Climate agreements and carbon intensity: Towards increased production efficiency and technical progress?

David Okorie and Presley K. Wesseh

Structural Change and Economic Dynamics, 2023, vol. 66, issue C, 300-313

Abstract: Dozens of studies point to evidence of significant reductions in carbon emissions driven by climate agreements, such as the Paris climate agreement. However, these studies fail to answer a pertinent question, that is, are global carbon emission reductions due to reduced production activities or are production processes becoming more efficient as less carbon is emitted per unit output due to technical progress? Such an understanding is important to evaluate the tension between environmental quality and economic growth. Therefore, drawing on difference-in-differences approaches, our results suggest a significant decline in global carbon emission intensity due to the 2015 Paris climate agreement, which is estimated at a 4.1% reduction on average over the sample period. Our evidence also shows that while some countries may be too poor to generate meaningful outcomes from climate agreements, the associated rate of reduction in carbon intensity in others tends to decline above a certain income threshold. These results imply that although there has been a worldwide increase in production efficiency and technical progress, at least owing to the Paris climate agreement, reaching net zero carbon emissions globally requires new approaches, especially for the very poor countries relative the ones at the top of the income ladder.

Keywords: Climate agreements; Paris conference; Carbon intensity; Treatment effect; Technical progress (search for similar items in EconPapers)
JEL-codes: C15 C21 C99 F01 Q54 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:66:y:2023:i:c:p:300-313

DOI: 10.1016/j.strueco.2023.05.012

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