Last updated: September, 2015
The OECD’s Inter-Country Input-Output (ICIO) database when 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 distribution across economies of final consumption of embodied carbon that has been emitted anywhere in the world along global production chains.
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.
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.
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).
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).
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 FD_CO2 are calculated as follows:
where diag(EF) is the the diagonalised matrix form of vector EF of industry emissions per unit of production (i.e. Emission Factors) by country, of size KN (K*N) where K = number of industries and N = number of countries. A is the global intermediate coefficients matrix so that (I-A)-1 is the global Leontief inverse (both of size KN x KN), and Y is the global final demand matrix of size KN x N.
The rows in the result matrix CC, of size KN x N, represent the country and industry origins of emissions, while the columns represent the final demand countries where the emissions are consumed.
Total CO2 embodied in final demand by country is then estimated as follows:
where colsum(CC) is a 1 x N vector of total emissions embodied in the consumption of final goods and services, while FNLC is 1 x N vector of direct emissions due to final consumption. These direct emissions stem, to a large extent, from private road transport but also from other uses such as gas for cooking. To ensure that all emissions are taken into account, these emissions need to be added to that of matrix CC. Similarly, to account for all production-based emissions, FNLC needs to be added to the rows of CC (distributed primarily to the manufacture of petroleum products and the electricity, gas and water supply industries).
Several alternative approaches for this type of calculation are possible, e.g. a differentiation between final demand industries.
Any suggestions or queries can be sent to email@example.com, mentioning Embodied CO2 in the title of your message.