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Global outsourcing of carbon emissions 1995–2009: A reassessment
Environmental Science and Policy 92 (2019) 228–236
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Environmental Science and Policy journal homepage: www.elsevier.com/locate/envsci
Global outsourcing of carbon emissions 1995–2009: A reassessment a,⁎
a
a
a
Nicolai Baumert , Astrid Kander , Magnus Jiborn , Viktoras Kulionis , Tobias Nielsen a b
T b
Lund University, Department of Economic History, Box 7083, S-220 07, Lund, Sweden Lund University, Department of Political Science, Box 52, S-221 00, Lund, Sweden
A R T I C LE I N FO
A B S T R A C T
Keywords: Carbon leakage Climate mitigation Emission outsourcing Input-output analysis Emissions embodied in trade Consumption-based accounting
Increasing global production fragmentation allows for outsourcing of emissions, which may undermine national climate policies. Researchers focusing on the gap between consumption-based and production-based emissions have concluded that developed countries are systematically outsourcing emissions to developing countries. However, asymmetries in emissions embodied in trade may emerge due to differences in carbon intensity of energy and production between different countries, and need not be evidence of outsourcing. This study investigates if previous results concerning emission in –and outsourcing of developed and developing countries hold when emission flows are adjusted for technological differences. Two striking results are demonstrated: first, the magnitude of outsourcing is significantly smaller than previous studies have suggested, and, second, there is no clear divide between developing and developed countries. Large developed Anglophone countries (US, UK, Canada and Australia) were increasingly outsourcing emissions between 1995 and 2009 by shifting toward more carbon-intensive goods in their imports and less carbon intensive goods in exports, whereas other developed countries (i.e. the Nordics, advanced Asia and even the aggregate EU-27) maintained a positive emission trade balance. Among major developing countries, China is a major insourcer of emissions, while other emerging economies show no consistent pattern (e.g. India, Turkey and Brazil) or marginal outsourcing (e.g. Indonesia and Mexico). These results contribute to a more nuanced understanding of the impact of international trade on global carbon emissions.
1. Introduction Two competing narratives about carbon emission trends in developed countries are found in the literature. One is optimistic, highlighting that several developed nations have reduced domestic carbon emissions significantly while maintaining substantial economic growth. This is considered proof that economic growth can be decoupled from carbon emissions (Andersson and Lövin, 2015); if some countries have managed to reduce their emissions by improving carbon efficiency and changing consumption patterns, other countries could presumably do so as well (Jiborn et al., 2018). The other narrative is pessimistic and points to the fact that global emissions have continued to increase – particularly in developing countries serving demands for the same developed countries that are reporting reduced domestic emissions. According to this narrative, developed countries’ improvements in carbon efficiency have so far been offset by increased imports (Peters et al., 2011 & 2012). However, this is not visible in national carbon accounts as traditional, productionbased carbon accounting only considers emissions that occur within national borders. As Hermele (2002, p. 60) puts it: “environmental
⁎
consequences do not disappear just because the manufacturing takes place on the other side of the ocean”. Thus, reported emission reductions may not be evidence of decoupling but of outsourcing of emissions to developing countries that are increasingly acting as “Factories of the World”. Which of these narratives is (more) correct is an important question since decoupling of economic progress from environmental degradation is a necessary condition for sustainable development. If domestic emissions decrease due to outsourcing of emissions-intensive production, this can hardly be considered sustainable. The issue is also highly relevant for the monitoring of national performance in relation to international climate agreements. Little is gained for climate mitigation if countries achieve strict domestic reduction commitments by outsourcing part of their emissions to countries with less strict commitments. The aim of this paper is to assess the claim that carbon emissions are systematically outsourced from developed to developing countries. We investigate the scale and direction of carbon emission outsourcing via international trade between 1995 and 2009. “Outsourcing of emissions” means that a country’s foreign trade
Corresponding author. E-mail address: [email protected] (N. Baumert).
https://doi.org/10.1016/j.envsci.2018.10.010 Received 14 June 2018; Received in revised form 15 October 2018; Accepted 16 October 2018 1462-9011/ © 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/BY-NC-ND/4.0/).
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and methods; section 4 elaborates on the results and section 5 concludes with a discussion and suggestions for further research.
reduces domestic emissions, but increases emissions outside its borders. This is sometimes also called “weak carbon leakage” (Peters, 2008), “carbon displacement” (Jiborn et al., 2018), or “spillover effects” (Sachs et al., 2017). In the weakest sense of the term, all imports amount to emission outsourcing, and all countries that engage in foreign trade are simultaneously outsourcing emissions to others through their imports and insourcing emissions from others through their exports. We analyze whether some countries are net outsourcers – i.e. if they are outsourcing more emissions than they are insourcing – either by differences in the composition of imports and exports or by a monetary trade deficit. Studies showing large-scale net transfers of carbon emissions from developed to developing countries have focused on the difference between consumption-based and production-based emissions (e.g. Peters et al., 2011). Production-based accounting (PBA) – used for official carbon reporting under the UN Framework Convention on Climate Change (UNFCCC) – assigns emissions to the country where they were generated. Consumption-based accounting (CBA) treats emissions that are generated in production as “embodied” in goods, and assigns emission responsibility to the country where a product is finally consumed, regardless of where along the global value chain emissions physically occurred. Many studies have demonstrated a large and growing flow of such embodied carbon emissions in international trade, mainly from developing to developed countries (e.g. Davis and Caldeira, 2010; Peters et al., 2011). For most developed countries, consumption-based emissions are therefore much larger than officially reported production-based emissions. However, imbalances in emissions embodied in exports and imports may result from differences in carbon intensities in energy and production technologies between trading partners, and do not necessarily indicate outsourcing of emissions (Jakob and Marschinski, 2013; Kander et al., 2015; Jiborn et al., 2018). For example, suppose a country has a large share of renewables in its energy mix while specializing in the production of energy-heavy goods – like steel – for exports and importing mainly less energy-demanding products – like software. Such a country could be a net importer of embodied emissions, even if the net effect of its foreign trade is a reduction of emissions abroad (compared to a no trade scenario). It would be odd to consider this as emission outsourcing. Some industrial sectors, such as steel, mining, chemistry, paper and pulp, oil and gas – i.e. heavy industry – are consistently more energy demanding, and hence in general more carbon intensive than others, for example light manufacturing (e.g. pharmaceuticals or electronics) or services. This usually holds regardless of the country of production. But the carbon intensity of energy, and hence the general carbon intensity of production varies substantially between countries. For example, the carbon intensity of Swedish electricity production, which is largely based on nuclear, hydro and wind energy, is only around 15 percent of the global average (Supplementary Information SI.7). To determine if and to what extent emissions are outsourced, we should consider the relative magnitude and composition of a country’s exports and imports, while adjusting for the effects of technology differences – i.e. energy intensity of production and carbon intensity of energy – between countries. For this purpose, we employ a technology-adjusted measure of emission flows in international trade, in which carbon intensities for industrial sectors are standardized according to the world average for each industry. In Jiborn et al. (2018), this measure is applied to Sweden and the UK, and net outsourcing/insourcing is further decomposed into trade composition and monetary trade balance. Our paper extends this analysis to 40 countries (and a Rest-of-the-World aggregate) included in the World Input-Output Database (WIOD) from 1995 to 2009 and investigates the global scale and pattern of emission outsourcing in international trade. The paper is organized as follows. Section 2 summarizes the relevant literature and theoretical insights; section 3 describes the data
2. Theory and previous research A large body of recent research has shifted the emission perspective from producer countries to countries of final demand (e.g. Davis and Caldeira, 2010). Consumption-based accounting allows for calculating direct and indirect emissions involved in the production of goods that are ultimately consumed within a country – i.e. its carbon footprint (Minx et al., 2009) – and hence the amount of emissions generated globally to serve demand in a given country (e.g. Ahmad and Wyckoff, 2003). Several key findings were obtained in prior research. First, numerous studies identified large and increasing quantities of embodied emissions in today’s international trade patterns (e.g. Davis et al., 2011; Peters & Caldeira, 2011; Peters et al., 2012). Davis and Caldeira (2010) found that 23 percent of global CO2 emissions (i.e. 6.2 gigatones; Gt) were internationally traded in 2004. Peters et al. (2011) estimated the emissions embodied in international trade to 4.3 Gt CO2 in 1990 and 7.8 Gt of CO2 in 2008 – equivalent to a rise from 20 to 26 percent of total global emissions. These figures reflect the total amount of emissions embodied in products that are finally consumed in other countries than where they were produced. However, since all countries are both exporters and importers of embodied emissions, the total net flow of emissions from exporters to importers is considerably smaller. The sum of all net deficits (or surpluses) of emissions embodied in trade amounts to, on average, 6.9 percent of global CO2 emissions between 1995 and 2009. Second, the discrepancy between production- and consumptionbased accounting has increased over time. For instance, Boitier (2012) finds that while the EU-27 (i.e. all 27 member countries of the EU before 2013) displayed 11 percent higher consumption-based than production-based emissions in 1995, this gap had risen to 24 percent in 2008. A similar trend is suggested for the OECD countries’ total emissions. Moreover, for major rapidly developing countries (i.e. Brazil, Russia, India and China), production-based emissions exceeded consumption-based emissions by 22 percent in 2008. Third, several scholars suggest a regional divide between developed and developing countries, with the former being net importers and the latter net exporters of emissions embodied in trade. Peters et al. (2011) quantify the net emission transfer from developing to developed countries to have increased four-fold from 0.4 Gt in 1990 to 1.6 Gt in 2008. This could be interpreted as a sign of intensifying emission outsourcing from developed to developing countries. However, Jakob and Marschinski (2013) and Kander et al. (2015) argue that the world’s CO2 trade specialization could be exaggerated in conventional CBA studies since these do not account for differences in production technologies among trade partners. Carbon intensities for equal goods may vary substantially among trade partners. In conventional CBA, trade specialization in export of carbon-intensive goods such as chemicals or steel is indistinguishable from having a more polluting energy system and production in general. Consequently, CBA is unable to identify whether a balance of emissions embodied in trade (BEET) surplus stems from specialization in carbon-heavy exports (relative to imports) or from comparatively emission-intensive energy systems (i.e. electricity generation). In turn, a BEET deficit could be due to either a monetary trade deficit, specialization in carbon-heavy imports (relative to exports) or less emission-intensive technologies and energy. For instance, the scenario depicted in Fig. 1 (adapted from Jakob et al., 2014) – in which arrows represent cross-border deliveries – supposes that a given country A incorporates a more emission-intensive electricity system and/or produces with comparatively more energyintensive technology relative to country B. If country A exchanges identical goods with country B, the result will be a bilateral surplus in 229
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input-output (IO) and emission data for 40 countries and a Rest-of-theWorld (RoW) aggregate (each divided into 35 sectors) covered in the WIOD (Timmer et al., 2015). Alongside the economic linkages mapped in the core IO tables, WIOD also contains satellite accounts of key environmental factors such as CO2 emissions from fossil fuels and industrial processes that are embodied in traded goods (Genty et al., 2012). We consider the CO2 emissions indicated in WIOD, which contributed roughly 2/3 of total emissions of greenhouse gases during the studied period (Intergovernmental Panel on Climate Change (IPCC, 2014). The net emission balance is decomposed into effects of trade specialization and monetary trade balance. TBEET results are scale invariant, i.e. countries can be aggregated into regions (e.g. EU-27) (Domingos et al., 2016; Kander et al., 2016). Our results will allow for generalizations linking TBEET to countries’ characteristics (e.g. regions, emission regulations or development level) while relying on annual IO tables for 1995 to 2009. We consider all individual countries within WIOD that the World Bank classified as “High income” countries in 2009 as developed (World Bank, 2010). In addition, Bulgaria, Lithuania and Romania are referred to as developed to avoid considering these countries (forming part of the EU-27) within multiple groups. Consequently, we refer to the EU-27, Australia, Canada, Japan, South Korea, Taiwan and the USA as “developed” and the remaining individual countries within the WIOD as “developing”. We start by computing the total output x within the examined countries as: Fig. 1. BEET & Technology Differences.
