CO₂Embodied in International Trade with Implications for Global Climate Policy

Abstract

The flow of pollution through international trade flows has the ability to undermine environmental policies, particularly for global pollutants. In this article we determine the CO 2 emissions embodied in international trade among 87 countries for the year 2001. We find that globally there are over 5.3 Gt of CO 2 embodied in trade and that Annex B countries are net importers of CO 2 emissions. Depending on country characteristics-such as size variables and geographic location-there are considerable variations in the embodied emissions. We argue that emissions embodied in trade may have a significant impact on participation in and effectiveness of global climate policies such as the Kyoto Protocol. We discuss several policy options to reduce the impact of trade in global climate policy. If countries take binding commitments as a part of a coalition, instead of as individual countries, then the impacts of trade can be substantially reduced. Adjusting emission inventories for trade gives a more consistent description of a country's environmental pressures and circumvents many trade related issues. It also gives opportunities to exploit trade as a means of mitigating emissions. Not least, a better understanding of the role that trade plays in a country's economic and environmental development will help design more effective and participatory climate policy post-Kyoto.

Embodied Environmental Emissions in U.S. International Trade, 1997−2004

“…As discussed in recent work, there are two main ways to define the "balance of embodied pollution in trade" (BEET), differing by allocation of emissions related to multi-directional trade ("through-trade"). Throughtrade is defined as imports used by one economy to produce its exports (31,32). Here we use what past authors have called the "embodied emissions in trade" accounting (EET), roughly akin to Lenzen et al's "unidirectional trade model" as our base case and an approximation of the "embodied emissions in consumption" (EEC) or "multidirectional trade" accounting for an upper-bound estimate of embodied emissions in imports (EEI) and exports (EEE) (6,32).…”

“…Throughtrade is defined as imports used by one economy to produce its exports (31,32). Here we use what past authors have called the "embodied emissions in trade" accounting (EET), roughly akin to Lenzen et al's "unidirectional trade model" as our base case and an approximation of the "embodied emissions in consumption" (EEC) or "multidirectional trade" accounting for an upper-bound estimate of embodied emissions in imports (EEI) and exports (EEE) (6,32). The former (EET) allocates all embodied emissions to the direct trade partner, while the latter (EEC) attempts to distinguish between the multi-directional flows into and out of an economy.…”

Methods for assessing future scenarios from a sustainability perspective

“…It is a rapidly developing field. Its use for calculation of global environmental footprints, and in discussions and analysis of climate policy issues, has made a significant contribution to the field's development [87][88][89][90]. An example is EXIOBASE [87] which aims to integrate the economy-wide material and energy flow accounting with MRIO analysis and includes multiregional system of supply-use tables based on statistical data, linked via trade.…”

Temporal and Spatial Distribution of Global Mitigation Cost: INDCs and Equity

“…For example, many studies working on equity issues discuss cumulative emission allocation schemes [31][32][33][34][35], which are not discussed in this paper. Meanwhile, a focus of recent studies has been the emissions transfer from developed countries to developing countries through international trade [36][37][38][39][40]. This emissions accounting method is certainly relevant to the equity debate, but it was not considered in this study.…”