International inequalities in per capita CO2 emissions: A decomposition methodology by Kaya factors

In this paper, we provide a methodology for decomposing international inequalities in per capita CO2 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 CO2 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 CO2 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.