Understanding material and energy use in the processes of decoupling CO2 emissions from economic growth

Abstract

The share of emissions from materials has significantly increased over the last decades and is projected to rise in the coming years unless effective climate policies are developed. In this regard, understanding the environmental effect of material becomes highly crucial for achieving climate goals, especially from the climate mitigation perspective, yet its critical effect on emissions is often overlooked and more attention is heavily paid to the energy-related policies. In this study, to address this shortcoming in the existing literature, we investigate the role of material use on the decoupling process of carbon dioxide emissions (CO2) and gross domestic product (GDP) and compare it with the role of energy use in the world's top-19 emitting countries for the period between 1990 and 2019. Methodologically, using the logarithmic mean divisia index (LMDI) approach, we first decompose CO2 emissions into four effects based on the two different model specifications (material- and energy-related models). We secondly determine the impact decoupling status and efforts of countries with two different approaches, i.e., Tapio-based decoupling elasticity and decoupling effort index models. Our decomposition and Tapio-based decoupling elasticity results show that material and energy-related efficiency effects have an inhibitory factor. However, the carbon intensity of materials has not contributed to CO2 emissions reduction and impact decoupling progress as much as the carbon intensity of energy has. Decoupling effort index results indicate that while developed countries are making relatively good progress towards decoupling particularly after the Paris Agreement, developing countries need to further improve their mitigation efforts. From the policy perspective, the overall results reveal that designing and implementing some policies only centering energy/material intensity or carbon intensity of energy might not be sufficient to achieve the decoupling of carbon emissions from GDP. Therefore, both energy-related and material-related strategies should be developed and implemented in harmony. JEL Codes: Q56, O13, C33