(1)
x = LF
where F is the final consumption matrix and L is the Leontief inverse quantifying direct and indirect production requirements, which are necessary in the production of one unit of final demand in a given industry. Pre-multiplying each industry’s direct CO2 intensity d with LF gives direct and indirect CO2 required to serve final demand:
emissions embodied in trade for A and a deficit for B in a traditional CBA analysis. This holds true although the exchange neither increases nor decreases emissions in either of the countries compared to a no trade scenario, where each country produces the same goods for domestic demand. Outsourcing should capture effects of imbalances in trade structures, i.e. if developed countries specialize in service production and import heavy industrial goods from abroad (Jakob and Marschinski, 2013; Jiborn et al., 2018). Mistaking effects of differences in production technologies for effects of a structural imbalance in exports and imports could result in biased conclusions about the extent or direction of emission outsourcing. To remedy this, there is need for a refined method that corrects for technology differences between nations. An analogy that may be helpful is that GDP accounts need to be corrected for inflation to generate meaningful growth rates, which is done by deflating the estimates by an index to obtain constant figures. Similarly, without correcting for technology differences, we can only say little about the drivers of emission outsourcing in global trade. For this purpose, Kander et al. (2015) developed the TCBA (technology-adjusted consumption-based account). Subsequently, Jiborn et al. (2018) introduced the technologyadjusted balance of emissions embodied in trade (TBEET) to estimate how trade specialization and monetary trade balance affect emission transfers in trade for the UK and Sweden. In Jiborn et al. (2018), the UK, but not Sweden, was found to be outsourcing emissions abroad through its trade structure. This indicates a more complex picture than simply developed countries’ emission outsourcing toward developing countries. Following this, one key contribution of this paper is to assess the validity of the developed-developing country distinction and to add more nuance to the observable emission outsourcing pattern.
ˆ E = dLF
(2)
The elements of the matrix E indicate the direct and indirect emissions in domestic as well as foreign industries required to serve the demands of the given country. A “hat” operator denotes matrix diagonalization. Using eij to denote emissions embodied in trade from country i to j , emissions embodied in exports (EEE ), and imports (EEI ) of country i can be calculated as follows: n
EEEi =
∑ ji
EEIi =
∑ ji
n
eij
(3)
eji
(4)
The balance of emissions embodied in trade (BEET) for country i is the difference between its emissions embodied in exports and emissions embodied in imports:
BEETi = EEEi − EEIi
(5)
To avoid considering effects of technology differences as proof of trade specialization, we standardize the carbon intensity for each sector across all countries. Therefore, we adjust the vector d assuming globally uniform carbon intensities across nations for each sector separately. The resulting vector dWA displays average carbon intensity and its block elements diWA are the same across all countries. Then we follow standard procedure as outlined in Equations 2–5 (except that country-specific carbon intensities di are replaced by world average carbon intensities diWA). The total emission matrix EWA is obtained by:
3. Methodology
EWA = dˆWALF
3.1. Technology-adjusted balance of emissions embodied in trade
(6) WA
represent the emissions that would have occurred if Elements eij the same products had been produced with world average technology.
Building upon Jiborn et al. (2018), we apply the TBEET approach to 230
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decomposed into its drivers – trade balance and trade specialization.
Technology-adjusted emissions embodied in exports are calculated as:
TEEEi =
n
∑ ji
eijWA
4.1. Emission Trade and Responsibility from 1995 to 2009
(7)
Similarly, technology-adjusted emissions embodied in imports are computed as:
TEEIi =
n
∑ ji
eWA ji
The net emission trade imbalance (i.e. the sum of net surpluses or deficits) as a share of global emissions amounts to 3.6 percent on average over the period, increasing from 3.0 in 1995 to 4.6 percent in 2008. This is significantly less than the net flow of emissions embodied in trade from net exporters to net importers when measured in CBA terms without technology-adjustment – amounting to 6.9 percent. This finding is crucial as it shows that about half of what previous studies considered as outsourcing can be attributed to technology differences across nations. Consistent with previous research, Fig. 2 demonstrates a large and mostly increasing discrepancy between developed countries’ domestic emissions (PBA) and emissions generated to serve their consumption (CBA). Consequently, the BEET is negative for both the EU-27 and USA throughout the period. Furthermore, the BEET trends for the EU-27 and USA are similar – reflecting an apparent pattern of advanced countries’ consumption-based emissions significantly exceeding domestically produced emissions. However, in contrast with the EU-27’s BEET, the TBEET is positive over the entire period. Thus, the observed gap between CBA and PBA for the EU-27 is explained by more carbon efficient production than world average rather than by emission outsourcing through a trade deficit or structural trade specialization. The aggregate EU-27’s positive TBEET suggests net emission insourcing throughout the period. This contrasts with Peters et al.’s (2011) proposition that (most) developed countries are outsourcers of emissions. For the USA, however, the result does not change much between BEET and TBEET as the country remains net emission outsourcer after the technology-adjustment. The small difference between the USA’s TBEET and BEET is reasonable since the large US economy defines global technologies to a high degree in our technology-adjusted measure (Supplementary Information SI.8), which is weighted by each nation’s share in global exports for the respective commodity group. The difference between the US and the EU-27 for technology-adjusted emissions was also pointed out in Kander et al. (2015). Fig. 3 shows TBEET as a share of total production-based emissions on a yearly basis for several country (group) accounts. Embodied emissions in the EU-27’s export exceeded the equivalent imported emissions by a share of 2–6 percent of its production-based emissions. In contrast, the emission trade balance of the US has continuously been negative and, since 2002, exceeded 10 percent of its production-based emissions – manifesting the country’s status as major outsourcer of carbon emissions. Other major Anglophone countries such as Australia, Canada and the UK also exhibit a strong shift towards outsourcing during the period. In contrast, the Nordic countries in our sample (i.e. Sweden, Denmark and Finland) consistently appeared as insourcers. Did developing countries – often claimed to be “Factories of the World” – act as insourcers? Fig. 4 displays results for all developing countries within the WIOD on aggregate and for China individually. According to traditional CBA the developing economies are overall net emission exporters (see Table 1) with both China’s and the overall developing countries’ PBA emissions being significantly higher than emissions caused by the countries’ consumption resulting in a positive BEET. The developing countries’ overall TBEET is also positive but less so than their BEET. This suggests that carbon efficiency in this country group is significantly below world average. However, this result is almost entirely due to China’s exceptional TBEET. In fact, China and Russia are the only large developing countries that display clearly positive TBEETs (i.e. are carbon insourcers) over the whole period. In contrast, other large emerging economies’ TBEET fluctuate around zero (Brazil and Indonesia) or indicate comparatively small net outsourcing
(8)
and the technology-adjusted balance of emissions embodied in trade is: (9)
TBEETi = TEEEi − TEEIi 3.2. Decomposition of the TBEET
We decompose each country’s TBEET into effects of trade specialization and monetary trade balance using an additive and refined Laspeyres index decomposition (Sun, 1998). Our decomposition uses the same method as Jakob and Marschinski (2013), but deviates from it in that, since energy and carbon intensities are calculated as world averages for each sector on the export as well as the import side, only the composition and scale of exports and imports will have impact. Thus, a country’s trade specialization equals the difference between the technology-adjusted carbon intensities of its exports and its imports:
ΔTSpi =
TEEEi TEEIi – Ex i Imi
(10)
where Exi and Imi denote a country’s total export and import value, respectively. The contributions of trade specialization (ΔCiTSp) and trade balance (ΔCiTB) to a country’s TBEET are calculated by:
