Mishandling carbon intensities

Resumo

The goal of this paper is to make clear cut reasoning for the ambiguous evidence in favour of the Environmental Kuznets Curve (EKC) hypothesis. The EKC for CO2 might be flawed with some sort of misconceptions thus providing misleading guidelines for policy makers. The main contribution of this paper (but not unique) is to provide original explanations to dismiss the EKC according to economic concepts. Thus it goes beyond the usual justification based mainly on inadequate use of econometric techniques. Actually, the controversy in the EKC literature may partially be the result of some kind of �monetary illusion� regarding the usual figures for carbon intensity trends. We may summarize the main policy implication of this paper as follows. Neglecting the EKC on CO2 suggests significant distributional consequences from any climate change policy that eventually put at risk any international climate change agreement.