Does stringent climate policy decouple economic growth from greenhouse gas emissions?

Abstract A foundational question in environmental sociology is whether economic growth can be sufficiently decoupled from greenhouse gas emissions. Scholars working in different analytical perspectives assert that such a decoupling is largely contingent on more stringent climate policy that mandates or incentivizes the reduction of carbon-intensive production. However, there is limited research on whether policy has such a moderating influence. Here, we extend the literature by testing whether more stringent climate policy moderates the effect of economic growth on greenhouse gas emissions using panel data from 1990 to 2022 for forty-nine countries. Building on the extended two-way fixed effects estimator, we advance an approach for estimating country-specific and average short-run and long-run effects with dynamic models that we show outperform other macro panel estimators using Monte Carlo experiments. Using this approach, we find that, on average, strong climate policy stringency decouples economic growth from emissions in the short run and the long run and that the decoupling effect is largest in higher-income nations. However, we also find that greater policy stringency is associated with increases in emissions in lower-income and middle-income nations. We then build a hypothetical three-nation World that consists of a lower-income, middle-income, and higher-income nation and develop a suite of scenarios that differ based on their rate of economic growth and climate policy stringency. The results suggest that steady-state and degrowth scenarios offer the most sustainable futures in terms of lower emissions and that degrowth is the most equitable in terms of reducing emissions. We conclude by arguing that these findings have significant implications for policymaking and for key theoretical debates in sociology regarding economic growth and the environment.