The Role of Public Spending in CO2 Emissions Reduction in Polish Regions: An LMDI Decomposition Approach
Global climate change and air pollution are critical environmental problems in the modern world. Therefore, the reduction of CO2 emissions has long been a crucial challenge for individual countries. In this area, numerous technological, legal, and economic solutions are used. The purpose of this article is to examine the impact of public spending on the level of CO2 emissions in Polish regions. The study uses the logarithmic mean Divisia index (LMDI) method, proposing a unique proprietary set of factors that influence the level of CO2 emissions. The results of the study confirm that public expenditure contributes to reducing CO2 emissions at the regional level, while environmental expenditure is counterproductive. This tendency is observed mainly in regions with a high level of socioeconomic development, higher energy consumption, and high carbon emissions. The failure of environmental spending to reduce carbon dioxide emissions in Polish regions is explained by the “green paradox” hypothesis.