Abstract
International trade and emission offshoring can reduce a country’s domestic carbon dioxide emissions, helping it to reach emission reduction targets set under the prevailing territorial climate policy frameworks. We ask what is the net contribution of trade to national production-based emissions. Existing metrics (consumption-based emissions and the technology-adjusted balance of emissions embodied in trade) do not answer this question. Based on global multi-regional input-output tables and the domestic technology assumption, we calculate net emission onshoring as the difference between the emissions embodied in gross exports (onshoring) and the emissions avoided by gross imports (offshoring) for 43 countries between 2000–2014. We find that the USA offshores emissions and China onshores emissions; the aggregate trade balance explains this result while the trade composition plays a negligible role in either country. In general there is no cross-country relationship between net offshoring and per-capita income, and neither one between trade specialization in emission-intensive products and per-capita income. The developed countries’ absolute decoupling of economic growth and production-based emissions since 2000 is “genuine” in the sense that it reflects domestic economic developments and is not owed to emission offshoring.
Highlights
Importing goods and services can be viewed as a form of emission offshoring: the USA avoids emissions when foreign producers emit carbon dioxide as a by-product of satisfying American demand
In accordance with the counterfactual scenario, the technology-adjusted emissions embodied in exports (TEEX) have to be interpreted as a measure of the emissions avoided in the rest of the world by the focus country’s exports – the TEEX measure the foreign emissions avoided by exports, which we regard as negative weak carbon leakage. 2
We suggest to interpret the technology-adjusted balance of emissions embodied in trade (TBEET) as a measure of the contribution of trade to foreign emissions: foreign emissions avoided by exports minus foreign emissions generated by imports
Summary
Importing goods and services can be viewed as a form of emission offshoring: the USA avoids emissions when foreign producers emit carbon dioxide as a by-product of satisfying American demand. Exporting goods and services can be viewed as a form of emission onshoring: American producers emit carbon dioxide as a by-product of satisfying foreign demand. In the opposite case, when emission onshoring exceeds emission offshoring, trade implies a net increase in a country’s production-based emissions and makes it more challenging to reach national climate policy tar-. We investigate if trade systematically helps the developed countries evade emission responsibility under productionbased accounting principles. To this end we analyze if there is a statistically significant and quantitatively important relationship between net offshoring and the per-capita income level across countries
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