This study analyzes the key drivers of carbon dioxide (CO2) emissions in Lao PDR from 2000 to
2022, examining the interplay between economic growth, energy consumption, and environmental
sustainability. Using the Kaya identity and a two-factor decomposition method, the research quantifies
the contributions of carbon intensity, energy efficiency, economic activity, and population growth
to CO2 emissions. Findings indicate that increased reliance on fossil fuels, particularly due to the
introduction of the Hongsa Lignite power plant, has significantly contributed to emissions growth. While
hydropower dominates electricity generation, the country remains dependent on imported petroleum
and coal for transportation and industry. Additionally, deforestation from agricultural expansion and
infrastructure development has further exacerbated emissions by reducing carbon sinks. Despite a
rise in per capita emissions, Lao PDR’s levels remain below the global average. However, the rapid
increase underscores the need for urgent policy measures, including enhancing energy efficiency,
investing in renewable energy, and promoting reforestation. Balancing economic expansion with
environmental stewardship is crucial for sustainable development. This study highlights the necessity
of coordinated efforts among policymakers, industries, and communities to reduce emissions while
ensuring continued economic progress.