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


  • Okorie, David Iheke
  • Wesseh, Presley K.


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.

Suggested Citation

  • Okorie, David Iheke & Wesseh, Presley K., 2023. "Climate agreements and carbon intensity: Towards increased production efficiency and technical progress?," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 300-313.
  • Handle: RePEc:eee:streco:v:66:y:2023:i:c:p:300-313
    DOI: 10.1016/j.strueco.2023.05.012

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    More about this item


    Climate agreements; Paris conference; Carbon intensity; Treatment effect; Technical progress;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • F01 - International Economics - - General - - - Global Outlook
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming


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