Convergence of per capita carbon dioxide emissions in the EU: Legend or reality?

Abstract

Designing appropriate environmental and energy policies, in order to meet the Kyoto protocol's carbon dioxide (CO 2) reduction targets in the European Union (EU), requires a detailed examination and thorough understanding of CO 2 emission trends across the EU member states. This paper investigates whether CO 2 emissions have converged across 22 European countries over the 1971 to 2006 period. The Bayesian shrinkage estimation method is employed to do this work and the results reveal the following: first, the hypothesis of absolute convergence in per capita CO 2 emissions is supported and a slight upward convergence is observed; second, the fact that countries differ considerably in both their speed of convergence and volatility in emissions makes it possible to identify different groups of countries; third, the results with respect to convergence do not vary much once the share of industry in GDP is accounted for in a conditional convergence analysis. However, a decreasing share of industry in GDP seems to contribute to a decline in per capita emissions. These findings may carry important implications for both national and EU environmental policies.