Cyclical fluctuation patterns and decoupling: towards common EU-28 environmental performance

Abstract

The EU-28 is one of the largest emitters of CO2 in the world and the most committed to reducing emissions. However, the national environmental strategies of the Member States are still diverse. This study is aimed at evaluating the environmental performance of European economies by analysing the fluctuations of CO2 emissions and their links with economic activity over the period 1950e2012. The methodological framework is based on a dynamic factor analysis to determine an index of the EU fluctuation of CO2 emissions in parametric form. This index can be used to monitor the progress towards common behaviour across Member States, with a time-varying recursive method. Following this approach, we also track the efforts made to decouple CO2 emissions from GDP. Based on these analyses, we develop a CO2 emissions-GDP linkage matrix to attain useful information on the EU Member State environmental performance.