The paper undertakes a decomposition study of carbon dioxide emission of the top ten emitting countries over the period 1980-2007 using variance analysis method, with the objectives of examining the relative importance of the major determining factors, the role of energy structure and impact of liberalisation on emission and exploring the possibilities of arresting emission with simultaneous rise in population and income. The major findings indicate that although rising income and population are the main driving forces, they are neither necessary nor sufficient for increasing emission, rather energy structure and emission intensities are the crucial determinants, pointing towards the fact that a country with higher income and population with proper energy policy may be a low emitter and vice-versa. Since modern energy-intensive production limits the scope of reduction in total energy use, it is necessary to decouple the quantum of energy use from emission through technological upgradation. The results indicate that liberalisation resulted in higher emission. The paper attempts to illustrate the required adjustments in energy structure and suggests necessary policy prescriptions. (C) 2012 Elsevier Ltd. All rights reserved.