A Note on Trends in European Industrial Pollution Intensities: A Divisia Index Approach

This paper attempts to identify whether declining industrial pollution intensities in many European countries are a result of reductions in sectoral emissions intensities (i.e. the effects of regulations and technology) or changes to the product mix (e.g. the decline of heavy industries). This distinction is important since reductions in pollution that are a result of changes to the product mix may simply reflect a transfer of pollution from one country to another, rather than a net reduction. We attempt to resolve this issue by applying the divisia decomposition technique to a new dataset of industry-specific emissions intensities for three common air pollutants, for four European countries. Our results generally indicate the dominance of the sectoral intensity effect although, for the UK in particular, evidence of an increasingly clean product mix is found.