How can Germany reduce production-based and consumption-based carbon emissions? A decomposition analysis

Abstract

Developing more effective mitigation strategy to achieve the carbon reduction targets set by the Paris Climate Agreement requires to more comprehension of the driving factors of the decline in carbon emissions. Production-based and consumption-based carbon emission in Germany declined by 2.8% and 8.5% from 2000 to 2015, respectively. In this work, the key drivers behind decline in carbon emission in Germany is explored by combing the multi-regional input-output and structural decomposition analysis. The results show German carbon emissions has been undergoing structural changes. Although its production-based and consumption-based emission declined, German carbon footprint embodied in exports increased, and its share in the production-based carbon footprint also increased. Germany's embodied emission exports to emerging countries increased, although Germany's embodied carbon exports remained mainly concentrate in developed countries, especially in EU (over 40%) and USA (∼10%). The decomposition results revealed that economic scale effect was the leading contributor to increase in carbon footprint in Germany's trade, followed by the industrial structure effect of final demand. The effects of production structure on German's exports was less than its imports. The carbon intensity coefficient was the most significant factor of decreased carbon emission. Generally, the decreasing effect of carbon intensity coefficient exceeded the increasing effect of economic scale, which lead to carbon reduction. The example of Germany shows that improving carbon emission efficiency and optimizing production structure can reduce carbon emission without lowering economic growth.