The Uneven Geography of Carbon Emissions in European Value Chains: A Subnational Analysis of carbon elites-ghettos

This paper brings new compelling regional-level evidence on the environmental degradation brought about by intra-European value chains. The paper postulates the presence of pollution havens derived as a consequence of the European production integration. We identify a neat elites-ghettos divide in carbon emission intensity per unit of production across EU regions: while capital-city and Northern regions form a carbon elites club, of contained emissions, Eastern regions converge towards systematically higher intensities. We build the intra-EU emission network, looking at the CO2 embodied in its backwards linkages to account for the extent to which the divide derives from GVC participation. The flow analysis reveals a steady decline in domestic multipliers, but persistently higher carbon intensity in foreign intermediates, with the Eastern regions dominating the most polluting linkages. The elites-ghettos regions are characterised by opposite emission paths: while the first export CO2 via the outsourcing of the most-polluting production activities toward the East, the latter import CO2 via the production of high-emission intermediaries for the West. In fact, convergence clubs display distinct specialisation profiles, with mid-stream manufacturing regions structurally locked into higher emission intensity. Overall, the paper highlights a discarded dimension of GVCs, that is, the environmental lock-in paths for regions embedded into GVCs to serve as pollution havens for the European carbon elite.