“The interplay between carbon emissions and inequality: A complex networks approach”

Abstract

The sustainable development process faces two key challenges: income inequality and carbon emissions, but their relationship remains unclear. This study analyzes interrelations between greenhouse gas emissions (GHG) and income inequality across European countries, using the Sustainable Development Goals (SDG) framework. First, the main determinants of greenhouse gas emissions are identified through Random Forest analysis, then two inequality groups are created via cluster analysis based on SDG1 and SDG10. Finally, two complex networks are constructed based on the inequality groups and main emission determinants to determine the most relevant factors influencing each group's impact on global emissions.

Our research reveals significant differences between countries with low and high levels of inequality. In the high-inequality group, productivity and emissions are negatively correlated, whereas, in the low-inequality group, the relationship is positive. This trade-off indicates that countries with lower inequality tend to have greater energy efficiency, but improvements in quality of life lead to higher consumption levels, influenced by the Marginal Propensity to Emit and consumer status levels. The negative relationship in the high-inequality group suggests a potential income threshold where productivity increases reduce emissions due to energy efficiency offsetting consumption increases. In agricultural activities, countries with higher inequality see a positive impact on emissions, whereas in countries with lower inequality, agriculture tends to be more productive with lower emissions. In countries with higher inequality, increased government investments correlate with higher emissions. Conversely, in countries with lower inequality, investments align with zero-carbon efforts, showing a negative correlation with emissions.