Using decomposition analysis to determine the main contributing factors to carbon neutrality across sectors

Abstract

This paper uses decomposition analysis to investigate the key contributions to changes in greenhouse gas emissions in different scenarios. We derive decomposition formulas for the three highest-emitting sectors: power generation, industry, and transportation (both passenger and freight). These formulas were applied to recently developed 1.5 °C emission scenarios by the Integrated Model to Assess the Global Environment (IMAGE), emphasising the role of renewables and lifestyle changes. The decomposition analysis shows that carbon capture and storage (CCS), both from fossil fuel and bioenergy burning, renewables and reducing carbon intensity provide the larg-est contributions to emission reduction in the scenarios. Efficiency improvement is also critical, but part of the potential is already achieved in the Baseline scenario. The relative importance of different emission reduction drivers is similar in the OECD (characterised by relatively high per capita in-come levels and emissions) and non-OECD (characterised by relatively high carbon intensities of the economy) region, but there are some noteworthy differences. In the non-OECD region, improv-ing efficiency in industry and transport and increasing the share of renewables in power generation are more important in reducing emissions than in the OECD region, while CCS in power generation and electrification of passenger transport are more important drivers in the OECD region.