Fifty shades of green: Revisiting decoupling by economic sectors and air pollutants

Using a consistent dataset for eighteen EU countries, six economic sectors, and six pollution indicators, we analyze decoupling of production-based emissions from GDP growth from 1995 to 2008. Computing decoupling factors as defined by the OECD (2002), we find that in almost all sectors and by almost all pollutants the median EU country had at least some decoupling. However, considerable heterogeneity in its magnitude can be observed across countries, sectors, and pollutants. For most pollutants and sectors, median decoupling performance improved from 2001-2008 compared to 1995-2001, while between-country disparities increased simultaneously. In a second step, we investigate country-level changes in decoupling states between the two sub-periods based on Tapio (2005). We find high diversity across countries and over time. To explain these differences across countries and sectors, we assess the impact of environmental policy stringency, and find tentative evidence that stricter policy encourages decoupling, however the effects are small and imprecise, differ by economic sector and pollutant, and take several years to materialize.