Decomposition and Decoupling Analysis between HDI and Carbon Emissions

Abstract

The concept of low carbon is extended to the welfare dimension by considering the relationship between carbon emissions and the Human Development Index (HDI). This paper examines the decoupling between carbon emissions per capita and HDI and the welfare output of carbon emissions by using the data from 189 countries, from 1990 to 2019, as well as decomposes the drivers of the decoupling index and carbon emissions performance (CEP) in the example countries. The results show that most countries that achieve strong decoupling have very high human development, while the worst case is that a few countries with an extremely low human development achieved strong decoupling. Moreover, the status of strong decoupling in most countries is not stable, and there is a risk of transformation to another decoupling status. Although the CEP of most countries has gradually improved, very few countries have high CEP. Economic development effects are the primary inhibitor to achieving and maintaining strong decoupling in example countries. The main drivers of CEP improvement are the carbon productivity effects in the Czech Republic, Germany, and the United Kingdom, and the economic development effects in South Korea and Turkey. The main factors inhibiting the increase of CEP are the energy intensity effect in the Czech Republic, Germany, and the UK, and the welfare effect in South Korea and Turkey. These effects are all related to GDP. Economic activity broadly affects the decoupling index and CEP. Recommendations for maintaining HDI growth and reducing carbon emissions are made for countries with different human development.