1 TEEEi TEEIi ⎞ TEEEi TEEIi ⎞ ΔCiTSp = ⎛ − * Imi + * ⎛ − *(Ex i − Imi ) Imi ⎠ 2 ⎝ Ex i Imi ⎠ ⎝ Ex i (11) ⎜
⎟
⎜
⎟
and
ΔCiTB =
1 TEEEi TEEIi ⎞ TEEIi *(Ex i − Imi ) + * ⎛ − *(Ex i − Imi ) 2 ⎝ Ex i Imi Imi ⎠ ⎜
⎟
(12) Supplementary Information SI.12 provides a more detailed derivation and explanation. A country with a neutral trade balance and more carbon-intensive imports than exports will exhibit a negative TBEET (i.e. be classified as an outsourcer). However, even if a country’s imports are more carbonintensive than its exports, a positive monetary trade balance may counteract this and result in a positive TBEET. Moreover, by employing time series, we may also quantify whether countries gradually change their trade composition by shifting towards more (or less) carbon-intensive imports or exports. If developed countries consistently show a trend towards light export and heavy import products (i.e. a shrinking TBEET) in the period 1995–2009, this finding would disprove the optimistic decoupling interpretation. 4. Results Table 1 lists the PBA, CBA, conventional BEET and (decomposed) TBEET for all individual countries in 1995 and 2009 to allow for country-specific consultation. Moreover, it emphasizes not only that the global sum of CBA and PBA is equal, but also that the sum of TBEETs for all nations amounts to zero globally as imported emissions must equal exported emissions by definition. In the following, we first elaborate on the TBEET results together with the conventional BEET as well as the PBA and CBA from 1995 to 2009. This unveils the discrepancy between the conventional and technology-adjusted balance of emissions in trade. Second, the TBEET is 231
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Table 1 PBA, CBA, BEET & (decomposed) TBEET – Individual Countries in 1995 and 2009. PBA
Australia Austria Belgium Bulgaria Brazil Canada China Cyprus Czech R Germany Denmark Spain Estonia Finland France UK Greece Hungary Indonesia India Ireland Italy Japan S Korea Lituania Luxemburg Lattvia Mexico Malta Netherlands Poland Portugal Romania Russia Slovakia Slovenia Sweden Turkey Taiwan USA RoW Total
CBA
BEET
TBEET
T.Spec
T.Bal
1995
2009
1995
2009
1995
2009
1995
2009
1995
2009
1995
2009
305 62 132 62 229 465 3074 5 119 949 74 254 18 60 406 590 87 61 215 806 35 454 1141 409 17 8 10 306 2 193 368 54 130 1608 45 15 63 179 194 4954 3880 22039
405 64 121 47 323 529 6696 8 109 817 87 300 16 62 386 559 110 53 393 1643 43 425 1102 584 15 5 8 427 3 205 317 61 91 1598 36 18 58 296 314 5025 5494 28850
300 96 134 40 260 414 2577 9 102 1164 75 289 14 64 506 638 103 63 214 741 38 528 1414 402 17 7 11 297 3 196 309 62 110 1229 33 17 82 202 185 5231 3865 22039
454 95 146 38 370 555 5651 11 97 958 64 371 12 70 547 659 139 58 380 1595 59 545 1270 499 19 8 11 451 4 210 292 71 96 1224 37 21 81 315 211 5670 5487 28849
5 −35 −2 22 −30 51 498 −3 17 −214 −1 −35 4 −3 −100 −48 −16 −2 0 66 −3 −74 −273 7 −1 0 −1 9 −1 −3 59 −7 20 379 11 −2 −19 −23 9 −277 15 0
−48 −30 −25 9 −48 −26 1045 −3 11 −141 23 −71 3 −8 −162 −100 −29 −5 12 48 −16 −120 −169 85 −5 −3 −3 −24 −1 −5 25 −10 −5 375 −1 −3 −24 −19 103 −644 7 0
8 −6 27 4 −10 27 77 −2 9 −8 21 −1 0 13 84 6 −13 0 −8 12 5 36 122 28 −1 1 −1 −5 −1 55 10 −4 4 58 5 0 15 −11 25 −187 −395 0
−25 25 6 5 −6 −30 613 −3 13 87 33 4 1 2 −35 −79 −12 0 −18 −49 12 −7 58 95 −1 4 −1 −32 0 59 5 −7 −4 105 6 −1 2 −4 34 −565 −292 0
5 −3 14 4 −4 10 54 −1 11 −56 14 11 1 6 59 −6 4 2 −9 14 1 9 12 22 0 −1 −1 −10 0 35 6 3 7 40 5 0 3 −5 18 −141 −134
−29 18 −4 7 −10 −28 437 −1 8 −23 26 33 1 −1 −20 −77 19 −2 −28 −28 3 −3 16 69 −1 2 −1 −31 0 34 2 4 2 60 6 −1 −8 8 20 −406 −86
3 −3 12 0 −6 17 24 −1 −2 48 7 −12 0 8 25 11 −18 −2 1 −2 4 27 110 6 −1 1 0 5 0 20 4 −6 −2 18 0 0 12 −6 7 −46 −261
4 7 10 −2 4 −2 175 −2 4 110 7 −29 1 3 −14 −2 −31 2 10 −21 9 −4 42 26 0 2 0 −1 0 25 3 −11 −5 45 1 0 11 −11 14 −159 −207
Note: All values in megatons (Mt).
2009 prevents a verification of this. Still, it can be expected that the monetary trade surplus will have upheld the EU-27’s positive TBEET after 2009. Third, consulting the individual analysis of EU-27 countries (Table 1) we find major differences in the trade specialization pattern. While the trade composition of Spain, Denmark, Greece, and the Netherlands display positive contributions to the EU-27’s import/export specialization, countries such as Germany, France and (particularly) the UK counter these contributions – although not enough to result in an overall negative impact of the aggregate EU-27’s trade specialization. For the USA, the monetary trade deficit has contributed substantially to outsourcing, but specialization has played an increasing role, and was since 2000 more important than the monetary trade deficit. Fig. 6 shows the UK’s decomposed TBEET (normalized by PBA), which does not at all resemble the corresponding EU-27 graph. Both specialization and monetary trade balance have contributed to the UK’s negative TBEET. Still, specialization has contributed much more than monetary trade balance to emission outsourcing. In 2009, almost the entire negative TBEET stemmed from exporting less carbon-intensive products and importing more CO2-heavy goods. The pattern of the UK’s trade composition seems akin to the development for the US. Both countries display a consistent and increasing negative impact of trade specialization – reflecting reinforced
of carbon emissions (India and Mexico). This emphasizes that the categorization of developing countries as insourcers of emissions is an oversimplification. To put this in perspective, Fig. 3 illustrates China’s normalized TBEET relative to its overall PBA emissions, which is substantial and increasing up until the world financial crisis in 2008. Thus, China is indeed taking on the role of being a “Factory of the World”. 4.2. The underlying drivers of the TBEET To understand the nature of emission outsourcing/insourcing, we decompose TBEET into its drivers. Fig. 5 displays the contribution of trade specialization (T. Spec.) and monetary trade balance (T. Bal.) to the TBEET for the EU-27 and USA 1995-2009. These two drivers can either counteract or reinforce each other. The included graphs illustrate the relative share of both drivers compared to the respective total domestic emission. Both the impacts of trade specialization and monetary trade balance are positive for the EU-27. However, the positive impact of trade specialization decreased over the period, reflecting a shift towards more carbon-intensive imports and/or less carbon-intensive exports, while the monetary trade surplus upheld part of the EU-27’s status as net insourcer. This trend for trade specialization may have continued after 2009, which could have shifted the specialization of the EU-27 trade pattern towards outsourcing, but the lack of data after 232
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Fig. 2. PBA, CBA, BEET & TBEET – EU-27 & USA (1995–2009).
trade composition. Since 1995, the total impact of trade specialization to the insourcing of both the aggregated developing countries and China individually has ranged between 53 and 81 percent of the overall TBEET. That specialization has a stronger positive impact on China’s TBEET than trade balance might be surprising, considering that a substantial share of Chinas exports consists of light manufacture. However, trade specialization is an effect of import as well as export composition, and the average, technology-adjusted carbon intensity of Chinese exports has been consistently higher than that of its imports throughout the period. The aggregate monetary trade surplus of the developing economies amplifies their overall TBEET. This seems to confirm the developing countries’ status as insourcers. However, the aggregate results for these major developing countries are largely due to China’s individual contribution to the TBEET. China and Russia exhibit distinctly different specialization patterns compared to other major emerging countries (see Table 1). Brazil, India, Indonesia, Mexico and Turkey display either small or negative contributions of trade specialization throughout the period (with unambiguous results for the trade balance). Certainly, these findings do not suggest a general pattern of insourcing for developing or emerging economies in general when technology differences are corrected for. However, they do point to China’s exceptional role as the major emission insourcer through a large monetary trade surplus and more carbon-intensive exports than imports. Nevertheless, China and Russia are not the only countries with a large positive contribution of trade specialization. Other examples of insourcers are the Nordic countries that also focus on heavy industrial goods in their exports, despite being high-income advanced countries. In fact, the Nordics’ positive trade balance with more carbon-intensive exports than imports (Fig. 8) is in stark contrast to the clear cases of outsourcers such as the US and the UK. Furthermore, advanced Asian countries such as Japan, Korea or Taiwan may – due to their trade composition and monetary trade balance – be considered “Factories of the world” (i.e. insourcers), which is further highlighted in Fig. 8 depicting normalized contributions of the TBEET drivers.
