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Pollution Offshoring and Emission Reductions in EU and US Manufacturing

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  • Claire Brunel

    (American University)

Abstract

Between 1995 and 2008, the European Union and the United States raised environmental standards and concurrently experienced important reductions in emissions from manufacturing despite a rise in output. Levinson (Am Econ Rev 99(5):2177–2192, 2009) finds that the offshoring of polluting industries to countries with lower environmental standards played only small role in the cleanup of US manufacturing, which was largely due to improvements in production technique. But there is no evidence of whether US patterns hold in other developed economies. I provide the first analysis of the pollution intensity of EU production and imports to examine which forces drove the EU cleanup. I find that concerns about the effect of pollution offshoring were unfounded in the European Union, not because the effect was small like in the United States, but because the patterns of specialization of EU production and imports were exactly opposite to what pollution offshoring would predict. Starting in the early 2000s, EU manufacturing increasingly produced more pollution-intensive goods while imports became progressively less pollution-intensive, especially from low-income countries. There are two notable exceptions: primary aluminum and electrometallurgical products, except steel, which do provide evidence of offshoring from the EU to lower income countries. The “brown” specialization of EU production is difficult to explain, but about a quarter can be matched by increased demand for EU exports of polluting goods. However, similar to the US cleanup, changes in production and imports were overwhelmed by improvements in production technique, which were the main drivers of the cleanup of manufacturing.

Suggested Citation

  • Claire Brunel, 2017. "Pollution Offshoring and Emission Reductions in EU and US Manufacturing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 621-641, November.
  • Handle: RePEc:kap:enreec:v:68:y:2017:i:3:d:10.1007_s10640-016-0035-1
    DOI: 10.1007/s10640-016-0035-1
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    2. Filippo Bontadini & Francesco Vona, 2020. "Anatomy of Green Specialization: Evidence from EU Production Data, 1995-2015," Working Papers hal-03403070, HAL.
    3. Jingbo Cui & On Kit Tam & Bei Wang & Yan Zhang, 2020. "The environmental effect of trade liberalization: Evidence from China's manufacturing firms," The World Economy, Wiley Blackwell, vol. 43(12), pages 3357-3383, December.
    4. Polina Ustyuzhanina, 2022. "Decomposition of air pollution emissions from Swedish manufacturing," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(2), pages 195-223, April.
    5. J. Scott Holladay & Lawrence D. LaPlue, 2021. "Decomposing changes in establishment‐level emissions with entry and exit," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1046-1071, November.
    6. LaPlue, Lawrence D., 2019. "The environmental effects of trade within and across sectors," Journal of Environmental Economics and Management, Elsevier, vol. 94(C), pages 118-139.
    7. Inácio Araúgo & Randall Jackson & Amir B. Ferreira Neto & Fernando Perobelli, 2018. "Environmental Costs of European Union Membership: A Structural Decomposition Analysis," Working Papers Working Paper 2018-04, Regional Research Institute, West Virginia University.
    8. Jean-Thomas Bernard & Jakir Hussain & Mishaal Masud Sinha, 2020. "Survival of the cleanest? Evidence from a plant-level analysis of pollutant emissions in Canadian pulp and paper industry, 2005–2013," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(2), pages 109-126, April.
    9. Wu, Ran & Ma, Tao & Schröder, Enno, 2022. "The contribution of trade to production-Based carbon dioxide emissions," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 391-406.
    10. Cole, Matthew A. & Elliott, Robert J.R. & Okubo, Toshihiro & Zhang, Liyun, 2021. "Importing, outsourcing and pollution offshoring," Energy Economics, Elsevier, vol. 103(C).
    11. Hille, Erik & Shahbaz, Muhammad, 2019. "Sources of emission reductions: Market and policy-stringency effects," Energy Economics, Elsevier, vol. 78(C), pages 29-43.
    12. Araújo, Inácio Fernandes de & Jackson, Randall W. & Ferreira Neto, Amir B. & Perobelli, Fernando S., 2020. "European union membership and CO2 emissions: A structural decomposition analysis," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 190-203.
    13. Cole, Matthew A. & Zhang, Liyun, 2019. "The clean-up of Chinese manufacturing: Examining the role played by changing techniques of production," Economics Letters, Elsevier, vol. 180(C), pages 11-14.
    14. Damien Dussaux & Francesco Vona & Antoine Dechezleprêtre, 2020. "Carbon Offshoring: Evidence from French Manufacturing Companies," Working Papers hal-03403069, HAL.
    15. Rottner, Elisa & von Graevenitz, Kathrine, 2022. "What drives carbon emissions in German manufacturing: Scale, technique or composition?," ZEW Discussion Papers 21-027, ZEW - Leibniz Centre for European Economic Research.
    16. Lawrence D. LaPlue & Christopher A. Erickson, 2020. "Outsourcing, trade, technology, and greenhouse gas emissions," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(2), pages 217-245, April.

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    More about this item

    Keywords

    Trade and environment; Environmental account and accounting; Technological innovation; Input–output table;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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