Sources of greenhouse gas emission reductions in OECD countries: Composition or technique effects

Greenhouse gas, as the main pollutant of industrial production, has experienced a recent decline in OECD countries despite a substantial increase in manufacturing output. Based on the index decomposition analysis approach, changes in greenhouse gas emissions of 19 OECD countries from 2012 to 2016 are decomposed into scale, composition, and technique effects. Cross-country differences in emissions and the main sources are compared and discussed based on the data of 19 sub-industries of manufacturing. The empirical results are as follows: (1) In OECD as a whole, the total greenhouse gas emission reduction is primarily driven by composition effect rather than technique effect, while country-specific sources of emission changes are not the same. (2) The greenhouse gas emission reductions in Austria, the Czech Republic, France, Italy, Slovak Republic, and Spain own to composition effects, which is generated by the increasing share of clean sectors. (3) The greenhouse gas mitigation in Denmark, Latvia, Poland, Sweden, and the United Kingdom benefits from the technique effect, which is brought about by the technological progress in emission intensities. These findings provide significant implications for differentiated emission reduction measures for different countries.