Determinants of global carbon emission and aggregate carbon intensity: A multi-region input-output approach

A deep understanding of the drivers behind aggregate carbon indicators, including carbon emissions and carbon intensity, is essential for achieving low-carbon economic growth. However, integrated analysis incorporating both indicators remains limited. Using a multi-region input-output model and structural decomposition analysis, we examine the determinants behind the changes in carbon indicators during 2000-2014. Our findings reveal the efficacy of global carbon reduction strategies, characterized by a decline in total emissions increase and an accelerated reduction in carbon intensity. Further decomposition shows that the carbon efficiency effect is the primary factor in reducing the carbon indicators by improving sectoral direct carbon intensity. The input structure effect is the second largest contributor, mainly resulting from the decar-bonization of intermediate inputs in the supply chain. The final demand effect is the main impediment due to the steady growth of consumption and investment demand across economies.