Decomposition analysis for assessing the progress in decoupling industrial growth from CO2 emissions in the EU manufacturing sector

Decomposition analysis is used in this paper not only to explain changes in industrial CO2 emissions, but also to comparatively evaluate the progress made in 14 EU countries in decoupling emissions from industrial growth. The analysis is performed for the period 1990-2003, by distinguishing two time intervals for assessing progress prior to and following the agreement on the Kyoto Protocol. The refined Laspeyres model is used to determine the impact of 5 explanatory factors: output, energy intensity, structure, fuel mix and utility mix. The obtained results are further elaborated in order to assess the real efforts undertaken in each country and their effectiveness in dissociating the economic and environmental dimensions of development. Moreover, a rescaling procedure is implemented in order to adjust efforts to the average progress in the EU and proceed to a fair comparative evaluation. It is found that most EU countries made a considerable but not always sufficient decoupling effort, while no significant acceleration is observed in the post-Kyoto period.