The drivers of declining CO2 emissions trends in developed nations using an extended STIRPAT model: A historical and prospective analysis

Although global total fossil fuel CO2 emissions continued to grow between 2005 and 2016, many developed countries had experienced a decline in their emissions in the past decade, which significantly slowing down the growth of global emissions. Understanding the determinants of emissions trends in economies with continuously decreasing emissions is key to gauging whether efforts to decarbonize heavy industry and energy systems is working. This study selected a “peak-and-decline” panel of 18 economies to carry out a decomposition analysis on CO2 emissions with six contributing factors using an extended STIRPAT model and estimated the future trend of their CO2 emissions from both historical and prospective perspectives. The results show that CO2 emissions and the six determining factors to be stationary after the first difference and to maintain a cointegrated relationship. The two-way fixed effect modeling analysis showed that the transition from fossil fuels to renewable energy and variations in energy intensity and fossil CO2 intensity were the primary factors contributed to the decrease in CO2 emissions. The Granger causality test reveals that there exists a bi-directional long-run causal link between the renewable energy consumption share and CO2 emissions, and an uni-directional short-run causal association from industrial structure, GDP per capita and energy intensity to CO2 emissions. Moreover, the forecasting results indicated that changes in the renewable energy share and fossil CO2 intensity will be the two primary factors for the decline inCO2 emissions in the next thirty years, while the contribution from the industrial structure, economic growth, and fossil energy intensity are rather limited. These findings highlight the importance of improved energy efficiency and the use of renewable energy in reducing CO2 emissions in the eighteen developed countries.