Decomposition of aggregate CO2 emissions within a joint production framework

We present an alternative decomposition technique to identify the factors which contribute to the change of aggregate CO2 emissions by using distance functions to model the joint production of desirable and undesirable outputs. The key feature of the proposed approach is the introduction of inputs/outputs factor efficiencies, specified as distance functions, to the decomposition model. By using the proposed approach, the components driving the change of CO2 emissions are decomposed into the contributors from nine factors specified in this paper, and several production technology related components are included. This paper applies the model to data from developing countries. For the 20 developing counties as a whole, empirical results indicate the economic (GDP) growth is the most important contributor to CO2 emission increase, while good output technical change is the most important component to CO2 emission reduction between 1995 and 2005. The empirical results also provide extensive insights into the components driving CO2 emissions for each country between 1995 and 2005.