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CO2 embedded in trade: trends and fossil fuel drivers

Author

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  • Sylvain Weber
  • Reyer Gerlagh
  • Nicole A. Mathys
  • Daniel Moran

Abstract

The amount of CO2 embedded in trade has substantially increased over the last decades. We study the trends and some drivers of the carbon content of trade over the period 1995-2009. Our main findings are the following. First, the mix of traded goods tends to have higher emission intensity than the average mix of final demand. Second, dirty countries tend to specialize in emission-intensive sectors. This finding suggests that trade liberalization may increase global emissions. Third, the share of goods produced in emission-intensive countries is rising, consequently increasing global emissions. Finally, we find that coal abundance is an important driver of net CO2 exports, and abundance increases exports. These findings highlight the importance of considering trade when designing CO2 reduction strategies. They also suggest that, if left unattended, continued growth in global trade will increase – not decrease – global CO2 emissions.

Suggested Citation

  • Sylvain Weber & Reyer Gerlagh & Nicole A. Mathys & Daniel Moran, 2019. "CO2 embedded in trade: trends and fossil fuel drivers," CESifo Working Paper Series 7562, CESifo.
    • Handle: RePEc:ces:ceswps:_7562
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    Cited by:

    1. Arik Levinson, 2017. "Energy Intensity: Prices, Policy, or Composition in US States," Working Papers gueconwpa~17-17-04, Georgetown University, Department of Economics.
    2. Alexander Krenek & Mark Sommer & Margit Schratzenstaller, 2019. "Sustainability-oriented Future EU Funding. A European Border Carbon Adjustment," WIFO Working Papers 587, WIFO.

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    More about this item

    Keywords

    international trade; embodied emissions; carbon leakage; multi-region input-output analysis; fossil fuels; Kyoto Protocol;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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