Decoupling dynamics

Greenhouse gas emissions are among the serious threats to the sustainability of the global economy. In an effort to curb the environmental impact of economic activities, the European Union (EU) has proposed and implemented various policies. One example is the carbon pricing policy. This study examines the impact of carbon pricing and non-carbon pricing policies on the decoupling of economic growth from carbon emissions in the EU. We examine the EU because it has adopted Emissions Trading Systems and renewable energy (non-carbon pricing) policies to reduce the environmental impacts of economic activities. The results of our decoupling analysis reveal that the EU has achieved strong and weak decoupling effects in most years where an impact of carbon pricing and non-carbon pricing policies is seen. Our modelling results suggest that carbon pricing is positively correlated with decoupling elasticity. The non-carbon pricing factor has a significant and negative correlation with the dependent variable (decoupling elasticities). This finding suggests that non-carbon pricing policies (renewable energy) have a greater effect on strengthening the decoupling of carbon emissions and economic growth than carbon pricing does. Research and development strengthen this decoupling as well. We find that fossil fuel, governance effectiveness, urbanization, and greenhouse gas (GHG) emissions are considered the main variables that weaken the decoupling of carbon emissions and economic growth. Our analysis provides input into policy/decision-making regarding the impact of carbon pricing and non-carbon pricing policies on the environmental health of the EU. They indicate that non-carbon pricing measures have a greater effect on strengthening the decoupling of carbon emissions and economic growth than carbon pricing policies do. With respect to policy recommendations, our results suggest that the EU should emphasize non-carbon pricing as well as carbon pricing policies. However, the former approach has a more prominent influence on achieving sustainable economic growth

Carbon fibers · Carbon price · Greenhouse gas · Sustainability · Sustainable development · Climate Change Policy and Economics · Energy, Environment, Economic Growth · Environmental Impact and Sustainability