Quantitative analysis of CO2 embodiment in international trade: An overview of emerging literatures

Abstract

The increasing volume of CO2 embodiment in international trade adds a layer of complexity to environmental policies and has raised arguments on the traditional production based responsibility for CO2 emissions. In order to help understand the quantity of CO2 embodiment in trade and its policy implications, this paper gives observations to recently emerging literatures that quantitatively discuss CO2 embodiment in trade. The analytical approaches share the principle of using input and output modeling but vary dramatically in study boundary and estimation accuracy. The calculations can be roughly categorized into three types: direct quantification of CO2 embodiments in multiregional trade, direct quantification of CO2 embodiment in bilateral trade, and indirect analysis by comparing the scenarios with or without trade. The practical estimations strongly rely on trade partner selection and data availability. An obvious imbalance of net CO2 embodiment in the commodity trade between major developed countries and developing economies as a whole was confirmed by these literatures. Carbon taxes and other possible limitations on CO2 emissions have been addressed. The consistency across the calculations could be enhanced by systematic analyses in more detail to convince the international community to take binding commitments for the reduction of global CO2 emissions.