Germany's contribution to global carbon reduction might be underestimated – A new assessment based on scenario analysis with and without trade

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The pollution paradise hypothesis states that international trade shifts pollution from developed countries to developing countries, ignoring the positive effects that the participation of developed countries in international trade has on the reduction of carbon emissions. To evaluate a country's contribution to carbon reduction comprehensively, this paper constructed a framework for calculating carbon emissions in two trade scenarios using a multi-regional input-output model. It took Germany as an example, analyzing it at global, national, and sectoral levels. The main findings were as follows: firstly, Germany's contributions to the reduction of emissions may have been underestimated. Without Germany, global embodied CO2 emissions would have increased by 1.53% on average during the research period. Secondly, Germany's participation in international trade contributed to carbon reduction in developing countries, particularly China and Russia. This was due to the lower intensity of Germany's carbon emissions. Finally, at the sectoral level, changes to carbon emissions in different trade scenarios mainly came from “manufacturing” and “electricity, gas and water supplies”. As a result, corresponding policy suggestions were proposed. Studying Germany confirmed that trade protectionism did not benefit the environment and free trade was a better choice. However, more evidence is required to see whether this conclusion would be true for other countries.