The emission benefits of European integration

Luís Costa,Vincent Moreau

doi:10.1088/1748-9326/ab3738

Abstract

Simulating the implications of Brexit on the UK’s emissions embodied in trade with a multi-region input–output table exposes the benefits of European integration. Under 2014 trade volumes, technologies and energy mixes, a hard Brexit—reverting to a trade pattern between the UK and the EU prior to the European Internal Market (EIM)—would imply a rise of about 0.215Gt of CO2eq in the UK’s emissions embodied in imports. This is equivalent to a 38% rise in UK’s imported emissions in 2014 and roughly equal to the territorial emissions of the Netherlands in 2017. Substituting imports from the EU with those from the Rest of the World (RoW), under the same conditions, implies adding 0.35 kg of CO2eq, on average, to each dollar of activity imported in the UK. This underlines the emission benefits of an integrated European market abiding to common environmental standards and climate policies. Filling the gap in imports lost from the UK to the EU by stepping up production within the EIM would result in an extra 0.012Gt of CO2eq, a rather small increase when compared to the additional emissions in the UK’s imports following Brexit. Should the EU reallocate the lost imports from the UK to the RoW, a total of 0.128Gt of CO2eq would be added to the EIM imports. This exposes the environmental benefits in terms of emissions in keeping UK trade closely linked to the EU and the important role that Single Member States can play indirectly on EU’s import emissions. In terms of emissions embodied in trade, the sum of the EU market is, paradoxically and for the better, less than the sum of its individual parts.

Highlights

Brexit exemplifies the complexity in reversing longterm processes of economic integration, especially since European Union (EU) membership goes far beyond trade and investment alone
Both of these sub scenarios are identical in the implementation of Brexit scenario, that is, imports lost from the EU27+ to the UK are shifted onto the Rest of the World (RoW)
The efficiency gains of the RoW outpaced that of the EU27+ for the same type of traded products, albeit starting from a worse level

Summary

Introduction

Brexit exemplifies the complexity in reversing longterm processes of economic integration, especially since European Union (EU) membership goes far beyond trade and investment alone. The impacts on carbon emissions from a potentially new trade regime between the UK, the EU and the Rest of the World (RoW) has received little to no attention. Such impacts have already been quantified with most of the burden falling onto the UK (Babonneau et al 2018) While this potentially reduces the efforts by remaining EU Member States, the UK will unlikely be the only one worse off as a result of leaving. The North American Free Trade Agreement (NAFTA) or the Southern Common Market (MERCOSUR) and the lowering of trade barriers or tariffs, were shown to increase carbon emissions embodied in trade (Islam et al 2019). With energy and climate policies focusing on territorial emissions, those embodied in trade result from economic structures. How this reconfiguration adds up to a new emission trade balance between the UK and the EU27+ is yet unexplored

Scenario and data

Results

Conclusions

Data availability statement