Decoupling CO2 Emissions from Economic Growth: Revealing the Role of Materials

The decoupling analysis has been widely considered one of the most important tools by national and international institutions, as the environment-economy nexus is one of the most critical topics for sustainable development. Therefore, a growing number of studies in the existing literature empirically investigate the nexus between carbon dioxide (CO2) emissions and economic growth by using the decoupling analysis. Despite many attempts in this direction, as these studies have so far largely focused on the level of decoupling, i.e. the decoupling state of CO2 emissions and economic growth, they have not presented sufficient and convincing evidence on driving forces leading to changes in the decoupling indicator. More importantly, even if some recent studies pay special attention to the driving forces, the effect of material consumption has been largely overlooked. The main purpose of this study is to analyze the  relationship between CO2 emissions and economic growth based on the decoupling method and to reveal the influencing factors of the decoupling status with paying special attention to material consumption alongside energy consumption. To this end, we first measure the decoupling indicator between CO2 emissions and economic growth based on the Tapio (2005) decoupling index. In the second step, we identify the driving forces behind the change in this decoupling indicator using the Log Mean Divisia Index (LMDI) method. The findings reveal important policy insights about the critical role of material and energy use in mitigating carbon emissions.