Decoupling economic growth from energy consumption:Review of global trends and policy implications

Ali Abbas

doi:10.63335/j.hp.2025.0013

Abstract

As the climate crisis on a global scale worsens, the need to reconcile the growth of the economy and environmental sustainability has become a defining challenge of the 21st century. At the heart of this discourse is decoupling, alleviating the negative footprint impacts of economic activity without endangering development objectives. This review article offers a comprehensive synthesis of global experiences with both relative and absolute decoupling, with a focus on the underlying theoretical foundations, empirical patterns, and policy mechanisms that characterize the pursuit of sustainable growth. Based on cross-country comparisons and detailed case studies, we explore how members of diverse income groups manage the balance between economic development and environmental responsibility. Developed countries now show absolute decoupling more and more, supported by technological innovation, structural economic transformation, and strong policy frameworks. On the other hand, relative decoupling is evident for a middle-income economy because the economy has recorded high growth while making modest gains in energy efficiency and emissions control. Low-income countries, on the other hand, tend to be tightly coupled, dogged by dependence on fossil fuels, weak institutions, and weak access to clean technologies. The review outlines major drivers of climate action, including carbon pricing, investments in renewable energy, urbanization, and quality of governance, along with persistent impediments, like a shortage of infrastructure, policy inertia, and lack of capital. In addition, the article defines new emerging research gaps and highlights the need for sector-specific analysis, behavioral insights, and equitable policy design with just transition in mind.

