Environment, Energy, and Environmental Productivity of Energy: A Decomposition Analysis in China and the US

The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the only one Earth. This study aims to measure relative contributors to the environmental quality changes during 2002-2011 using Logarithmic Mean Divisia Index in China and the US. Since these countries are the biggest polluters in the world, the decomposition technique is used to cut their wide environmental issues into the tiny bits of problems, being easy to cope with. Moreover, we employed Environmental Performance Index (EPI) to evolve the concept of Environmental Productivity of Energy (EPE). The results suggest that economic growth and income equality are environmentallyfriendly while energy consumption is environmentally-unfriendly; and the Environmental Productivity of Energy (EPE) and technology progress are environmentally-moody (with various effects on environment). Consequently, the policy makers are advised to develop those economic sectors which are independent of pollutant energies; to replace the black energies by the green ones; and to invest on the research about the products whose demand is price inelastic.