The global greenhouse effect may be one of the greatest challenges ever
to face humankind. If fossil fuel use, and the consequent CO emissions,
2 continue to increase at their current trend, there is the possibility
that over the next century there will be massive climate change and the
flooding of coastal areas. The economics profession is beginning to
respond to this challenge, through seeking to understand the economic
processes which detennine the demand for energy, the proportion of this
energy supplied by fossil fuels, and the policy instruments available
for reducing fossil fuel demand while still supplying appropriate
amounts of energy. This study is a contribution to that literature. We
examine the impact of structural changes in the German and UK economies
upon CO emissions 2 over the last two decades, and explore the potential
for further structural change to reduce such emissions. This study is
different from much of the current literature, in that we do not
presuppose that the respective economies consist of only one, or a few,
sectors. Instead, we analyse the interrelationships of 47 sectors for
about 20 years, using input-output methods. We also deal with the
effects of the changing sectoral structure of imports and exports of
these two countries on the 'responsibility' for CO emissions. On the
basis of this extensive evidence we have a solid 2 foundation to develop
different scenarios to show how the 'Toronto target' of reducing CO
emissions by 20% over 20 years can be achieved.