Breaking Environmental Kuznets Curves. Evaluating Energy and Policy Time Events Effects on CO2 Trends for Advanced Countries

This paper documents the structural differences among advanced countries with regard to their long run carbon-income relationships. On the basis of a first application of intervention analysis to Environmental Kuznets curves, we show that time related effects, namely structural breaks, have been predominantly relevant in explaining the eventual occurrence of such bell shaped curves. We indeed find great heterogeneity of effects in comparing advanced countries long run performances. The different response in terms of environmental policy and innovation efforts of northern EU to exogenous policy events such as the 1992 climate change Rio convention, that gave earth to the Kyoto era, and to the second oil shock that preceded it in the 80’s are among the underlying causes. Environmental policy can be or create the pre conditions to exert long run beneficial shocks to the energy-economic system. Evidence provides food for thought for the post Kyoto era policy making, just after the Rio+20 step.