The CO2 Content Of Consumption Across US Regions: A Multi-Regional Input-Output (MRIO) Approach

We improve on existing estimates of the carbon dioxide (CO₂) content of consumption across regions of the United States. Using a multi-regional input-output framework which tracks both interstate and international trade, we estimate the direct and indirect CO₂ emissions attributable to domestically and internationally imported goods. We find that on average indirect emissions embodied in non-energy consumption goods and services account for 55% of total consumption-related emissions. In contrast to previous analyses using an input-output approach to track emissions from production to consumption, we find substantial heterogeneity in the indirect CO₂ intensity of consumption across regions. Importantly, this heterogeneity is quantitatively similar to the more easily observable heterogeneity in the CO₂ emissions attributable to direct fossil fuel and electricity consumption. These findings have important implications for the regional distributional impacts of a national climate policy as well as for understanding differing incentives to implement state-level or regional policies.