China’s emissions embodied in exports: How regional and trade heterogeneity matter

Abstract

Trade facilitates the shifts of emissions from one place to another. Although studies have shown that regionally disaggregated model and model that distinguishes processing exports at the national level are necessary to estimate the embodied emissions in China's exports, no study evaluates this issue by simultaneously taking both regional and trade heterogeneity into account. To fill this gap, we re-estimate the CO2 emissions embodied in China’s exports at both regional and industrial level, by using the newly-developed inter-regional input-output (IRIOP) model that distinguishes processing trade from other trade at the regional level. Results show that compared to the IRIOP model, the traditional multi-regional input-output (MRIO) model has overestimated the environmental loss from exports by 14%–25% in 2002 and 7%–20% in 2012 for different regions. The largest bias is found in regions and industries with the highest processing export shares. Therefore, the IRIOP model gives more accurate accounting on the regional environmental loss due to national exports and thus is important for establishing effective emission mitigation policies.