Discrepancies Between Environmental Kuznets Curves for Production- and Consumption-Based CO2 Emissions

This paper analyzes the patterns of CO2 emissions for a sample of 144 countries in 1992–2013. The environmental Kuznets curve (EKC) hypothesis was tested with the help of econometric analysis for both production- and consumption-based emissions. The relationship between incomes and emissions was also examined for leading national economies. The results show an important distinction: while there is some evidence of decoupling between economic growth and the growth of production-based emissions at a higher level of income, consumption-based emissions continue to grow with rising incomes even in the richest countries. There is further investigation of the discrepancies between production and consumption EKCs, which are determined by emissions embodied in international trade. A structural decomposition analysis (SDA) was applied to define the contribution of different factors to the change in emissions embodied in trade with the rise of GDP per capita. While structural and technological factors explain most of this change at low and middle levels of income, the effect of the volume of trade plays the key role in the evolution of emissions embodied in trade in high-income countries