Fig. 3. TBEET as % of PBA – Selected Country (Group) Accounts (1995–2009).
outsourcing through their import-export composition. Moreover, we examine whether a clear pattern of trade specialization or monetary trade balance underlies the TBEET of developing countries and China in particular (Fig. 7). First, Fig. 7 shows a consistent pattern of positive contributions of
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Fig. 4. PBA, CBA, BEET & TBEET – Developing Countries & China (1995–2009).
Fig. 5. Contribution of Trade Balance and Specialization – EU-27 & USA (1995–2009).
Fig. 6. Contribution Trade Balance and Specialization – United Kingdom (1995–2009).
Thus, it can be asserted that – when technology differences are accounted for – China, the Nordic countries and the advanced major Asian economies emerge as the most pronounced cases of insourcers, with specialization in more emission-intensive exports than imports as well as monetary trade surpluses. The aggregate EU-27 displays a declining yet positive trade specialization with a large monetary trade surplus – strongly contrasting the most pronounced country cases of emission outsourcing (i.e. US and UK).
5. Concluding discussion Outsourcing of emissions is not necessarily bad for the global climate. There is no reason to expect that factor content in international trade should be balanced for any specific production factor; indeed, a prime motive for engaging in international trade is that countries have different comparative advantages regarding production factors, including energy, which is the primary driver of carbon emissions. If 234
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effective distribution of global production and hence contribute to a reduction of global emissions. If, on the other hand, carbon intensive production is outsourced from countries with more carbon efficient production technologies to countries that are largely based on fossil fuels, the result may be a net increase in global emissions. Trade can thus either facilitate global climate goals by supporting a more carbon efficient distribution of production, or undermine them. The interesting question is not whether outsourcing occurs per se, but rather which countries outsource or insource emissions. Moreover, it is worth investigating to what extent and in what direction trade may affect global climate goals. This study shows that accumulated net outsourcing of emissions via trade throughout the period amounted to 3.6 percent of global emissions between 1995 and 2009. This means that the potential effect on global climate targets is significant, although it is only half of the net emission transfers that are found when no adjustments for differences in technology are made. Consequently, a significant part of the net flow of emissions embodied in trade, that has been interpreted as emission outsourcing in conventional CBA analyses, is in fact driven by differences in carbon intensity of energy and production technologies, rather than outsourcing of heavy industry from developed countries. Studies based on the gap between consumption-based and production-based emissions have concluded that developed countries were consistently outsourcing carbon emissions to developing economies between 1995 and 2009. This study shows that, when the effects of technology differences are cancelled out, the pattern is less clear. Taken as a collective, developed countries are found to be outsourcing emissions to developing economies; however, this is largely due to the US and China, which accounted for half of the net emission insourcing/ outsourcing in 2009. In fact, disregarding the US results in collective emission insourcing of developed WIOD countries during the whole period. Since carbon intensities of most industrial sectors in China are above world average (Supplementary Information SI.9), the current net flow of emissions appears to run in a way that counteracts global climate goals. However, the fact that there is no consistent pattern for neither developed nor developing countries shows that the dynamics of emission outsourcing are more complicated than previously assumed. Nevertheless, our analysis also observed that most developed regions tend to shift towards comparatively more carbon-intensive imports and less carbon-intensive exports over time. This should raise concerns among policy-makers, since it does offset part of the climate mitigation achievements that have been reported by a number of developed countries. Our study contributes to this discussion with a more nuanced picture of this trend. A pattern that emerges is that large Anglophone countries (i.e. the UK, US, Canada and Australia) have all been emission outsourcers during most of the period studied here. Future research may examine why these countries show a different pattern than many other developed countries (e.g. advanced Asian countries and the Nordics). One possibility is that some early-industrialized countries, such as the US and the UK are subject to historical lock-in effects, either in the form of more energy demanding consumption than average or with large sunk costs in coal machinery that might have impeded the transition to oil and electricity later. Another option relates to strong currencies, which could have allowed some countries to run monetary deficits over extended periods. Finally, it is possible, of course, that Anglophone countries are just ahead of most other developed countries in deindustrializing their economies, focusing more on services and knowledge-intensive production while outsourcing more heavy industrial production (Castells, 2009). This explanation is supported by our results on the negative trend of emission trade specialization in most developed countries. This study has highlighted the significant impact that the choice of accounting principles has on the scale as well as direction of emission flows in international trade. Adjusting for technology differences
Fig. 7. Contribution Trade Balance & Specialization - China & Developing Countries (1995–2009).
Fig. 8. Contribution Trade Balance & Specialization – Nordics & Developed Asia (1995–2009).
energy intensive production is outsourced from countries that are less well-endowed in terms of renewable energy resources, to countries with ample renewable energy, this may in fact lead to a more carbon 235
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between countries has been shown to reverse the net flow of emissions in foreign trade for a number of countries, and to challenge common views about the global pattern of outsourcing and insourcing of emissions. There are other possible adjustments that could also contribute to improving our understanding of the drivers of global emissions. For example, it might be relevant to differentiate between emissions related to investments and to current consumption (Chen et al., 2018). Moreover, just as there are flows of goods between countries in international trade, there are also cross-border flows of capital that affect global emissions. If a country maintains a trade surplus, this will be balanced by an equally large deficit in foreign investments – i.e. net savings abroad will be larger than foreign investments within the country – in accordance with the basic equation Exports – Imports = Savings – Investments. It could be argued that, to maintain symmetry, emissions related to foreign investments should be treated on a par with emissions related to export. This issue is beyond the scope of the present paper, but investigating how flows of foreign investments affect global emission patterns would be an interesting subject for future research. It would also be worthwhile to realize a further decomposition of the specialization factor to examine, first, the extent and direction in which different sectors contribute and, second, to what extent a country’s changes in the export respectively import composition contribute to changes in its specialization over time. The latter was done for Sweden and the UK in Jiborn et al. (2018). One striking observation was the major role played by trade in electricity. Electricity is exported directly, but also, to a much larger extent, embodied in exported goods. It would be possible to distribute embodied electricity over production sectors in order to reflect how the electricity intensity of different nonenergy production sectors contributed to specialization. Such a preliminary study has been conducted for Sweden (Nielsen and Kander, 2017).
Boitier, B., 2012. CO2 Emissions Production-based Accounting Vs Consumption: Insights From the WIOD Databases WIOD Conference Paper, April. Available Online: http:// www.wiod.org/conferences/groningen/paper_Boitier.pdf. Castells, M., 2009. The Rise of the Network Society, 2nd edn. Blackwell Publishing, Hoboken, NJ, USA. Chen, Z.M., Ohshita, S., Lenzen, M., Wiedmann, T., Jiborn, M., Chen, B., Lester, L., Guan, D., Meng, J., Xu, S., Chen, G.Q., Zheng, X., Xue, J.J., Alsaedi, A., Hayat, T., Liu, Z., 2018. Consumption-based greenhouse gas emissions accounting with capital stock change highlights dynamics of fast-developing countries. Nat. Commun. 9, 3581. Davis, S.J., Caldeira, K., 2010. Consumption-based accounting of CO2 emissions. Proc. Natl. Acad. Sci. 107 (12), 5687–5692. Davis, S.J., Peters, G.P., Caldeira, K., 2011. The supply chain of CO2 emissions. Proc. Natl. Acad. Sci. 108 (45), 18554–18559. Domingos, T., Zafrilla, J.E., López, L.A., 2016. Consistency of technology-adjusted consumption-based accounting. Nat. Clim. Change 6 (8), 729. Genty, A., Arto, I., Neuwahl, F., 2012. Final Database of Environmental Satellite Accounts: Technical Report On Their Compilation. WIOD Documentation. 4. . Hermele, K., 2002. Vad kostar framtiden? Globaliseringen, miljön och Sverige. SE: Ordfront, Stockholm. Intergovernmental Panel on Climate Change (IPCC), 2014. Climate Change 2014: Mitigation of Climate Change. First Published. Cambridge University Press, New York, NY, USA. Available Online: https://www.ipcc.ch/report/ar5/wg3/. Jakob, M., Marschinski, R., 2013. Interpreting trade-related CO2 emission transfers. Nat. Clim. Change 3 (1), 19–23. Jakob, M., Steckel, J.C., Edenhofer, O., 2014. Consumption-versus production-based emission policies. Annu. Rev. Resour. Econ. 6 (1), 297–318. Jiborn, M., Kander, A., Kulionis, V., Nielsen, H., Moran, D.D., 2018. Decoupling or delusion? Measuring emissions displacement in foreign trade. Glob. Environ. Chang. Part A 49, 27–34. Kander, A., Jiborn, M., Moran, D.D., Wiedmann, T.O., 2015. National greenhouse-gas accounting for effective climate policy on international trade. Nat. Clim. Chang. 5 (5), 431–435. Kander, A., Jiborn, M., Moran, D.D., Wiedmann, T.O., 2016. Reply to’Consistency of technology-adjusted consumption-based accounting’. Nat. Clim. Chang. 6 (8), 730. Minx, J.C., Wiedmann, T., Wood, R., Peters, G.P., Lenzen, M., Owen, A., Paul, A., 2009. Input–output analysis and carbon footprinting: an overview of applications. Econ. Syst. Res. 21 (3), 187–216. Nielsen, H., Kander, A., 2017. Swedish Comparative Carbon Advantage in World Exports: The Role of The Electricity Sector, Energiforsk Report. Peters, G., 2008. Reassessing carbon leakage. Eleventh Annual Conference on Global Economic Analysis-Future of Global Economy. pp. 12–14. Available Online: https:// www.gtap.agecon.purdue.edu/resources/download/3751.pdf. Peters, G.P., Minx, J.C., Weber, C.L., Edenhofer, O., 2011. Growth in emission transfers via international trade from 1990 to 2008. Proc. Natl. Acad. Sci. 108 (21), 8903–8908. Peters, G.P., Davis, S.J., Andrew, R., 2012. A synthesis of carbon in international trade. Biogeosciences 9 (8), 3247. Sachs, J., Schmidt-Traub, G., Kroll, C., Durand-Delacre, D., Teksoz, K., 2017. SDG Index and Dashboards Report 2017. Bertelsmann Stiftung and Sustainable Development Solutions Network (SDSN), New York, NY, USA. Available Online: http://sdgindex. org/assets/files/2017/2017-SDG-Index-and-Dashboards-Report–full.pdf, 2017, [Accessed 7 September 2018]. Sun, J., 1998. Changes in energy consumption and energy intensity: a complete decomposition model. Energy Econ. 20 (1), 85–100. Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R., Vries, G.J., 2015. An illustrated user guide to the world input–output database: the case of global automotive production. Rev. Int. Econ. 23 (3), 575–605. World Bank, 2010. World Bank Analytical Classifications. Available Online: http:// databank.worldbank.org/data/download/site-content/OGHIST.xls.
