Is burden responsibility more effective? A value-added method for tracing worldwide carbon emissions

Abstract

This paper takes both value-added trade and trade-implied CO2 emission reduction responsibility into account, which constructs a unified conceptual framework to recalculate CO2 emission reduction responsibility from the perspective of value-added trade. This allows policymakers to trace worldwide CO2 emissions at multiple levels of trade, production, consumption, and shared principle alongside the world trade network. This paper employs the gross export decomposition methodology and the World Input-Output Database for calculations. Firstly, compared with traditional trade statistics, measuring embedded emissions in value-added trade can deduct the double-counted terms of CO2 emissions due to intermediate products crossing several borders repeatedly. Secondly, the worldwide inter-country CO2 emission footprints embedded in exports, imports, and net flows of value-added trade are traced in a geographical world map. It occurs that, China, the USA, Russia, and the EU are the top four largest emitters. Thirdly, network analysis is further utilized to capture bilateral implicit CO2 emission relationships, e.g., the EU members' environmental impacts depend on intra-regional trade within the union. Finally, a comparison is made under three burden-sharing principles based on value-added trade. The shared responsibility offers a compromise between the producer's and the consumer's principle, which is considered to be fairer and more effective.