The determinants of the inequality in CO2 emissions per capita between developing countries and their implications for environmental policy

Abstract

AbstractWe analyze the differences in CO2 emissions from fuel combustion per capita between developing countries and how these are influenced by a series of affluence, structural, demographic, and climatic variables. First, a regression analysis provides new evidence on the determinants of CO2 emissions in developing countries. We find an N‐shaped relationship with GDP per capita and a negative impact of the agriculture share and average daily minimum temperatures, while urbanization and the share of potentially active population would be positively correlated with emissions per capita. Second, by using the regression‐based inequality decomposition method, we indicate the weight of each significant determinant in explaining the inequality in CO2 emissions per capita between developing countries. The main contributors are economic affluence and the potentially active population, in this order. We study the relevance of each factor in the changes experienced by inequality over time. Some of our results contrast with previous evidence for more heterogeneous samples. We derive some relevant implications for environmental and energy policy in developing countries.