CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: This paper examines convergence of carbon dioxide (CO2) emissions caused by oil combustion for a panel of 86 countries considering the importance of analyzing several sub-periods separately. Also, the investigation points at the necessity of choosing a restricted global sample, which takes into account that, for instance, eastern bloc countries reacted differently to increasing world market crude prices than the Western economies. The analysis builds on examining the beta-convergence hypothesis in a neoclassical growth model setting with additional control variables such as combustion of solid fuels. The results reveal evidence in support of beta-convergence of CO2 emissions intensity due to oil combustion for the sub-periods 1973-1979 and 1979-1991, while no evidence for convergence was found for the post-1991 period. This is true both for the restricted global sample and the sub-samples comprised of western OECD economies. One possible interpretation of the results is that international carbon taxes or permit trading schemes may first be introduced for oil only.

Keywords: Carbon dioxide; Oil; Convergence; Carbon convergence; Energy history

JEL-codes: N50

21 pages, January 15, 2015

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