Beyond peak emission transfers: historical impacts of globalization and future impacts of climate policies on international emission transfers

Abstract

Globalization of supply chains has resulted in rapid increases in emission transfers from the developing to the developed world. As outsourcing has risen, developed countries have been able to decarbonize domestically, at the expense of increased emissions in developing countries. However, the rapid improvement of carbon efficiency in developing regions together with the post-2008 deceleration in international trade raises the question of whether such embodied emission transfers have peaked. Here we update historical analysis, finding that emission transfers between OECD and non-OECD countries peaked in 2006, and have been declining since. The reversal is principally due to the reduction in the emissions intensity of traded goods, rather than the volume of trade. A more recent decline in embodied emissions transfers is also observed in trade between developing countries. We analyse whether these trends are likely to continue, by exploring a baseline and a Nationally Determined Contribution (NDC) scenario with the Macro-econometric Energy-Environment-Economy Model (E3ME) model. The results suggest that absolute embodied emissions will plateau at current levels or slowly return to pre-2008-crisis levels, and differences between the NDC and baseline scenarios imply that NDC policies will not result in significant carbon leakage. However, the share of national footprint embodied in imports, at least for countries with ambitious decarbonization policies, will likely increase. This suggests that, despite the worldwide stabilization of emissions transfers, addressing emissions embodied in imports will become increasingly important for reducing carbon footprints. Key policy insights. Emissions embodied in imports have plateaued since 2006, and are unlikely to return to the peak of the mid-2000s.. For developed countries, as domestic decarbonization occurs, the share of emissions embodied in imports as a percentage of the total national carbon footprint will increase.. The Paris NDCs in themselves are unlikely to cause significant carbon leakage.. Climate policy will ideally focus on reducing both production and consumption emissions, through a variety of mechanisms, especially centred around international assistance.

A systematic review of the evidence on decoupling of GDP, resource use and GHG emissions, part II: synthesizing the insights

“…income (Stern 2017). National-level studies (Peters and Hertwich 2008, Kander et al 2015, Azam and Khan 2016, Hardt et al 2018, Moreau and Vuille 2018, Moreau et al 2019, Wood et al 2019a emphasize the role of 'offshoring' emissions (e.g. related to imported goods) and changes in economic structure (e.g.…”

The structure, drivers and policy implications of the European carbon footprint

“…The peak value of the production account was around 2003. For the consumption account, the peaking was delayed, until 2007 (due to the carbon intensity of international tradesee Wood, Grubb, et al (2020)), with a consistent decline since the onset of the financial crisis, apart from a very short recovery in growth (previously picked up in 2009 by Peters, Marland, et al (2012)). The production account was 4.9 Gt in 2010, dropping to 4.4 Gt in 2015; the consumption account was 29% higher than the production account in 2010 (6.3 Gt) and 27% higher in 2015 (5.6 Gt).…”

The emission benefits of European integration

“…A related strategy would consist of systematically shifting trade flows to the lowest emission intensive exporters (de Boer et al 2019). However, as embodied emissions reach a plateau, re industrializing EU Member States at low emission intensities might prove most effective in the medium to long run (Wood et al 2019). For the sake of emission reduction, any divorce from the EU should carefully evaluate its carbon terms.…”