Greenhouse gas emissions and the energy system: decomposition analysis and the environmental Kuznets curve

This paper discusses to what extent the recent trends in energy consumption and production are compatible with the requirements of sustainable development. For this purpose, starting from a simple identity applied to the energy sector, we use the decomposition analysis to derive a few analytical requirements for the long-term sustainability of the energy system and examine whether they are satisfied on the basis of the currently available data. From the analysis conducted in the paper, it emerges that an Environmental Kuznets Curve in energy intensity and/or carbon intensity may be insufficient to satisfy the sustainability conditions identified in the paper. Moreover, using simple graphical analysis, we show that the decomposition approach and the EKC imply two different relationships between per capita income (y) and carbon intensity (gy) and discuss the relative implications.