Managed Decarbonization or Structural Emissions Decline? An LMDI, Gross Carbon-Cost Exposure, and Investment-Capacity Assessment of Germany, Poland, and Ukraine

Abstract

A decline in CO2 emissions is often treated as evidence of successful climate policy, although the same outcome may reflect technological modernization, economic contraction, demographic decline, deindustrialization, or external shocks. Accordingly, the objective is to test whether comparable headline reductions reflect different transition mechanisms when historical drivers, prospective indicative gross carbon-cost exposure, and investment capacity are evaluated jointly. We hypothesize that Germany is closest to managed decarbonization, Poland follows carbon-intensive decoupling, and Ukraine’s decline is predominantly structural or shock-driven and that the joint diagnostic indicates greater contraction risk where multiple investment-capacity measures are weakest, without implying a causal prediction of firm response. This study develops a three-stage diagnostic framework combining additive Logarithmic Mean Divisia Index (LMDI) decomposition, indicative gross sectoral carbon-cost exposure, and multiple macroeconomic investment-capacity indicators to distinguish managed decarbonization from carbon-intensive decoupling and structural or shock-driven emissions decline. The framework is applied to Germany, Poland, and Ukraine for 1990–2024, with subperiods reflecting major structural transformations and shocks. Germany reduced emissions by 482.48 Mt CO2 despite rising population and GDP per capita, as lower energy and carbon intensity more than offset these upward pressures. Poland reduced emissions by 103.48 Mt CO2 mainly through lower aggregate energy intensity, while carbon-intensity improvements were more limited. Ukraine recorded the largest decline (564.03 Mt CO2), but substantial contributions came from lower GDP per capita and population, while carbon intensity increased emissions over the period. At a common benchmark of EUR 75.28/tCO2, Ukraine has the highest indicative gross exposure among the integrated-steel cases, whereas Poland has the highest indicative gross exposure among the electricity cases. The findings show that emissions outcomes should be interpreted jointly with their drivers, sectoral carbon-price transmission, and the capacity to finance technological response.