References

Adams, S., Klobodu, E.K.M., Apio, A., 2018. Renewable and nonrenewable energy, regime type and economic growth. Renew. Energy 125, 755–767. doi: 10.1016/j.renene.2018.02.135.
Adom, P.K., Adams, S., 2020. Technical fossil fuel energy efficiency (TFFEE) and debt-finance government expenditure nexus in Africa. J. Clean. Prod. 271. doi: 10.1016/j.jclepro.2020.122670.
Ahuja, D., Tatsutani, M., Schaffer, D., 2008. Sustainable energy for developing countries. S.A.P.I.EN.S Surv. Perspect. Integr. Environ. Soc. 2(1), 1–48.
Akhtar, S., Zahedi, K., Capon, A., Hamanaka, H., 2016. Transformations for Sustainable Development: Promoting Environmental Sustainability in Asia and the Pacific. United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
Bergmann, T., Kalkuhl, M., 2025. Decoupling economic growth from ergy use: the role of energy intensity in an endogenous growth model. Ecol. Econ. 230, 1–44. doi: 10.1016/j.ecolecon.2025.108519.
Bilal, Khan, I., Tan, D., Azam, W., Tauseef Hassan, S., 2022. Alternate ergy sources and environmental quality: the impact of inflation dynamics. Gondwana Res. 106, 51–63. doi: 10.1016/j.gr.2021.12.011.
Chi, M., Muhammad, S., Khan, Z., Ali, S., Li, R.Y.M., 2021. Is centralization killing innovation? The success story of technological innovation in fiscally decentralized countries. Technol. Forecast. Soc. Change 168, 4–9. doi: 10.1016/j.techfore.2021.120731.
Cordesman, A.H., 2012. Energy Risks in North Africa and the Middle East. Cent. Strateg. Int. Stud.
Danish, Tauseef, S., Khan, I., 2025. Achieving net-zero carbon emission targets in OECD countries: the role of the energy transition, institutional quality, and green technological innovation. Gondwana Res. 144, 20–32. doi: 10.1016/j.gr.2025.03.012.
Hao, Y., Khan, I., 2025. Impact of decarbonization enablers, energy supply between transition and disruption, on renewable energy development. Energy 324, 135863. doi: 10.1016/j.energy.2025.135863.
IEA, 2020a. Germany 2020 Energy Policy Review. URL: https://www.iea.org/reports/germany-2020.
IEA, 2020b. World Energy Investment 2020, The energy industry that emerges from the Covid-19 crisis will be significantly different from the one that came before. World Energy Invest. 2020 2018–2019. doi: 10.1787/6f552938-en.
Li, J., Khan, I., 2024. Transition to a sustainable energy balance and conversion factors in economic management: basics for transitioning to a low-carbon economy. Energy 313, 133724. doi: 10.1016/j.energy. 2024.133724.
Liza, F.F., Wei, L., Hassan, S.T., Khan, I., Ahmad, F., 2024. Driving low-carbon mechanisms through smart investments in renewable resources and green finance initiatives among G20 nations. J. Environ. Manage. 370, 122439. doi: 10.1016/j.jenvman.2024.122439.
Lombardi, P., Gruenig, M., 2016. Low-carbon Energy Security from a European Perspective. Elsevier Academic Press, 1–269. doi: 10.1016/ C2014-0-03464-8.
Luo, H., Li, L., Lei, Y., Wu, S., Yan, D., Fu, X., Luo, X., Wu, L., 2021. Decoupling analysis between economic growth and resources environment in Central Plains Urban Agglomeration. Sci. Total Environ. 752. doi: 10.1016/j.scitotenv.2020.142284.
Nguyen, C.P., Su, T.D., 2021. Alleviating energy poverty for forest conservation: it seems to work, but what are we missing? Land Use Policy, 19–21. doi: 10.1016/j.landusepol.2021.105625.
Poumanyvong, P., Kaneko, S., 2010. Does urbanization lead to less ergy use and lower CO₂ emissions? A cross-country analysis. Ecol. Econ. 70, 434–444. doi: 10.1016/j.ecolecon.2010.09.029.
Raza, M.Y., Wang, W., Javed, Q., 2025. Decoupling effect and driving factors of transport CO₂ emissions: modeling and prediction of ergy and environmental factors towards Vision-2035 in a developing economy. Energy Strategy Rev. 59, 1–39. doi: 10.1016/j.esr.2025. 101750.
Sany-Mengual, E., Secchi, M., Corrado, S., Beylot, A., Sala, S., 2019. Assessing the decoupling of economic growth from environmental impacts in the European Union: a consumption-based approach. J. Clean. Prod. 236, 1–29. doi: 10.1016/j.jclepro.2019.07.010.
Speirs, J., McGlade, C., Slade, R., 2015. Uncertainty in the availability of natural resources: fossil fuels, critical metals and biomass. Energy Policy 87, 654–664. doi: 10.1016/j.enpol.2015.02.031.
Tian, G., Khan, I., 2025. Impact of energy end-uses and efficiency indicators on the environmental policy stringency index. Energy 326, 136232. doi: 10.1016/j.energy.2025.136232.
Tian, Y., Wang, Y., Hang, Y., Zhou, D., Hu, X., Wang, Q., 2025. Decoupling economic growth from industrial SO₂ emissions in China: a twostage decomposition approach. Chinese J. Popul. Resour. Environ. 23, 49–61. doi: 10.1016/j.cjpre.2025.01.005.
Waheed, A., Bernward Fischer, T., Khan, M.I., 2021. Climate change policy coherence across policies, plans, and strategies in Pakistan—implications for the China–Pakistan economic corridor plan. Environ. Manag. 67, 793–810. doi: 10.1007/s00267-021-01449-y.
Wang, H., Wang, G., Qi, J., Schandl, H., Li, Y., Feng, C., Yang, X., Wang, Y., Wang, X., Liang, S., 2020. Scarcity-weighted fossil fuel footprint of China at the provincial level. Appl. Energy 258, 114081. doi: 10.1016/j.apenergy.2019.114081.
Wei, W., Cai, W., Guo, Y., Bai, C., Yang, L., 2020. Decoupling relationship between energy consumption and economic growth in China’s provinces from the perspective of resource security. Resour. Policy 68, 101693. doi: 10.1016/j.resourpol.2020.101693.
World, R.E., 2019. Germany: The World’s First Major Renewable Energy Economy. URL: https://www.renewableenergyworld.com/2009/04/03/germany-the-worlds-first-major-renewable-energy-economy/#gref.

Scilight Press

Author Information

Abstract

Keywords

References

Discover

Flagship Journals

Support

Company