Carbon intensity changes in the Asian Dragons. Lessons for climate policy design

- Econometric study on the main drivers of carbon intensity in the Asian Dragons.
- A search for the comparative contribution of intensive and extensive GDP growth.
- The nature of economic growth has a major effect on carbon intensity trends.
- Productivity is the main factor responsible for major carbon intensity reductions.
- Carbon intensity targets may be misleading for policy design and assessment.

There is a growing political interest in carbon intensity targets because they are the basis for climate pledges from relevant developing countries such as China. They may be also the basis for policy designs in developed countries like EU members. This paper develops a comprehensive econometric study on the main drivers of national emissions intensity in emerging countries in East Asia. This regional focus responds to their pivotal position in global economic growth and remarkable trends in carbon emissions intensity. The main hypothesis of this paper is that the nature of economic growth has a major effect on carbon intensity trends that deserves some attention. Accordingly, the novelty of this paper is to examine the contribution of “intensive” and “extensive” GDP growth for carbon intensity abatements. Labour productivity is revealed to be the main factor responsible for major carbon intensity reductions by Asian Dragons. Whereas household energy per capita and industrial energy per worker contributed in the opposite direction. Consequently, intensity targets may become “meaningless” for real climate action contributions if they do not take into account labour productivity trends.