Convergence of per capita carbon dioxide emissions in the EU: Legend or reality?

Designing appropriate environmental and energy policies, in order to meet the Kyoto protocol's carbon dioxide (CO2) reduction targets in the European Union (EU), requires a detailed examination and thorough understanding of CO2 emission trends across the EU member states. This paper investigates whether CO2 emissions have converged across 22 European countries over the 1971 to 2006 period. The Bayesian shrinkage estimation method is employed to do this work and the results reveal the following: first, the hypothesis of absolute convergence in per capita CO2 emissions is supported and a slight upward convergence is observed; second, the fact that countries differ considerably in both their speed of convergence and volatility in emissions makes it possible to identify different groups of countries; third, the results with respect to convergence do not vary much once the share of industry in GDP is accounted for in a conditional convergence analysis. However, a decreasing share of industry in GDP seems to contribute to a decline in per capita emissions. These findings may carry important implications for both national and EU environmental policies. (C) 2010 Elsevier B.V. All rights reserved.