Are structural change and modernisation leading to convergence in the CO2 economy? Decomposition analysis of China, EU and USA

This article investigates the factors that impact the amount of CO2 emissions from fuel combustion and energy use in three major economies in the world, China, the EU-27 and the United States, using mathematical decomposition analysis, where the observed change in explained variable is divided into meaningful components. These components' shares of the total change can be compared and the change in the shares over time can be studied. We have conducted two different types of mathematical decomposition analyses: first, the chained decomposition analysis, in which the observed change in CO2 from fuel combustion is decomposed to four intensity factors and an extensive factor, population; and second, the sectoral decomposition analysis of the final energy use, where the change in final energy use in agricultural, industrial and service sectors are decomposed to activity, intensity and structural effects in the different sectors. The results of the decomposition analyses indicate similar trends of convergence in the three economies. This can be interpreted to be caused by the globalisation of the economic processes, which directs the production processes of businesses to develop in similar patterns. On the other hand, there are also differences in the development trends caused by the different structures of the three economies. (C) 2014 Elsevier Ltd. All rights reserved.