European union membership and CO2 emissions: A structural decomposition analysis

This paper’s interest lies in the environmental pressures of the European Union (EU). EU membership requires a series of economic and political changes that should impact a country’s production and consumption structures and its trade relationships. These changes, in turn, will affect CO2 emissions sources and levels. This is especially true for the new Member States that joined during the 2004–2007 enlargement of the European Union, given the difference in their levels of development and production structure. As these countries increase participation in a globally integrated production chain their emission’s structure and level should change. Using a Structural Decomposition Analysis we are able to quantify the main drivers of changes in emissions differentiating six components, namely: emissions intensity, industrial structure and sourcing, consumer preferences, final demand sourcing and consumption levels. Grouping the countries into five groups, New European Union countries, Old European Union countries, the United States of America, China, and the Rest of the World, we measure trading pattern changes and their impact on CO2 emission levels. The main results show that, although New European Union countries countries’ emissions generally declined, the changes were not large enough to offset their increased emissions from access to more and wider ranging export demand. Increased CO2 emissions embodied in final goods exports were especially notable.