What setscountries apart

The shift in manufacturing also changed the geography of emissions. Factories consume energy where goods are made, while products may be used thousands of kilometres away. A car or phone therefore contributes to the production footprint of one country and the consumption footprint of another.

As supply chains expanded, richer countries specialised in services, design and high-value activities, while carbon-intensive production moved towards Asia and other emerging manufacturing centres. This widened the distance between where goods were consumed and where their emissions occurred.

This created two different views of national emissions. Production-based accounting records greenhouse gases released by domestic production. Consumption-based accounting follows final demand, adding emissions embodied in imports and subtracting those embodied in exports (↗ IPCC).

The gap can be substantial. In 2015, around 27% of global CO₂ emissions from fuel combustion were linked to international trade (↗ OECD). Import-dependent economies often have a larger consumption footprint than domestic emissions suggest; manufacturing exporters tend to show the opposite pattern.

China's rise as an industrial centre made this distinction especially visible. Across the OECD, emissions associated with domestic demand remain higher than those generated by domestic production (↗ OECD). Both views matter: production emissions show where cleaner energy can act most directly, while consumption emissions reveal how demand and trade shape the global footprint.

Prosperity begins with energy and materials. Factories, roads, housing, transport and rising household consumption expand alongside the economy. During the early stages of development, more output therefore tends to bring more emissions—particularly where industrial growth depends on coal and other fossil fuels.

As economies become richer, the relationship may begin to weaken. Production becomes more efficient, services gain importance and governments can afford cleaner infrastructure and stricter environmental rules. Electricity generation may also shift towards lower-carbon sources. These changes can allow income to keep rising while emissions grow more slowly or eventually decline.

This is the intuition behind the environmental Kuznets curve: pollution first rises with income and later falls, creating an inverted U-shaped path. The pattern has been observed for some local pollutants, but the evidence for CO₂ remains mixed (↗ Hannesson, 2022). Higher income creates the capacity to reduce emissions, but does not guarantee that the turning point will arrive.

Trade complicates the picture further. A wealthy economy may lower its domestic emissions by shifting carbon-intensive production abroad while continuing to consume the same goods. Research comparing production- and consumption-based CO₂ suggests that the apparent turning point can occur later once imported emissions are included (↗ Aldy, 2005).

The carbon cost of prosperity therefore differs widely across countries with similar incomes. Energy sources, industrial structure, technology and trade all shape the result. Comparing emissions per person reveals whether richer economies have genuinely weakened the link between growth and carbon—or simply moved part of their footprint elsewhere.