Elsevier

Energy

Volume 147, 15 March 2018, Pages 858-875
Energy

Transnational transfer of carbon emissions embodied in trade: Characteristics and determinants from a spatial perspective

https://doi.org/10.1016/j.energy.2018.01.008Get rights and content

Highlights

  • Global emissions in trade have flown from developing to developed countries.

  • Spatial econometric regression models are used to investigate the determinants of embodied emissions changes.

  • Energy mix improvement can curtail the impact of trade on embodied carbon emissions.

  • Backfire effects are found in embodied carbon emissions.

Abstract

Based on the multi-regional input-output analytical framework and spatial econometric regression models, this paper analyzes embodied global emissions in trade, so as to unravel the characteristics of spatial emissions transfer for 39 countries from 1995 to 2011, and investigates the determinants of transnational transfer of the global emissions in trade changes from a spatial perspective. One important finding from this study is that the global emissions in trade primarily have flown from developing to developed countries and regions. Notably, however, for those countries endowed with rich natural resources and developed economy like Canada, they have become the net carbon exporters in trade. Another important finding is that such important determinants as energy and industrial structure have spatial spillover effects on the emissions embodied in trade changes. Regarding climate policies, our results suggest that the increase in the share of clean energy could curtail the impact of trade on global carbon emissions. Notably, our study also finds that improving energy efficiency would not lower the emissions embodied in global trade because the forecasted reduction in energy use and thus carbon emissions that may be lost due to the sum of consumer and market responses.

Introduction

Global climate change caused by greenhouse gas (GHG) emissions from fossil fuel combustion and from anthropogenic activities has already become one of the most significant environmental and ecological issues currently faced by countries all over the world [1,2]. To actively respond to and mitigate climate change in reducing ecological risks for the earth and the crisis of human survival, a legally binding global climate change agreement (i.e. the Paris Protocol) on reducing GHG emissions had been implemented since November 4, 2016, which is one of the most important and unprecedented conventions in human history. From the perspective of global climate governance, the Paris Protocol primarily determines the shared targets of emissions reduction in order to limit global GHG emissions and ensure that they reach summits as early as possible, and produce near-zero net pollutant emissions in the second half of this century. Fortunately, all parties had made a unequivocal commitment to avoiding a global average temperature rise greater than 2 °C relative to the pre-industrial levels.

To achieve these targets, the stakeholders are required to assign the quantitative task of differentiated commitments for carbon emissions reduction to countries or regions [[3], [4], [5]]. International trade plays a vital role in global economic development by providing a mechanism to effectively and efficiently allocate various resources (e.g. energy, capital, technology, products and services) during economic globalization. However, it also has a side effect that consumers and pollutants (e.g. CO2 emissions and SO2) producers in the production processes and providers of consumable items are separated in geographic space [[6], [7], [8], [9], [10]]. International trade also provides a mechanism to transfer pollutant emissions associated with their consumption to other countries or regions [[11], [12], [13]]. It is known as the so-called emissions leakage caused by supply chain extension in the process of the globalization of trade in goods. Thus, part of the obligations for carbon emissions reduction that would otherwise belong to the consumers are transferred to the producers accompanied with international trade [1,[14], [15], [16]]. Consequently, it leads to the enormous difficulties in reaching a consensus of all countries or regions about sharing the responsibilities between consumers and producers and in promoting the achievement of global emissions reduction targets.

With the rapid development of economic globalization and regional economic integration, the volume of global carbon-leakage has increased by approximately 80% during the period of 1995–2007, in line with the increase in international integration of supply and demand chains [4,17]. It may imply that by means of relocating the production of goods and services abroad or importing substitution, the consumers in developed countries circumvent their own emissions reduction responsibilities and shirk some obligations of global pollutant emissions reduction. In other words, international trade may have an important influence on country's emission accounting and the imputation of responsibilities for pollutant emissions in global climate policies. Consequently, in order to allocate global responsibilities for carbon emissions reduction to each country from the viewpoint of equity, important climate implications emerging from using a consumption-based emissions inventory instead of a conventional production-based emissions inventory have been presented. A lot of attention has been paid to the impact of global emissions embodied in trade (GEET) on the country's carbon emissions accounting and its reduction responsibility assignments (see amongst others, [1,5,[18], [19], [20]]. In this context, it is particularly important for researchers to conduct in-depth and comprehensive discussions on the GEET and thus provide policy-makers with more balanced and effective mitigation actions.

Overall, the literature on emissions embodied in trade and related issues at global scope had developed extensively during the past decades. However, two main limitations that we are seeking to improve are the following. One is that few studies focused on the spatial characteristics of transnational transfer of the GEET in a group of major countries for a period of time, and thus the changes in inflows and outflows of the GEET from a spatial perspective had also not yet been discussed. It may lead to provide less valuable policy implications for emission reduction policy makers to identify global emissions reduction responsibilities and raise appropriate mitigation policies. However, by means of analyzing regional transfer of emissions embodied in trade within a specific country like China or the U.S., previous studies (see amongst others [19,21,22], found that amounts of flows of the emissions embodied in trade transferred from underdeveloped regions to relatively developed regions within a country, but from the perspective of embodied emissions at the global level, a question hence arises as to whether flows of the GEET also shift from underdeveloped or developing countries (or regions) to developed countries (or regions). Furthermore, whether the characteristics of spatial transfer of GEET have changed significantly along with the rapid development of the global economy is also our important concern in this study.

