Measuring progress towards a ‘Green Energy Economy’: Who is really winning the race?

This paper provides the first regional econometric decomposition of CO2 emissions from fuel combustion in eight regions of the world. Using the best publically-available time series data (1971–2011), the analysis examines the key determinants and relationships of the ‘Green Energy Economy’ (GEE) in Africa, Asia, Latin America and the Caribbean, the Middle East, Non-OECD Europe and countries from the Former Soviet Union, Oceania, OECD Europe, and OECD North America. The results show that emissions continued to grow across all regions, at rates ranging from 0.1% y-1 to 7% y-1 for the period under analysis. Despite progress in energy intensity (e.g. Asia) and carbon dioxide intensity of the energy supply (e.g. OECD Europe), GDP per capita (or ‘affluence’) was found to be a key driver of accelerating CO2 emissions in most regions. In certain cases, a sharp but short term decrease in CO2 emissions was identified; however, these reductions did not appear to correlate with income levels or other explanatory variables, but rather to a historical exogenous shock. Findings show that the opportunity offered by the 2008–2009 global financial crisis to move towards a GEE, at least in terms of reduced CO2 emissions, was missed in nearly all regions. From a policy perspective, the analysis strongly suggests that regional policy portfolios aimed at market uptake of green energy technologies are still insufficient and/or ineffective and that great ambition level is needed.