Carbon Emissions in the U.S.: Factor Decomposition and Cross-State Inequality Dynamics

Abstract

This paper examines the determinants of inequality in the distribution of CO2 emissions across U.S. regions. We implement a factorial decomposition of CO2 per capita based on extended Kaya factors, that is, carbon intensity of fossil fuel consumption, energy mix, energy intensity of GDP, economic growth in terms of labor productivity and employment rate. Results reveal that U.S. states display marked differences in most factors. We identify energy intensity as the main source of emissions inequality. Based on the within and between group inequality components we also explore the effect of geographical, geological, climatic and human development partitions of U.S. states’ groups. Findings indicate that the within-group inequality had been the main contributor to the whole inequality. Finally, some economic policy implications are also discussed; explaining the unequal distribution of emissions is vital to establish differentiated targets and work towards successful mitigation proposals.