Is European Union's economy "greening"?

Green growth is seen as a practical tool for achieving sustainable development (Kasztelan, 2017). It is based on the understanding that as long as economic growth remains a predominant goal, a decoupling of economic growth from resource use and adverse environmental impacts is required. "Decoupling" is usually used to mean the possibility of economic growth that takes place simultaneously with a fall in environmental pressure. In other words, the concept of decoupling was introduced to measure and analyze the controversial trade-off between economic development and environmental sustainability; in particular, several empirical studies concern the construction and use of decoupling indicators  (Tarabusi & Guarini, 2018).

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Indicators

Two types of decoupling are mainly identified· Relative Decoupling and Absolute Decoupling (Green Growth). Τhe most commonly used indicator for measuring economic growth is GDP (Gross Domestic Product), but I  will use Real GDP per capita (RGDP). According to Eurostat this indicator is calculated as the ratio of real GDP to the average population of a specific year. GDP measures the value of total final output of goods and services produced by an economy within a certain period of time. It includes goods and services that have markets (or which could have markets) and products which are produced by general government and non-profit institutions. It is a measure of economic activity and is also used as a proxy for the development in a country’s material living standards. 

On the other hand a widely used indicator for measuring environmental pressure is the Net Greenhouse Gas Emissions (NGG). According to Eurostat, this indicator measures total national emissions including international aviation of the so called ‘Kyoto basket’ of greenhouse gases, including carbon dioxide (`CO_2`), methane (`CH_4`), nitrous oxide (`N_2 O`), and the so-called F-gases (hydrofluorocarbons, perfluorocarbons, nitrogen triflouride (`NF_3`) and sulphur hexafluoride (`SF_6`) from all sectors of the GHG emission inventories (including international aviation and indirect `CO_2`). 

Dataset & Method

For our analysis, we will use the datasets for indicators in the time periods 2000-2009 and 2010-2019 for the European Countries. Both datasets for Real GDP per capita and Net Greenhouse Gas emissions (`CO_2`, `N_2 O`, `CH_4`, `HFC`, `PFC`, `SF_6`, `NF_3`) comes from Eurostat (sdg_08_10  and sdg_13_10). For a given country at time j, let `Y_j` be the Real GDP per capita, `H_j` the level of environmental pressure. The respective variation rates with respect to time `j + n` are:

•  `y = \frac{Y_(j+n) - Y_j}{Y_j} => y = \frac{Y_(j+n)}{Y_j} - 1`
•  `h = \frac{H_(j+n) - H_j}{Y_j} => h = \frac{H_(j+n)}{H_j} - 1`

The cloud of points extends for a substantial number of units over each of the six open plane regions (and some points may be located arbitrarily close to each of the six half-lines as well as to the origin), showing that each theoretically possible combination of signs for y, h and their difference y − h may actually occur and cannot be neglected. The variables y and h are only bound by the constraints: `x, y > -1`. Also, in the end of the article you can find the table, which contains the y and h for every European Union's Country for the time periods 2000-2009 and 2010-2019 analytically.

Results

Figure 1: Combinations (x, y) of countries, for the time period 2000 - 2009
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Observing Figure 1, we understand that most of the European Union's Countries for the time period 2000 - 2010 was in decoupling stage· absolute (green growth) and relative. Specifically, Luxemburg, Croatia, Poland Bulgaria, Lithuania, and Estonia were in the relative decoupling stage and this fact means that the economic growth of these countries was higher than the growth of environmental pressure (`h < y` and `h > 0`).  Austria was in worth situation than the countries mentioned above because the environmental pressure of the time period 2000-2009 was great than the economic growth (`y < h` and `y > 0`).

Malta, Cyprus, Greece, Slovenia, Czech, Hungary, Finland, Ireland, Portugal, Denmark, Germany, Netherlands, Spain, France, Sweden, Slovakia, Belgium, and Latvia were in the phase of absolute decoupling (green growth), in which happens at the same time economic growth and reduction of environmental pressure (`h < y`, `h < 0` and `y > 0`). Unfortunately, the environmental pressure in Italy was greater than economic growth for the time period 2000 - 2009 (`h < y` and `y < 0`). 

