The role of intermediate trade in the change of carbon flows within China

Abstract

In recent years, evaluating the emissions embodied in trade (EEIT) has become an important area of policy and research. Multiregional input-output (MRIO) analysis, which links producers and final consumers, is a widely-used method for quantifying the EEIT. However, the role of intermediate trade in driving changes in the EEIT is still not fully incorporated in MRIO analysis and as a result poorly understood. Here, we present a framework that separately identifies the drivers of the emissions embodied in the trade of final and intermediate products. We implement this framework in a case study in which we analyse the changes in CO2 emissions embodied in interprovincial trade in China from 2007 to 2012. We find that the largest changes are a rising final demand, which is associated with increased emissions that are to some extent offset by decreasing emissions intensity and changing interregional dependency. The rising imports and the growth in final demand in less developed regions in the north and central (e.g., Hebei and Henan) led to reductions in the CO2 emissions outsourced by central coastal regions. The framework enriches our understanding of the role played by intermediate trade in the relocation of emissions.