Decomposition analysis for energy-related CO2 emissions intensity over 1996-2009 in Portuguese Industrial Sectors

Is this paper, we used the 'complete decomposition' technique to examine CO2 emissions intensity and its components considering 16 industrial sectors over 1996-2009 period. In addition, we have implemented the forecast error variance decomposition applied to the factors in which emissions intensity was decomposed. It is shown that CO2 emissions intensity diminished significantly in the considered period. Energy intensity of economic sectors is the most important effect in the determination of the CO2 emissions intensity. The technologies used are more efficient and less polluting, for the same amount of fuel used. Moreover, there was a substitution between fossil fuels in favour of less polluting fuels, but the technologies related to fossil fuels may still have a significant role. The industry (in particular 5 industrial sectors) is contributing largely to the effects of variation of CO2 emissions intensity. There is bidirectional causality between CO2 emissions intensity and the share of fossil fuels in total energy consumption. Emissions intensity reacts more significantly to shocks in the weight of fossil fuels in total energy consumption compared to shocks in other variables.