The other limitation is that studies pertaining to determinants of the GEET, particularly considering spatial spillover effects among determinants, have not yet received attention. In addition, more importantly, the possible impacts of some important determinants such as energy structure and industrial structure on the GEET changes from a spatial perspective had received little attention in the previous studies. Actually, a few studies (see amongst others [[23], [24], [25], [26]], found that the emission growth from expansion of regional residents' consumption could be partially offset by reductions in emissions through some measures such as improving industrial structure or optimizing energy structure. Thus, it is essential to introduce a more effective method that enables stakeholders to better understand the determinants of embodied carbon emissions changes at the global level. Specifically, as an important method considering spatial spillover effects among these significant determinants that are not explicitly captured in the SDA studies, spatial econometric regression models are superior to capturing spatial interaction effects to investigate the determinants of carbon emissions embodied in trade at the global scope. Moreover, this method had been applied extensively to analyze the influencing factors of energy intensity changes or carbon emissions intensity changes for a country or a group of countries and regions [[27], [28], [29]]. Unfortunately, the examination of the determinants of embodied carbon emissions changes using the spatial econometric models has received little attention from a spatial perspective.

Moreover, it is particularly noteworthy that in order to formulate the effective emissions mitigation policies, regional emission spillover effects in international trade should be seriously taken into account [30]. Because spatial spillover effects across regions via supply chains can affect changes in one region's production technology or final demand, and thereby may have a significant impact on the changes in other regions' carbon emissions embodied in trade [31]. Most importantly, spatial spillover effects of influencing factors on the GEET should be likely to exist among countries. For example, most countries in the world are closely linked with each other through international supply chains in the process of globalization, namely, a country's production technology or final demand may have a significant impact on others' carbon emissions growth via international production networks. From the above analysis, it follows that spatial spillover effects should be considered when investigating embodied carbon emissions upon a global scale. Otherwise, it may draw erroneous conclusions. To sum up, from the embodied carbon emissions perspective, whether measures such as improving industrial structure or optimizing energy structure are also effective for the GEET and whether the spatial spillover effects of such key factors as energy structure, industrial structure and per capita GDP exist need to be verified in this study. A more comprehensive understanding of the determinants of the global pollutants transfer may help policy makers to effectively implement future climate and environmental policies at the global level.

In order to enable the related stakeholders to facilitate developing a targeted global environmental and energy policies, using the WIOD for 39 countries (all 27 EU countries and 12 major countries), this paper contributes to filling the above mentioned gaps by means of the MRIO model and spatial econometric models to analyze the characteristics and the determinants of transnational transfer of the GEET from a spatial perspective for a period of 1995–2011. The structure for the remainder of this paper is organized as follows. The following section summarizes literature review on GEET, while the details of methodology and data sources are presented in the section 3. Section 4 discusses empirical results. Finally, the conclusions and policy implications are shown in Section 5.

Section snippets

Literature review

In the existing literature, studies pertaining to emissions embodied in trade at global scope can be divided into two primary streams. One focuses on emissions embodied in trade in a specific country and its internal trade across regions within this country for one year or for a period [16,19,20,22,[32], [33], [34], [35], [36], [37], [38], [39], [40], [41], [42], [43]]. Overall, these results showed that most regions outsourced a small amount of the total carbon emissions to the rest of world

Calculation of carbon emissions embodied in trade

Input-output (IO) analysis captures direct, indirect and induced economic effects within an economy through a detailed accounting of interdependencies between inputs and outputs across economic sectors. It can thus capture indirect environmental impacts caused by upstream production and is suitable for the estimation of pollutants [1]. This macroeconomic modeling technique has been recognized as an effective framework to quantify the embodied GHG and resources used in one region for the

Empirical results and discussions

In this section, we first present the characteristics of embodied carbon emissions flows in international trade of each region chosen in our study, and then analyze spatial econometric results.

Conclusions and policy implications

The goal of this research is to enhance our more systemic and comprehensive understanding of the characteristics and the determinants of transnational transfer of global carbon emissions embodied in trade. To this end, using multi-regional input-output tables from the WIOD, this paper in the first stage analyzed the characteristics of spatial transfer of embodied global emissions in trade from 1995 to 2011. In the second stage, spatial econometric models are applied to investigate the

Acknowledgments

We thank the anonymous reviewers and the editor for their useful suggestions and valuable comments. Financial support from the Zhejiang Provincial Social Science Planning Fund Program (No.18NDJC149YB), the National Natural Science Foundation of China (No.71742001, 41761021), the China Postdoctoral Science Foundation (No. 2017M621740) and the Humanities and Social Science Research Program of the Ministry of Education (No.17YJC790061) are gratefully acknowledged.

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