Assessing the Economic Structure, Climate Change and Decarbonisation in Europe

Abstract

Anthropogenic greenhouse gas (GHG) emissions coming mainly from fossil fuel combustion for energy use are causing air temperature increases resulting in climate change. This study employs an environmentally extended input–output model to conduct an economy-wide assessment of GHG emissions in the European Union (EU). Model results indicate that the assumed growth of economic activity by 2030 will lead to a large increase in GHG emissions by 89%, assuming no technological change and no additional policy mitigation efforts. The electricity sector and agriculture create the highest direct and indirect GHG emissions per unit of economic output across the 27 EU member states (EU-27); for every 1-million-euro-increase in the final demand for the products and services of the electricity sector and agriculture, 2198 and 1410 additional tons of GHG emit, respectively. Regional climate projections under a low-decarbonisation pathway (RCP8.5), in accordance with our economic analysis, indicate a further increase of regional warming, combined with pronounced changes in the hydrological cycle. Contrariwise, following a strong mitigation pathway (RCP2.6) will result in warming levels lower than 1.5 °C with respect to the 1986–2005 reference period. Our findings reveal the importance of both direct and indirect contribution of economic sectors in the generation of GHG emissions, taking into consideration the size of the sectors and the assumed growth rates. The design and implementation of sectoral emission reduction policies from the perspective of the whole production supply chain can effectively contribute to GHG emission reduction commitments.