The Stochastic Convergence of CO2 Emissions: A Long Memory Approach

In response to equity concerns surrounding the spatial distribution of CO2 emissions and assumptions of CO2 convergence within some climate models, this paper examines the convergence of CO2 emissions within the OECD over the period 1870-2004. More specifically, using the Local Whittle estimator and its variants we examine whether relative per capita CO2 emissions are fractionally integrated, that is they are long memory processes which, although highly persistant, may revert to the mean/trend in the long run. Our results suggest that CO2 emissions within 13 out of 18 OECD countries are indeed fractionally integrated implying that they converge over time, albeit slowly. Interestingly though, the countries whose emissions are not found to be fractionally integrated are some of the highest polluters within the OECD, at least in per capita terms. Our results have implications both for future studies of CO2 convergence and for climate policy.