The ‘complex’ transition: Energy intensity and CO2 emissions amidst technological and structural shifts. Evidence from OECD countries

Abstract

The purpose of the paper is twofold. Firstly, we investigate whether technological and structural shifts result in reduced energy intensity and lower CO2 emissions. Secondly, we explore whether such technological and industrial transformations interact and have a joint impact on the environment. We use a PVAR model in first differences for a panel of 34 OECD countries spanning from 1994 to 2019, as well as for a cluster of countries exhibiting the most compelling trend in energy intensity. The findings substantiate our research hypotheses. Notably, technological change exhibits a full impact on carbon dioxide emissions exclusively within the identified cluster. Structural change does not directly impact emissions reduction, yet it appears to act as a catalyst for green innovation and reduced energy intensity. Improvements in energy intensity lead to lower emissions and spur both technological and structural transformations. The technological change driven by R&D activities supports the trend towards services. Such a structural evolution serves as a stimulus for environmentally related innovations. In this context, environmental taxes wield a substantial influence on the environment and the energy transition.