Frameworks for Comparing Emissions Associated with Production, Consumption, And International Trade

Abstract

While the problem of climate change is being perceived as increasingly urgent, decision-makers struggle to agree on the distribution of responsibility across countries. In particular, representatives from countries hosting emissions-intensive exporting industries have argued that the importers of emissions-intensive goods should bear the responsibility, and ensuing penalties. Indeed, international trade and carbon leakage appear to play an increasingly important role in the carbon emissions debate. However, definitions of quantities describing the embodiment of carbon emissions in internationally traded products, and their measurement, have to be sufficiently robust before being able to underpin global policy. In this paper we critically examine a number of emissions accounting concepts, examine whether the ensuing carbon balances are compatible with monetary trade balances, discuss their different interpretations, and highlight implications for policy. In particular, we compare the emissions embodied in bilateral trade (EEBT) method which considers total trade flows with domestic emission intensities, with the multi-regional input-output (MRIO) method which considers trade only into final consumption with global emission intensities. If consumption-based emissions of different countries were to be compared, we would suggest an MRIO approach because of the global emissions coverage inherent in this method. If trade-adjusted emission inventories were to be compared, we would suggest an EEBT approach due to the consistency with a monetary trade balance.

Bi-lateral CO 2 emissions embodied in Australia–China trade

“…This paves the way for estimating CO2 emissions embodied in international trade for our purpose. An IO framework has been widely used to assess embodied energy and CO2 emissions stemming from multi-lateral trade activities (Wyckoff and Roop, 1994;Ferng, 2003;Wiedmann, 2009;Kanemoto et al, 2012) and bilateral trade activities of US -China (Shui and Harris, 2006;Guo et al, 2010). An IO framework has also been used to assess embodied CO2 emissions for US -China and the driving forces based on the emergy/dollar ratio (Du et al, 2011), but the IO study anticipated in this paper shares similarities with Guo et al (2010).…”

Product level embodied carbon flows in bilateral trade

“…Yet in practice, data ability and necessary simplifying assumptions under both methods restrict their equivalence One of the major limitations of the method relates to the chosen system boundary, which raises the problem of double-counting of emissions when looking at aggregate global emissions. As discussed in Kanemoto et al (2012b), this approach is more suitable for comparing trade-adjusted emission inventories and indeed our aim here is to do so, at a detailed product-level. The alternative system boundary used under the MRIO framework which considers trade only into the final consumption is, instead, more suitable for consumption analysis.…”

“…As recent reviews highlight, there is considerable uncertainty surrounding the measurement of EET (Wiedmann et al, 2011), and comparing across studies reveals a large variation in EET estimates (Sato, 2013). This is largely due to the fact that underlying data, methodology and choice of methods all suffer issues with accuracy and different methods are used for EET quantification with varying definitions and application of trade balances (Kanemoto et al, 2012b).…”

Does consistency with detailed national data matter for calculating carbon footprints with global multi-regional input–output tables? A comparative analysis for Belgium based on a structural decomposition

“…UNECE 2017) and considered as an official statistic in the UK (see Wiedmann and Barrett 2013;Defra 2017), the method and data for its calculation must be sufficiently robust if it is to be used as a tool for climate policy (Kanemoto et al 2012).…”

“…They have been used to calculate carbon footprints for large panels of countries (e.g. Peters et al 2012;Arto et al 2012;Tukker et al 2014).…”