A carbon footprint proportional to expenditure - A case for Norway?

- We estimate the carbon footprint of Norwegian households.
- We find that the carbon footprint increases in a proportional way to expenditures.
- This implies no decoupling of consumption and the environmental impact.
- A hydro-based power sector and low electricity imports partly explain the result.

Motivated by the importance of consumption as an underlying driver of CO2 emissions, we examine the link between consumption and CO2 emissions for Norwegian households. The main goal is to investigate whether there is a decoupling of consumption expenditures and the environmental impact as we move up the income ladder. By combining a 2007 Norwegian consumer expenditure survey with emission coefficients from an environmental input-output model, reflecting emissions embodied in both domestically produced and imported goods and services, we calculate the per capita carbon footprint. The results from the analysis suggest that the per capita carbon footprint is directly proportional to expenditure with an estimated elasticity close to unity, implying no decoupling. The finding is partly driven by a near zero-emission power sector, which leads to comparatively low emissions embodied in domestically-produced goods and services.