buildings, transportation, and cities. According to the 2018 report of the UN Intergovernmental Panel on Climate Change (IPCC), exceeding the global threshold of 1.5☌ above the pre-industrial temperature level will mean increased risk of extreme drought, wildfires, floods, and food shortages for hundreds of millions of people.