International inequalities in per capita CO 2 emissions: A decomposition methodology by Kaya factors

Abstract

In this paper, we provide a methodology for decomposing international inequalities in per capita CO 2 emissions into Kaya (multiplicative) factors and two interaction terms. We use the Theil index of inequality and show that this decomposition methodology can be extended for analyzing between- and within-group inequality components. We can thus analyze the factors behind inequalities in per capita CO 2 emissions across countries, between groups of countries and within groups of countries. The empirical illustration for international data suggests some points. Firstly, international inequality in per capita CO 2 emissions is mainly attributable to inequalities in per capita income levels, which helps to explain its recent reduction, while differences in carbon intensity of energy and energy intensity have made a less significant contribution. This result is strongly influenced by the performance of China and India. Secondly, the between-group inequality component, which is the biggest component, is also largely explained by the income factor. Thirdly, the within-group inequality component increased slightly during the period, something mainly due to the change in the income factor and the interaction terms in a few regions.