Figure 2: Combinations (x, y) of countries, for the time period 2010 - 2019
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Observing Figure 2, we can easily understand that there are no dramatic changes. Most of European Countries are again in the absolute (green growth) or relative decoupling stage. Analytically, Latvia, Bulgaria, Czech, and Poland are in the Relative Decoupling Stage (`h < y` and `h > 0`). Lithuania's and Slovenia's environmental pressure is higher than the economic growth of this period (`y < h` and `y> 0`).  In Green Growth Stage are Portugal, Hungary, Croatia, Austria, Cyprus, Spain, Belgium, France, Germany, Slovakia, Estonia, Netherlands, Italy, Luxembourg, Finland, Denmark, Malta, and Sweden in the last decade (`h < y`, `h < 0` and `y > 0`). Unfortunately, Greece's economic growth is negative and hopefully higher than environmental pressure (`h < y` and `y < 0`).

Conclusively, most European Countries are in Green Growth Stage in both decades. In the last decade Austria, Luxemburg, Croatia, and Estonia are transferred to Green Growth Stage. Also, Slovenia is transferred from Green Growth and Lithuania from Relative Decoupling to the "`0 < y < h`" Stage. In addition, Italy changed its position with Greece; Italy is transferred from the "`0 < h < y`" Stage to Green Growth and Greece from Absolute Decoupling to the "`0 < h < y`" Stage.

Table of Data

Country	2000 - 2009		2010 - 2019
	Environmental  Pressure (h)	Economic Growth (y)	Environmental  Pressure (h)	Economic Growth (y)
Austria	0.1481	0.0984	-0.0833	0.0769
Belgium	-0.1959	0.0940	-0.1600	0.0825
Bulgaria	0.2245	0.6622	0.0625	0.3051
Croatia	0.1667	0.3450	-0.0612	0.1970
Cyprus	-0.0382	0.1699	-0.0924	0.0842
Czech	-0.1007	0.3081	0.0078	0.2290
Denmark	-0.1507	0.0244	-0.3008	0.1239
Estonia	0.0101	0.4284	-0.1575	0.4024
Finland	-0.3670	0.1193	-0.2952	0.0590
France	-0.1667	0.0456	-0.1600	0.0857
Germany	-0.1181	0.0578	-0.1538	0.1265
Greece	-0.0508	0.2249	-0.2453	-0.1186
Hungary	-0.1507	0.2453	-0.0161	0.3297
Ireland	-0.2350	0.0893	-0.1161	0.6384
Italy	-0.1474	-0.0303	-0.2073	0.0108
Latvia	-6.0000	0.6705	0.1224	0.4655
Lithuania	0.3793	0.6673	0.6176	0.5525
Luxembourg	0.1013	0.1308	-0.2538	0.0177
Malta	-0.0494	0.1389	-0.3291	0.3783
Netherlands	-0.1088	0.0884	-0.1679	0.0912
Poland	0.0000	0.4062	0.0000	0.3851
Portugal	-0.2237	0.0296	-0.0169	0.0989
Slovakia	-0.0139	0.5283	-0.1507	0.2601
Slovenia	-0.0484	0.2568	0.3667	0.1673
Spain	-0.1477	0.0764	-0.1250	0.0938
Sweden	-0.1875	0.1198	-0.4000	0.1059

Selected References

• Kasztelan, A. (2017). Green Growth, Green Economy and Sustainable Development: Terminological and Relational Discourse. Prague Economic Papers, 26(4), 487-499. https://doi.org/10.18267/j.pep.626
  
  
• Tarabusi, C., & Guarini, G. (2018). An axiomatic approach to decoupling indicators for green growth. Ecological Indicators, 84, 515-524. https://doi.org/10.1016/j.ecolind.2017.07.061