Decomposition analysis of air pollutants during the transition and post-transition periods in the Czech Republic

In index decomposition analysis, it is common to decompose changes in energy-related CO2 emissions to give the effects of five contributing factors. However, it is extremely challenging to derive the equivalent air pollutant emission coefficient by fuel type for air pollutants. As a result, air pollutant emissions have typically been decomposed into three factors, i.e. the scale, structure, and emission intensity factors. Using a unique facility-level dataset for the Czech Republic, we decompose air pollutant emissions into five factors, i.e. by decomposing the emission intensity effect further into the fuel-intensity, fuel-mix, and emission-fuel intensity factors. We use the Logarithmic Mean Divisia Index method to decompose annual changes in the emissions of four types of air quality pollutants stemming from large stationary emission sources. Our analysis covers the period 1990-2019, during which the Czech economy transited from a centrally-planned to a market economy and implemented strict environmental regulation to become a full member of the European Union. The emissions decreased substantially in the 1990s, remained then at stable levels, and declined again thereafter. Effects contributed to the changes are quantified. We also study how the results differ if one relies on the standard 3-factor decomposition and on a 4-factor analysis.