Appendix A. Supplementary data Supplementary data associated with this article can be found, in the online version, at https://doi.org/10.1016/j.envsci.2018.10.010. References Ahmad, N., Wyckoff, A., 2003. Carbon Dioxide Emissions Embodied in International Trade of Goods. Available Online: https://www.oecd-ilibrary.org/docserver/ 421482436815.pdf?expires=1526377413&id=id&accname=guest&checksum= 6AE7F4C36C33674D0E3D345A3071581B. Andersson, M., Lövin, I., 2015. Decoupling GDP Growth From CO2 Emissions Is Possible. Swedish Foreign Policy News. Available Online: http://www.swemfa.se/2015/05/ 23/sweden-decoupling-gdp-growth-from-co2-emissions-is-possible.
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Contents lists available at ScienceDirect
Environmental Science and Policy journal homepage: www.elsevier.com/locate/envsci
Global outsourcing of carbon emissions 1995–2009: A reassessment a,⁎
a
a
a
Nicolai Baumert , Astrid Kander , Magnus Jiborn , Viktoras Kulionis , Tobias Nielsen a b
T b
Lund University, Department of Economic History, Box 7083, S-220 07, Lund, Sweden Lund University, Department of Political Science, Box 52, S-221 00, Lund, Sweden
A R T I C LE I N FO
A B S T R A C T
Keywords: Carbon leakage Climate mitigation Emission outsourcing Input-output analysis Emissions embodied in trade Consumption-based accounting
Increasing global production fragmentation allows for outsourcing of emissions, which may undermine national climate policies. Researchers focusing on the gap between consumption-based and production-based emissions have concluded that developed countries are systematically outsourcing emissions to developing countries. However, asymmetries in emissions embodied in trade may emerge due to differences in carbon intensity of energy and production between different countries, and need not be evidence of outsourcing. This study investigates if previous results concerning emission in –and outsourcing of developed and developing countries hold when emission flows are adjusted for technological differences. Two striking results are demonstrated: first, the magnitude of outsourcing is significantly smaller than previous studies have suggested, and, second, there is no clear divide between developing and developed countries. Large developed Anglophone countries (US, UK, Canada and Australia) were increasingly outsourcing emissions between 1995 and 2009 by shifting toward more carbon-intensive goods in their imports and less carbon intensive goods in exports, whereas other developed countries (i.e. the Nordics, advanced Asia and even the aggregate EU-27) maintained a positive emission trade balance. Among major developing countries, China is a major insourcer of emissions, while other emerging economies show no consistent pattern (e.g. India, Turkey and Brazil) or marginal outsourcing (e.g. Indonesia and Mexico). These results contribute to a more nuanced understanding of the impact of international trade on global carbon emissions.
1. Introduction Two competing narratives about carbon emission trends in developed countries are found in the literature. One is optimistic, highlighting that several developed nations have reduced domestic carbon emissions significantly while maintaining substantial economic growth. This is considered proof that economic growth can be decoupled from carbon emissions (Andersson and Lövin, 2015); if some countries have managed to reduce their emissions by improving carbon efficiency and changing consumption patterns, other countries could presumably do so as well (Jiborn et al., 2018). The other narrative is pessimistic and points to the fact that global emissions have continued to increase – particularly in developing countries serving demands for the same developed countries that are reporting reduced domestic emissions. According to this narrative, developed countries’ improvements in carbon efficiency have so far been offset by increased imports (Peters et al., 2011 & 2012). However, this is not visible in national carbon accounts as traditional, productionbased carbon accounting only considers emissions that occur within national borders. As Hermele (2002, p. 60) puts it: “environmental
⁎
consequences do not disappear just because the manufacturing takes place on the other side of the ocean”. Thus, reported emission reductions may not be evidence of decoupling but of outsourcing of emissions to developing countries that are increasingly acting as “Factories of the World”. Which of these narratives is (more) correct is an important question since decoupling of economic progress from environmental degradation is a necessary condition for sustainable development. If domestic emissions decrease due to outsourcing of emissions-intensive production, this can hardly be considered sustainable. The issue is also highly relevant for the monitoring of national performance in relation to international climate agreements. Little is gained for climate mitigation if countries achieve strict domestic reduction commitments by outsourcing part of their emissions to countries with less strict commitments. The aim of this paper is to assess the claim that carbon emissions are systematically outsourced from developed to developing countries. We investigate the scale and direction of carbon emission outsourcing via international trade between 1995 and 2009. “Outsourcing of emissions” means that a country’s foreign trade
Corresponding author. E-mail address: [email protected] (N. Baumert).
https://doi.org/10.1016/j.envsci.2018.10.010 Received 14 June 2018; Received in revised form 15 October 2018; Accepted 16 October 2018 1462-9011/ © 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/BY-NC-ND/4.0/).
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and methods; section 4 elaborates on the results and section 5 concludes with a discussion and suggestions for further research.
reduces domestic emissions, but increases emissions outside its borders. This is sometimes also called “weak carbon leakage” (Peters, 2008), “carbon displacement” (Jiborn et al., 2018), or “spillover effects” (Sachs et al., 2017). In the weakest sense of the term, all imports amount to emission outsourcing, and all countries that engage in foreign trade are simultaneously outsourcing emissions to others through their imports and insourcing emissions from others through their exports. We analyze whether some countries are net outsourcers – i.e. if they are outsourcing more emissions than they are insourcing – either by differences in the composition of imports and exports or by a monetary trade deficit. Studies showing large-scale net transfers of carbon emissions from developed to developing countries have focused on the difference between consumption-based and production-based emissions (e.g. Peters et al., 2011). Production-based accounting (PBA) – used for official carbon reporting under the UN Framework Convention on Climate Change (UNFCCC) – assigns emissions to the country where they were generated. Consumption-based accounting (CBA) treats emissions that are generated in production as “embodied” in goods, and assigns emission responsibility to the country where a product is finally consumed, regardless of where along the global value chain emissions physically occurred. Many studies have demonstrated a large and growing flow of such embodied carbon emissions in international trade, mainly from developing to developed countries (e.g. Davis and Caldeira, 2010; Peters et al., 2011). For most developed countries, consumption-based emissions are therefore much larger than officially reported production-based emissions. However, imbalances in emissions embodied in exports and imports may result from differences in carbon intensities in energy and production technologies between trading partners, and do not necessarily indicate outsourcing of emissions (Jakob and Marschinski, 2013; Kander et al., 2015; Jiborn et al., 2018). For example, suppose a country has a large share of renewables in its energy mix while specializing in the production of energy-heavy goods – like steel – for exports and importing mainly less energy-demanding products – like software. Such a country could be a net importer of embodied emissions, even if the net effect of its foreign trade is a reduction of emissions abroad (compared to a no trade scenario). It would be odd to consider this as emission outsourcing. Some industrial sectors, such as steel, mining, chemistry, paper and pulp, oil and gas – i.e. heavy industry – are consistently more energy demanding, and hence in general more carbon intensive than others, for example light manufacturing (e.g. pharmaceuticals or electronics) or services. This usually holds regardless of the country of production. But the carbon intensity of energy, and hence the general carbon intensity of production varies substantially between countries. For example, the carbon intensity of Swedish electricity production, which is largely based on nuclear, hydro and wind energy, is only around 15 percent of the global average (Supplementary Information SI.7). To determine if and to what extent emissions are outsourced, we should consider the relative magnitude and composition of a country’s exports and imports, while adjusting for the effects of technology differences – i.e. energy intensity of production and carbon intensity of energy – between countries. For this purpose, we employ a technology-adjusted measure of emission flows in international trade, in which carbon intensities for industrial sectors are standardized according to the world average for each industry. In Jiborn et al. (2018), this measure is applied to Sweden and the UK, and net outsourcing/insourcing is further decomposed into trade composition and monetary trade balance. Our paper extends this analysis to 40 countries (and a Rest-of-the-World aggregate) included in the World Input-Output Database (WIOD) from 1995 to 2009 and investigates the global scale and pattern of emission outsourcing in international trade. The paper is organized as follows. Section 2 summarizes the relevant literature and theoretical insights; section 3 describes the data
