Climbing the electricity ladder generates carbon Kuznets curve downturns*

Abstract

This paper examines why some countries have experienced environmental Kuznets curve (EKC)‐type reductions in carbon dioxide (CO2) emissions, while others have not. The hypothesis that climbing to the upper rungs of the electricity ladder (nuclear power and modern renewables) has been the primary mechanism via which countries have achieved substantial reductions in per capita CO2 emissions is tested using a binomial dependent variable modelling approach for a sample of 105 countries. The findings suggest that electricity mix transitions caused by long‐run growth in per capita incomes are indeed the primary determinant of carbon Kuznets curve downturns. The paper explores additional mechanisms via which carbon Kuznets curves may have been generated, but the results indicate that these are of lesser overall importance than the electricity mix effect. The evidence also suggests that countries with larger fossil fuel endowments are less likely to experience carbon Kuznets curve downturns, an additional curse of natural resources.