Differential output growth across regions and carbon dioxide emissions: Evidence from U.S. and China

► We study the importance of differential GDP growth across regions in reducing CO2 emissions. ► We decompose changes in CO2 emissions into four sources. ► Uneven growth across regions contributes significantly to lower CO2 in both China and U.S. ► Differential growth has a relatively more important role in the U.S. than that in China.