2. Theory and previous research A large body of recent research has shifted the emission perspective from producer countries to countries of final demand (e.g. Davis and Caldeira, 2010). Consumption-based accounting allows for calculating direct and indirect emissions involved in the production of goods that are ultimately consumed within a country – i.e. its carbon footprint (Minx et al., 2009) – and hence the amount of emissions generated globally to serve demand in a given country (e.g. Ahmad and Wyckoff, 2003). Several key findings were obtained in prior research. First, numerous studies identified large and increasing quantities of embodied emissions in today’s international trade patterns (e.g. Davis et al., 2011; Peters & Caldeira, 2011; Peters et al., 2012). Davis and Caldeira (2010) found that 23 percent of global CO2 emissions (i.e. 6.2 gigatones; Gt) were internationally traded in 2004. Peters et al. (2011) estimated the emissions embodied in international trade to 4.3 Gt CO2 in 1990 and 7.8 Gt of CO2 in 2008 – equivalent to a rise from 20 to 26 percent of total global emissions. These figures reflect the total amount of emissions embodied in products that are finally consumed in other countries than where they were produced. However, since all countries are both exporters and importers of embodied emissions, the total net flow of emissions from exporters to importers is considerably smaller. The sum of all net deficits (or surpluses) of emissions embodied in trade amounts to, on average, 6.9 percent of global CO2 emissions between 1995 and 2009. Second, the discrepancy between production- and consumptionbased accounting has increased over time. For instance, Boitier (2012) finds that while the EU-27 (i.e. all 27 member countries of the EU before 2013) displayed 11 percent higher consumption-based than production-based emissions in 1995, this gap had risen to 24 percent in 2008. A similar trend is suggested for the OECD countries’ total emissions. Moreover, for major rapidly developing countries (i.e. Brazil, Russia, India and China), production-based emissions exceeded consumption-based emissions by 22 percent in 2008. Third, several scholars suggest a regional divide between developed and developing countries, with the former being net importers and the latter net exporters of emissions embodied in trade. Peters et al. (2011) quantify the net emission transfer from developing to developed countries to have increased four-fold from 0.4 Gt in 1990 to 1.6 Gt in 2008. This could be interpreted as a sign of intensifying emission outsourcing from developed to developing countries. However, Jakob and Marschinski (2013) and Kander et al. (2015) argue that the world’s CO2 trade specialization could be exaggerated in conventional CBA studies since these do not account for differences in production technologies among trade partners. Carbon intensities for equal goods may vary substantially among trade partners. In conventional CBA, trade specialization in export of carbon-intensive goods such as chemicals or steel is indistinguishable from having a more polluting energy system and production in general. Consequently, CBA is unable to identify whether a balance of emissions embodied in trade (BEET) surplus stems from specialization in carbon-heavy exports (relative to imports) or from comparatively emission-intensive energy systems (i.e. electricity generation). In turn, a BEET deficit could be due to either a monetary trade deficit, specialization in carbon-heavy imports (relative to exports) or less emission-intensive technologies and energy. For instance, the scenario depicted in Fig. 1 (adapted from Jakob et al., 2014) – in which arrows represent cross-border deliveries – supposes that a given country A incorporates a more emission-intensive electricity system and/or produces with comparatively more energyintensive technology relative to country B. If country A exchanges identical goods with country B, the result will be a bilateral surplus in 229
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input-output (IO) and emission data for 40 countries and a Rest-of-theWorld (RoW) aggregate (each divided into 35 sectors) covered in the WIOD (Timmer et al., 2015). Alongside the economic linkages mapped in the core IO tables, WIOD also contains satellite accounts of key environmental factors such as CO2 emissions from fossil fuels and industrial processes that are embodied in traded goods (Genty et al., 2012). We consider the CO2 emissions indicated in WIOD, which contributed roughly 2/3 of total emissions of greenhouse gases during the studied period (Intergovernmental Panel on Climate Change (IPCC, 2014). The net emission balance is decomposed into effects of trade specialization and monetary trade balance. TBEET results are scale invariant, i.e. countries can be aggregated into regions (e.g. EU-27) (Domingos et al., 2016; Kander et al., 2016). Our results will allow for generalizations linking TBEET to countries’ characteristics (e.g. regions, emission regulations or development level) while relying on annual IO tables for 1995 to 2009. We consider all individual countries within WIOD that the World Bank classified as “High income” countries in 2009 as developed (World Bank, 2010). In addition, Bulgaria, Lithuania and Romania are referred to as developed to avoid considering these countries (forming part of the EU-27) within multiple groups. Consequently, we refer to the EU-27, Australia, Canada, Japan, South Korea, Taiwan and the USA as “developed” and the remaining individual countries within the WIOD as “developing”. We start by computing the total output x within the examined countries as: Fig. 1. BEET & Technology Differences.
(1)
x = LF
where F is the final consumption matrix and L is the Leontief inverse quantifying direct and indirect production requirements, which are necessary in the production of one unit of final demand in a given industry. Pre-multiplying each industry’s direct CO2 intensity d with LF gives direct and indirect CO2 required to serve final demand:
emissions embodied in trade for A and a deficit for B in a traditional CBA analysis. This holds true although the exchange neither increases nor decreases emissions in either of the countries compared to a no trade scenario, where each country produces the same goods for domestic demand. Outsourcing should capture effects of imbalances in trade structures, i.e. if developed countries specialize in service production and import heavy industrial goods from abroad (Jakob and Marschinski, 2013; Jiborn et al., 2018). Mistaking effects of differences in production technologies for effects of a structural imbalance in exports and imports could result in biased conclusions about the extent or direction of emission outsourcing. To remedy this, there is need for a refined method that corrects for technology differences between nations. An analogy that may be helpful is that GDP accounts need to be corrected for inflation to generate meaningful growth rates, which is done by deflating the estimates by an index to obtain constant figures. Similarly, without correcting for technology differences, we can only say little about the drivers of emission outsourcing in global trade. For this purpose, Kander et al. (2015) developed the TCBA (technology-adjusted consumption-based account). Subsequently, Jiborn et al. (2018) introduced the technologyadjusted balance of emissions embodied in trade (TBEET) to estimate how trade specialization and monetary trade balance affect emission transfers in trade for the UK and Sweden. In Jiborn et al. (2018), the UK, but not Sweden, was found to be outsourcing emissions abroad through its trade structure. This indicates a more complex picture than simply developed countries’ emission outsourcing toward developing countries. Following this, one key contribution of this paper is to assess the validity of the developed-developing country distinction and to add more nuance to the observable emission outsourcing pattern.
ˆ E = dLF
(2)
The elements of the matrix E indicate the direct and indirect emissions in domestic as well as foreign industries required to serve the demands of the given country. A “hat” operator denotes matrix diagonalization. Using eij to denote emissions embodied in trade from country i to j , emissions embodied in exports (EEE ), and imports (EEI ) of country i can be calculated as follows: n
EEEi =
∑ ji
EEIi =
∑ ji
n
eij
(3)
eji
(4)
The balance of emissions embodied in trade (BEET) for country i is the difference between its emissions embodied in exports and emissions embodied in imports:
BEETi = EEEi − EEIi
(5)
To avoid considering effects of technology differences as proof of trade specialization, we standardize the carbon intensity for each sector across all countries. Therefore, we adjust the vector d assuming globally uniform carbon intensities across nations for each sector separately. The resulting vector dWA displays average carbon intensity and its block elements diWA are the same across all countries. Then we follow standard procedure as outlined in Equations 2–5 (except that country-specific carbon intensities di are replaced by world average carbon intensities diWA). The total emission matrix EWA is obtained by:
3. Methodology
EWA = dˆWALF
3.1. Technology-adjusted balance of emissions embodied in trade
(6) WA
represent the emissions that would have occurred if Elements eij the same products had been produced with world average technology.
Building upon Jiborn et al. (2018), we apply the TBEET approach to 230
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decomposed into its drivers – trade balance and trade specialization.
