Industry and globalisation

Carbon Dioxide Emissions Embodied in International Trade

 

Last updated: June, 2015

OECD’s Inter-Country Input-Output (ICIO) database, covering 61 countries and the region rest of the world, combined with IEA's energy statistics (CO2 emissions from fuel combustion) and other industry statistics, can be used to estimate consumption-based CO2 emissions. That is, the emissions occurring anywhere in the world, along global production chains, that are eventually consumed by one country.

The top 6 countries and regions in total consumption-based as well as production-based emissions in 2011 are China (CHN), USA, EU28, India (IND), Japan (JPN) and Russia (RUS). While the EU28 countries have decreased both, production- and consumption-based since 1995, there was a significant increase in both China and India, and a visible increase in the US, especially in consumption-based emissions. China is now the country with the single highest absolute emissions from a consumption and a production perspective. In per capita terms however, despite the fact that Chinese per capita emissions have doubled since 1995, US consumption-based emissions are still almost four times larger.

 

Carbon Dioxide Emissions Embodied in International Trade

 

The development of difference between production-based and consumption-based carbon emissions is highlighted in the graph below. While the OECD countries in total have been and still are embedded carbon net-importers (the solid blue line representing consumption-based emissions is above the dashed blue line representing production-based emissions), the non-OECD countries are net-exporters. Note, that the shaded blue (OECD net imports) and green (non-OECD net exports) areas have the exact same size, i.e. OECD net-imports are non-OECD net-exports of embedded carbon. Net-imports of OECD countries have doubled between 1995 and 2005, peaked between 2005 and 2007 and then decreased due to the economic crises.

 

Carbon Dioxide Emissions Embodied in International Trade

 

Not all OECD countries are net-importers of carbon and similarly, not all non-OECD countries are net-exporters of carbon, see the blue bars representing per capita production-based emissions of the Netherlands (NLD) or Korea (KOR), which are larger than the red bars representing per capita consumption-based emissions, Or, see the red bar of Brazil (BRA) being larger than the blue bar. The average of the three countries with highest per capita consumption-based emissions (Australia AUS, United States USA, and Luxembourg LUX) is ten times higher than that of the three countries with lowest per capita emissions (Brazil BRA, Indonesia IDN and India IND).

 

Carbon Dioxide Emissions Embodied in International Trade

 

It is further possible to estimate the origin of emissions embodied in final consumption. For some countries, up to 75% of the emissions embodied in the final goods and services consumed are emitted elsewhere in the world, while this number is less than 10% for others. The graph shows that the increase between 1995 (light bars in the background) and 2011 in the share of CO2 emitted abroad in total CO2 embedded in final demand is mainly due to an increase in the share of emissions in the non-OECD countries (green part of the bars). For most countries the share of OECD countries only increased little (compare light blue bars in the background with blue bars in the foreground).

 

Carbon Dioxide Emissions Embodied in International Trade

 

Methodology

Consumption-based emissions are calculated using IEA data on “CO2 emissions from fuel combustion” (2014) and the OECD inter-country input-output (ICIO) system (Edition 2015). Using information from both, emission-intensities of production are calculated for each industry in each country. These intensities are then combined with the Leontief inverse of the ICIO system to get emission multipliers for final demand. The carbon emissions associated with final demand are calculated as

CC= diag(c) (I-A)^(-1) Y+FNLC

With diag(c) being the diagonalised vector of industry and country specific emission intensities of production of size KN (K*N, K = number of industries and N = number of countries), A being the global intermediate coefficients matrix and, thus, (I-A)^(-1) being the global Leontief inverse (both of size KN x KN), and Y being the global final demand matrix of size (KN x N). FNLC is a KN x 1 vector of direct emissions of final demand, the most obvious example being emissions from private road transport. The result, matrix CC is of size KN x N, displaying in the rows the industries and countries of origin of emissions and in the columns the final demand countries, in whose consumption the emissions are embedded. Several alterations of this calculation are possible, e.g. a differentiation between final demand industries.

 

Further reading <forthcoming>

Data for download in Excel (country level) <forthcoming>

Data at OECD.stat (industry level) <forthcoming> 

 

Any suggestions or queries can be sent to stan.contact@oecd.org, mentioning Embodied CO2 in the title of your message. 

 

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