Economic growth and decoupling: the experience of the European Union

Abstract

The relevance of the study is determined by the need to identify effective models of economic development without increasing environmental pressure in the context of global climate challenges, energy instability, and the transition to a low-carbon economy. It has been established that the concept of decoupling in the contemporary economic policy of the European Union is gradually evolving from an environmental approach into a comprehensive mechanism of structural modernization, technological renewal, and enhancement of economic competitiveness. The purpose of the article is to investigate the relationship between economic growth and decoupling processes in EU countries and to substantiate practical mechanisms for ensuring sustainable development under conditions of ecological transformation of the economy. Methods. The study employs methods of theoretical generalization, structural analysis, comparative analysis, statistical assessment, the P. Tapio methodology, and graphical interpretation of economic and environmental indicators. Results.The key directions of decoupling implementation in the European Union have been identified, including the development of renewable energy, modernization of industrial production, dissemination of circular economy principles, digitalization of production processes, and promotion of green employment. It has been established that EU environmental and energy policies significantly influence economic restructuring and contribute to the formation of sectors characterized by high value added and low resource intensity. Based on the P. Tapio methodology, it has been proven that the European Union has achieved Strong Decoupling, whereby economic growth is accompanied by a sustained reduction in greenhouse gas emissions. A comparison with Ukraine demonstrated that the reduction in emissions after 2022 has been largely driven by the consequences of Russia’s aggression against Ukraine, destruction of production capacities, and declining economic activity, which does not allow the current dynamics to be interpreted as full-fledged absolute decoupling. At the same time, the study revealed that effective decoupling is constrained by the high cost of technological modernization, uneven economic development among EU member states, dependence on critical raw materials, and the complexity of coordinating environmental policies. Empirical evidence demonstrates that the Russian Federation's full-scale invasion of Ukraine and the resulting energy and economic shocks did not hinder the decoupling process in the European Union, confirming the structural resilience of the separation between economic growth and greenhouse gas emissions.

Conclusions. The feasibility of adapting the European decoupling experience to the conditions of Ukraine’s economic development has been substantiated through the modernization of energy-intensive industries, expansion of renewable energy, implementation of energy-efficient technologies, circular economy principles, and green transformation instruments. It has been established that achieving effective decoupling in Ukraine requires not only emission reductions but also sustainable economic growth based on structural modernization and technological upgrading of production. Prospects for further research are associated with assessing the impact of post-war recovery on decoupling processes and evaluating the effectiveness of green modernization of the national economy.One of the factors underlying the differences in the nature of decoupling between the European Union and Ukraine is the varying level of development of institutional carbon regulation mechanisms. In the European Union, the Emissions Trading System (EU ETS) has been in operation since 2005, providing long-term economic incentives for the decarbonisation of industry and the energy sector through carbon pricing. In contrast, carbon regulation instruments in Ukraine have long been predominantly fiscal in nature. Only in recent years, largely driven by the country's European integration commitments and the implementation of the Carbon Border Adjustment Mechanism (CBAM), has Ukraine begun developing a comprehensive system for monitoring, reporting, and verification (MRV) of greenhouse gas emissions and preparing for the introduction of a national emissions trading system. This indicates the existence of an institutional gap in carbon pricing policy, which is one of the factors limiting the achievement of absolute decoupling and the transition to a sustainable low-carbon model of economic development in Ukraine.