Technology-adjusted emissions embodied in exports are calculated as:
TEEEi =
n
∑ ji
eijWA
4.1. Emission Trade and Responsibility from 1995 to 2009
(7)
Similarly, technology-adjusted emissions embodied in imports are computed as:
TEEIi =
n
∑ ji
eWA ji
The net emission trade imbalance (i.e. the sum of net surpluses or deficits) as a share of global emissions amounts to 3.6 percent on average over the period, increasing from 3.0 in 1995 to 4.6 percent in 2008. This is significantly less than the net flow of emissions embodied in trade from net exporters to net importers when measured in CBA terms without technology-adjustment – amounting to 6.9 percent. This finding is crucial as it shows that about half of what previous studies considered as outsourcing can be attributed to technology differences across nations. Consistent with previous research, Fig. 2 demonstrates a large and mostly increasing discrepancy between developed countries’ domestic emissions (PBA) and emissions generated to serve their consumption (CBA). Consequently, the BEET is negative for both the EU-27 and USA throughout the period. Furthermore, the BEET trends for the EU-27 and USA are similar – reflecting an apparent pattern of advanced countries’ consumption-based emissions significantly exceeding domestically produced emissions. However, in contrast with the EU-27’s BEET, the TBEET is positive over the entire period. Thus, the observed gap between CBA and PBA for the EU-27 is explained by more carbon efficient production than world average rather than by emission outsourcing through a trade deficit or structural trade specialization. The aggregate EU-27’s positive TBEET suggests net emission insourcing throughout the period. This contrasts with Peters et al.’s (2011) proposition that (most) developed countries are outsourcers of emissions. For the USA, however, the result does not change much between BEET and TBEET as the country remains net emission outsourcer after the technology-adjustment. The small difference between the USA’s TBEET and BEET is reasonable since the large US economy defines global technologies to a high degree in our technology-adjusted measure (Supplementary Information SI.8), which is weighted by each nation’s share in global exports for the respective commodity group. The difference between the US and the EU-27 for technology-adjusted emissions was also pointed out in Kander et al. (2015). Fig. 3 shows TBEET as a share of total production-based emissions on a yearly basis for several country (group) accounts. Embodied emissions in the EU-27’s export exceeded the equivalent imported emissions by a share of 2–6 percent of its production-based emissions. In contrast, the emission trade balance of the US has continuously been negative and, since 2002, exceeded 10 percent of its production-based emissions – manifesting the country’s status as major outsourcer of carbon emissions. Other major Anglophone countries such as Australia, Canada and the UK also exhibit a strong shift towards outsourcing during the period. In contrast, the Nordic countries in our sample (i.e. Sweden, Denmark and Finland) consistently appeared as insourcers. Did developing countries – often claimed to be “Factories of the World” – act as insourcers? Fig. 4 displays results for all developing countries within the WIOD on aggregate and for China individually. According to traditional CBA the developing economies are overall net emission exporters (see Table 1) with both China’s and the overall developing countries’ PBA emissions being significantly higher than emissions caused by the countries’ consumption resulting in a positive BEET. The developing countries’ overall TBEET is also positive but less so than their BEET. This suggests that carbon efficiency in this country group is significantly below world average. However, this result is almost entirely due to China’s exceptional TBEET. In fact, China and Russia are the only large developing countries that display clearly positive TBEETs (i.e. are carbon insourcers) over the whole period. In contrast, other large emerging economies’ TBEET fluctuate around zero (Brazil and Indonesia) or indicate comparatively small net outsourcing
(8)
and the technology-adjusted balance of emissions embodied in trade is: (9)
TBEETi = TEEEi − TEEIi 3.2. Decomposition of the TBEET
We decompose each country’s TBEET into effects of trade specialization and monetary trade balance using an additive and refined Laspeyres index decomposition (Sun, 1998). Our decomposition uses the same method as Jakob and Marschinski (2013), but deviates from it in that, since energy and carbon intensities are calculated as world averages for each sector on the export as well as the import side, only the composition and scale of exports and imports will have impact. Thus, a country’s trade specialization equals the difference between the technology-adjusted carbon intensities of its exports and its imports:
ΔTSpi =
TEEEi TEEIi – Ex i Imi
(10)
where Exi and Imi denote a country’s total export and import value, respectively. The contributions of trade specialization (ΔCiTSp) and trade balance (ΔCiTB) to a country’s TBEET are calculated by:
1 TEEEi TEEIi ⎞ TEEEi TEEIi ⎞ ΔCiTSp = ⎛ − * Imi + * ⎛ − *(Ex i − Imi ) Imi ⎠ 2 ⎝ Ex i Imi ⎠ ⎝ Ex i (11) ⎜
⎟
⎜
⎟
and
ΔCiTB =
1 TEEEi TEEIi ⎞ TEEIi *(Ex i − Imi ) + * ⎛ − *(Ex i − Imi ) 2 ⎝ Ex i Imi Imi ⎠ ⎜
⎟
(12) Supplementary Information SI.12 provides a more detailed derivation and explanation. A country with a neutral trade balance and more carbon-intensive imports than exports will exhibit a negative TBEET (i.e. be classified as an outsourcer). However, even if a country’s imports are more carbonintensive than its exports, a positive monetary trade balance may counteract this and result in a positive TBEET. Moreover, by employing time series, we may also quantify whether countries gradually change their trade composition by shifting towards more (or less) carbon-intensive imports or exports. If developed countries consistently show a trend towards light export and heavy import products (i.e. a shrinking TBEET) in the period 1995–2009, this finding would disprove the optimistic decoupling interpretation. 4. Results Table 1 lists the PBA, CBA, conventional BEET and (decomposed) TBEET for all individual countries in 1995 and 2009 to allow for country-specific consultation. Moreover, it emphasizes not only that the global sum of CBA and PBA is equal, but also that the sum of TBEETs for all nations amounts to zero globally as imported emissions must equal exported emissions by definition. In the following, we first elaborate on the TBEET results together with the conventional BEET as well as the PBA and CBA from 1995 to 2009. This unveils the discrepancy between the conventional and technology-adjusted balance of emissions in trade. Second, the TBEET is 231
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Table 1 PBA, CBA, BEET & (decomposed) TBEET – Individual Countries in 1995 and 2009. PBA
Australia Austria Belgium Bulgaria Brazil Canada China Cyprus Czech R Germany Denmark Spain Estonia Finland France UK Greece Hungary Indonesia India Ireland Italy Japan S Korea Lituania Luxemburg Lattvia Mexico Malta Netherlands Poland Portugal Romania Russia Slovakia Slovenia Sweden Turkey Taiwan USA RoW Total
CBA
BEET
TBEET
T.Spec
T.Bal
1995
2009
1995
2009
1995
2009
1995
2009
1995
2009
1995
2009
305 62 132 62 229 465 3074 5 119 949 74 254 18 60 406 590 87 61 215 806 35 454 1141 409 17 8 10 306 2 193 368 54 130 1608 45 15 63 179 194 4954 3880 22039
405 64 121 47 323 529 6696 8 109 817 87 300 16 62 386 559 110 53 393 1643 43 425 1102 584 15 5 8 427 3 205 317 61 91 1598 36 18 58 296 314 5025 5494 28850
300 96 134 40 260 414 2577 9 102 1164 75 289 14 64 506 638 103 63 214 741 38 528 1414 402 17 7 11 297 3 196 309 62 110 1229 33 17 82 202 185 5231 3865 22039
454 95 146 38 370 555 5651 11 97 958 64 371 12 70 547 659 139 58 380 1595 59 545 1270 499 19 8 11 451 4 210 292 71 96 1224 37 21 81 315 211 5670 5487 28849
5 −35 −2 22 −30 51 498 −3 17 −214 −1 −35 4 −3 −100 −48 −16 −2 0 66 −3 −74 −273 7 −1 0 −1 9 −1 −3 59 −7 20 379 11 −2 −19 −23 9 −277 15 0
−48 −30 −25 9 −48 −26 1045 −3 11 −141 23 −71 3 −8 −162 −100 −29 −5 12 48 −16 −120 −169 85 −5 −3 −3 −24 −1 −5 25 −10 −5 375 −1 −3 −24 −19 103 −644 7 0
8 −6 27 4 −10 27 77 −2 9 −8 21 −1 0 13 84 6 −13 0 −8 12 5 36 122 28 −1 1 −1 −5 −1 55 10 −4 4 58 5 0 15 −11 25 −187 −395 0
−25 25 6 5 −6 −30 613 −3 13 87 33 4 1 2 −35 −79 −12 0 −18 −49 12 −7 58 95 −1 4 −1 −32 0 59 5 −7 −4 105 6 −1 2 −4 34 −565 −292 0
5 −3 14 4 −4 10 54 −1 11 −56 14 11 1 6 59 −6 4 2 −9 14 1 9 12 22 0 −1 −1 −10 0 35 6 3 7 40 5 0 3 −5 18 −141 −134
−29 18 −4 7 −10 −28 437 −1 8 −23 26 33 1 −1 −20 −77 19 −2 −28 −28 3 −3 16 69 −1 2 −1 −31 0 34 2 4 2 60 6 −1 −8 8 20 −406 −86
3 −3 12 0 −6 17 24 −1 −2 48 7 −12 0 8 25 11 −18 −2 1 −2 4 27 110 6 −1 1 0 5 0 20 4 −6 −2 18 0 0 12 −6 7 −46 −261
4 7 10 −2 4 −2 175 −2 4 110 7 −29 1 3 −14 −2 −31 2 10 −21 9 −4 42 26 0 2 0 −1 0 25 3 −11 −5 45 1 0 11 −11 14 −159 −207
Note: All values in megatons (Mt).
2009 prevents a verification of this. Still, it can be expected that the monetary trade surplus will have upheld the EU-27’s positive TBEET after 2009. Third, consulting the individual analysis of EU-27 countries (Table 1) we find major differences in the trade specialization pattern. While the trade composition of Spain, Denmark, Greece, and the Netherlands display positive contributions to the EU-27’s import/export specialization, countries such as Germany, France and (particularly) the UK counter these contributions – although not enough to result in an overall negative impact of the aggregate EU-27’s trade specialization. For the USA, the monetary trade deficit has contributed substantially to outsourcing, but specialization has played an increasing role, and was since 2000 more important than the monetary trade deficit. Fig. 6 shows the UK’s decomposed TBEET (normalized by PBA), which does not at all resemble the corresponding EU-27 graph. Both specialization and monetary trade balance have contributed to the UK’s negative TBEET. Still, specialization has contributed much more than monetary trade balance to emission outsourcing. In 2009, almost the entire negative TBEET stemmed from exporting less carbon-intensive products and importing more CO2-heavy goods. The pattern of the UK’s trade composition seems akin to the development for the US. Both countries display a consistent and increasing negative impact of trade specialization – reflecting reinforced
of carbon emissions (India and Mexico). This emphasizes that the categorization of developing countries as insourcers of emissions is an oversimplification. To put this in perspective, Fig. 3 illustrates China’s normalized TBEET relative to its overall PBA emissions, which is substantial and increasing up until the world financial crisis in 2008. Thus, China is indeed taking on the role of being a “Factory of the World”. 4.2. The underlying drivers of the TBEET To understand the nature of emission outsourcing/insourcing, we decompose TBEET into its drivers. Fig. 5 displays the contribution of trade specialization (T. Spec.) and monetary trade balance (T. Bal.) to the TBEET for the EU-27 and USA 1995-2009. These two drivers can either counteract or reinforce each other. The included graphs illustrate the relative share of both drivers compared to the respective total domestic emission. Both the impacts of trade specialization and monetary trade balance are positive for the EU-27. However, the positive impact of trade specialization decreased over the period, reflecting a shift towards more carbon-intensive imports and/or less carbon-intensive exports, while the monetary trade surplus upheld part of the EU-27’s status as net insourcer. This trend for trade specialization may have continued after 2009, which could have shifted the specialization of the EU-27 trade pattern towards outsourcing, but the lack of data after 232
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Fig. 2. PBA, CBA, BEET & TBEET – EU-27 & USA (1995–2009).
