Carbon Accounting in Long Supply Chain Industries

Abstract

Accounting for indirect carbon emissions embodied in different stages of the supply chain is increasingly important as supply chains become more and more globalised. Embodied emissions are greater when the supply chains of economic sectors are longer, when goods/services that are created in one sector demand significant input from another sectors and when several industries are involved in the supply chain. Simply monitoring and disclosing indirect emissions might not be adequate if the goals of carbon reduction policies are to be met. The paper presents first an overview of relevant literature on carbon accounting within supply chains. It examines the relevance of using hybrid input-output analysis to reveal the indirect impacts in the supply chains of different economic sectors. The paper presents the empirical research with the example of China, a country where goods are often produced to meet the demands of consumers in developed countries. Long supply chain industries and key indirect emission sources which are responsible for a significant proportion of total emissions are identified. A time-series analysis is presented in which the embodied emissions in exported products are analysed from 1995. Results confirm that the use of input-output models is especially relevant for accounting for indirect impacts in long supply chain industries. Corporations in these economic sectors are strongly advised to monitor and keep track of their indirect emissions.