Decomposing the Role of Different Factors in CO2 Emissions Increase in South Asia

The purpose of this paper is to determine the role of different important factors responsible for CO₂ emissions increase in South Asia. Decomposition analysis has been done to see the factors which are primarily responsible for changes in CO₂ emissions. Logarithmic Mean Divisia Index is used to quantify the role of different important factors in CO₂ emissions increase during 1980 to 2014 in seven major South Asian countries - Bhutan, Bangladesh, India, Maldives, Nepal, Pakistan and Sri Lanka. The analysis shows that income effect and population effect are the major determinants in the increase in per capita emissions whereas fuel intensity and in few cases, emissions intensity has a negative effect in emissions increase in most of these countries. Due to high growth potential, emerging trend and rich resource endowments, it is suggested that South Asian countries should accelerate their efforts and cooperate to reduce CO₂ emissions and energy consumption. This will help to attain sustainable economic growth in future.