Economic drivers of greenhouse gas-emissions in small open economies: A hierarchical structural decomposition analysis

The Paris agreement has prescribed strict Greenhouse Gas (GHG) reduction targets for participating countries. Implementation of climate protection policies is challenging, especially if the economy is export driven. We introduce a hierarchical structural decomposition model in order to investigate the effects of exports, imports, economic structure, consumption patterns, consumption level, outsourcing and insourcing on national GHG emissions. This model is applied to the data of national environmental accounts and to a harmonized and price-deflated series of national input-output tables of Austria for the years 1995, 2000, 2005 and 2010. Over the whole time period, the results indicate that the final demand effect was the main driver of GHG emissions, with exports as most important factor. Surprisingly, emission intensity contributed to an increase of GHG emissions during the period 2000-2005 as well, mostly due to increasing emission intensity in the transport sector.