trade composition. Since 1995, the total impact of trade specialization to the insourcing of both the aggregated developing countries and China individually has ranged between 53 and 81 percent of the overall TBEET. That specialization has a stronger positive impact on China’s TBEET than trade balance might be surprising, considering that a substantial share of Chinas exports consists of light manufacture. However, trade specialization is an effect of import as well as export composition, and the average, technology-adjusted carbon intensity of Chinese exports has been consistently higher than that of its imports throughout the period. The aggregate monetary trade surplus of the developing economies amplifies their overall TBEET. This seems to confirm the developing countries’ status as insourcers. However, the aggregate results for these major developing countries are largely due to China’s individual contribution to the TBEET. China and Russia exhibit distinctly different specialization patterns compared to other major emerging countries (see Table 1). Brazil, India, Indonesia, Mexico and Turkey display either small or negative contributions of trade specialization throughout the period (with unambiguous results for the trade balance). Certainly, these findings do not suggest a general pattern of insourcing for developing or emerging economies in general when technology differences are corrected for. However, they do point to China’s exceptional role as the major emission insourcer through a large monetary trade surplus and more carbon-intensive exports than imports. Nevertheless, China and Russia are not the only countries with a large positive contribution of trade specialization. Other examples of insourcers are the Nordic countries that also focus on heavy industrial goods in their exports, despite being high-income advanced countries. In fact, the Nordics’ positive trade balance with more carbon-intensive exports than imports (Fig. 8) is in stark contrast to the clear cases of outsourcers such as the US and the UK. Furthermore, advanced Asian countries such as Japan, Korea or Taiwan may – due to their trade composition and monetary trade balance – be considered “Factories of the world” (i.e. insourcers), which is further highlighted in Fig. 8 depicting normalized contributions of the TBEET drivers.
Fig. 3. TBEET as % of PBA – Selected Country (Group) Accounts (1995–2009).
outsourcing through their import-export composition. Moreover, we examine whether a clear pattern of trade specialization or monetary trade balance underlies the TBEET of developing countries and China in particular (Fig. 7). First, Fig. 7 shows a consistent pattern of positive contributions of
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Fig. 4. PBA, CBA, BEET & TBEET – Developing Countries & China (1995–2009).
Fig. 5. Contribution of Trade Balance and Specialization – EU-27 & USA (1995–2009).
Fig. 6. Contribution Trade Balance and Specialization – United Kingdom (1995–2009).
Thus, it can be asserted that – when technology differences are accounted for – China, the Nordic countries and the advanced major Asian economies emerge as the most pronounced cases of insourcers, with specialization in more emission-intensive exports than imports as well as monetary trade surpluses. The aggregate EU-27 displays a declining yet positive trade specialization with a large monetary trade surplus – strongly contrasting the most pronounced country cases of emission outsourcing (i.e. US and UK).
5. Concluding discussion Outsourcing of emissions is not necessarily bad for the global climate. There is no reason to expect that factor content in international trade should be balanced for any specific production factor; indeed, a prime motive for engaging in international trade is that countries have different comparative advantages regarding production factors, including energy, which is the primary driver of carbon emissions. If 234
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effective distribution of global production and hence contribute to a reduction of global emissions. If, on the other hand, carbon intensive production is outsourced from countries with more carbon efficient production technologies to countries that are largely based on fossil fuels, the result may be a net increase in global emissions. Trade can thus either facilitate global climate goals by supporting a more carbon efficient distribution of production, or undermine them. The interesting question is not whether outsourcing occurs per se, but rather which countries outsource or insource emissions. Moreover, it is worth investigating to what extent and in what direction trade may affect global climate goals. This study shows that accumulated net outsourcing of emissions via trade throughout the period amounted to 3.6 percent of global emissions between 1995 and 2009. This means that the potential effect on global climate targets is significant, although it is only half of the net emission transfers that are found when no adjustments for differences in technology are made. Consequently, a significant part of the net flow of emissions embodied in trade, that has been interpreted as emission outsourcing in conventional CBA analyses, is in fact driven by differences in carbon intensity of energy and production technologies, rather than outsourcing of heavy industry from developed countries. Studies based on the gap between consumption-based and production-based emissions have concluded that developed countries were consistently outsourcing carbon emissions to developing economies between 1995 and 2009. This study shows that, when the effects of technology differences are cancelled out, the pattern is less clear. Taken as a collective, developed countries are found to be outsourcing emissions to developing economies; however, this is largely due to the US and China, which accounted for half of the net emission insourcing/ outsourcing in 2009. In fact, disregarding the US results in collective emission insourcing of developed WIOD countries during the whole period. Since carbon intensities of most industrial sectors in China are above world average (Supplementary Information SI.9), the current net flow of emissions appears to run in a way that counteracts global climate goals. However, the fact that there is no consistent pattern for neither developed nor developing countries shows that the dynamics of emission outsourcing are more complicated than previously assumed. Nevertheless, our analysis also observed that most developed regions tend to shift towards comparatively more carbon-intensive imports and less carbon-intensive exports over time. This should raise concerns among policy-makers, since it does offset part of the climate mitigation achievements that have been reported by a number of developed countries. Our study contributes to this discussion with a more nuanced picture of this trend. A pattern that emerges is that large Anglophone countries (i.e. the UK, US, Canada and Australia) have all been emission outsourcers during most of the period studied here. Future research may examine why these countries show a different pattern than many other developed countries (e.g. advanced Asian countries and the Nordics). One possibility is that some early-industrialized countries, such as the US and the UK are subject to historical lock-in effects, either in the form of more energy demanding consumption than average or with large sunk costs in coal machinery that might have impeded the transition to oil and electricity later. Another option relates to strong currencies, which could have allowed some countries to run monetary deficits over extended periods. Finally, it is possible, of course, that Anglophone countries are just ahead of most other developed countries in deindustrializing their economies, focusing more on services and knowledge-intensive production while outsourcing more heavy industrial production (Castells, 2009). This explanation is supported by our results on the negative trend of emission trade specialization in most developed countries. This study has highlighted the significant impact that the choice of accounting principles has on the scale as well as direction of emission flows in international trade. Adjusting for technology differences
Fig. 7. Contribution Trade Balance & Specialization - China & Developing Countries (1995–2009).
Fig. 8. Contribution Trade Balance & Specialization – Nordics & Developed Asia (1995–2009).
energy intensive production is outsourced from countries that are less well-endowed in terms of renewable energy resources, to countries with ample renewable energy, this may in fact lead to a more carbon 235
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between countries has been shown to reverse the net flow of emissions in foreign trade for a number of countries, and to challenge common views about the global pattern of outsourcing and insourcing of emissions. There are other possible adjustments that could also contribute to improving our understanding of the drivers of global emissions. For example, it might be relevant to differentiate between emissions related to investments and to current consumption (Chen et al., 2018). Moreover, just as there are flows of goods between countries in international trade, there are also cross-border flows of capital that affect global emissions. If a country maintains a trade surplus, this will be balanced by an equally large deficit in foreign investments – i.e. net savings abroad will be larger than foreign investments within the country – in accordance with the basic equation Exports – Imports = Savings – Investments. It could be argued that, to maintain symmetry, emissions related to foreign investments should be treated on a par with emissions related to export. This issue is beyond the scope of the present paper, but investigating how flows of foreign investments affect global emission patterns would be an interesting subject for future research. It would also be worthwhile to realize a further decomposition of the specialization factor to examine, first, the extent and direction in which different sectors contribute and, second, to what extent a country’s changes in the export respectively import composition contribute to changes in its specialization over time. The latter was done for Sweden and the UK in Jiborn et al. (2018). One striking observation was the major role played by trade in electricity. Electricity is exported directly, but also, to a much larger extent, embodied in exported goods. It would be possible to distribute embodied electricity over production sectors in order to reflect how the electricity intensity of different nonenergy production sectors contributed to specialization. Such a preliminary study has been conducted for Sweden (Nielsen and Kander, 2017).
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Appendix A. Supplementary data Supplementary data associated with this article can be found, in the online version, at https://doi.org/10.1016/j.envsci.2018.10.010. References Ahmad, N., Wyckoff, A., 2003. Carbon Dioxide Emissions Embodied in International Trade of Goods. Available Online: https://www.oecd-ilibrary.org/docserver/ 421482436815.pdf?expires=1526377413&id=id&accname=guest&checksum= 6AE7F4C36C33674D0E3D345A3071581B. Andersson, M., Lövin, I., 2015. Decoupling GDP Growth From CO2 Emissions Is Possible. Swedish Foreign Policy News. Available Online: http://www.swemfa.se/2015/05/ 23/sweden-decoupling-gdp-growth-from-co2-emissions-is-possible.
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