Abstract
The paper combines grid-level data of eight emission types – CO2, N20, CH4, NH3, NOX, PM10, PM2.5, and SO2 – with sub-national economic data to create a 1995–2015 balanced panel for NUTS 2 regions in EU countries. Regions on average show decoupling of emissions from output but most of the emission reductions are achieved before the 2008 financial crisis. Post 2008, very weak decoupling and even coupling can be observed. Using OECD’s Environmental Policy Stringency (EPS) Index as an intervention variable, an event study analysis shows that strong policies significantly reduce emissions, but there is considerable heterogeneity in the response by emission types and regional income levels.
Highlights
The scale of economic activity of the past decades has caused serious environmental concerns and has threatened the ‘‘safe operating space for humanity’’ (Rockström et al, 2009; Steffen et al, 2015)
Several papers estimate the Environmental Kuznets Curve (EKC) for emissions for European countries and find weak evidence of a turning point while flattening of the EKC curve is observed in most cases (Stern, 2004; Bacon and Bhattacharya, 2007; Li et al, 2007; Shuai et al, 2017; Le Quéré et al, 2019)
Emissions data comes from the Emissions Database for Global Atmospheric Research, or EDGAR v5, hosted at the European Commission’s Joint Research Center (JRC) (Crippa et al, 2020a,b)
Summary
The scale of economic activity of the past decades has caused serious environmental concerns and has threatened the ‘‘safe operating space for humanity’’ (Rockström et al, 2009; Steffen et al, 2015). CO2 remains the main environmental indicator used for analysis (Wiedenhofer et al, 2020) other harmful emissions are generated from economic activity, but are not given sufficient attention (OECD, 2018; EEA, 2020a) These emissions have their own negative impacts and might not necessarily exhibit the same development trends as CO2 emissions. This paper contributes to the decoupling literature by (a), highlighting the significance of regional spatial–temporal variations in economic and emission indicators across EU regions, and (b), showing variations in causal response to emission policies by emission types and income levels across these regions.
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