Development and application of energy decoupling index as Cartesian Vector: evidence from world-wide regional data

Abstract

Abstract Economic growth and energy consumed is critical for sustainable global development. In this paper, an extended Vector version of the commonly used Decoupling Index De of energy elasticity to Gross Domestic Product (GDP) and Decoupling Ratio of Energy Intensity of GDP are used to investigate decoupling phenomenon for the period 1990 to 2014 in the main regions of the World. Using Vector properties, this study overcomes some well-known deficiencies of Energy to Growth elasticity Decoupling Index and suggests the Decoupling Angle as a suitable indicator when describing decoupling. The relationships with aggregate and per capita indicators are also examined. A general finding was that in emerging economies, even when moving to “disconnected” states of decoupling, reduced energy rates were paired with reduced growth rates and accelerated growth rates with increased energy consumption rates. This statement raises questions over long-term decoupling of energy consumption from economic growth.