Is embodied renewable energy transfer greening the global supply chain?

Abstract

Energy underpins international trade, and a greener energy mix can contribute to cleaner global supply chains (GSCs). This paper examines how energy transition has influenced GSC greening through embodied renewable energy transfer. Specifically, we analyze the contribution of countries/regions and sectors to the greening process from 2011 to 2021. We find some evidence of GSC greening over the period as the ratio of renewable energy in total transferred energy increased from 4.2% to 7.6%. Emerging economies that have advanced rapidly in energy transition are gradually overtaking developed countries in their contribution to GSC greening. Sectors with a higher electrification rate are main contributors to GSC greening led by significant inter-sectoral spillovers from the heavy industry and business services. However, transfer of embodied renewable energy by high-income developed countries is concentrated in other high-income countries raising concerns of limited access by low-income developing countries and the amelioration of global energy welfare inequality.