Co2 Emissions Convergence in Countries at Different Levels of Development. Do Environmental Policy and Globalisation Matter?

Our study compares the process of CO2 emissions convergence in countries at different levels of development based on two measures of CO2 emissions (from the point of view of producing and consuming countries). It examines the effect of globalisation and environmental policy stringency on the convergence of CO2 emissions. We employ panel data from 38 countries from the period between 1992 and 2019 and apply the DCCE-MG model. We find that absolute convergence indicates differences in the convergence process in countries at different levels of development. Also, we observe the conditional convergence process in both developed and developing economies, although it is faster in developing countries. The most important finding, however, is that convergence alone is insufficient to positively assess climate policies implemented in particular countries, as in developing countries average CO2 levels increase relatively rapidly, whereas in developed countries they decrease slowly. The analysis of the determinants indicates that the CO2 convergence process in developing countries – unlike in developed countries – is significantly influenced by more stringent environmental policies and increasing globalisation, while renewable energy consumption and industrialisation exert no impact. The impact of GDP levels is ambiguous. Moreover, the impact of globalisation depends on the measure of CO2 emissions, and this relationship is stronger in consumption emissions than in production ones