The technology-adjusted balance of emissions embodied in trade: Assessing global carbon emission displacement from 1995 to 2009

Increasing global production fragmentation allows for emission displacement, which may counteract advanced nation’s domestic reductions of production-related carbon emissions. Consequently, input-output analysis has become a common tool to measure countries’ carbon footprint and emission trade balances based on national consumption instead of domestically produced CO2 emissions. Nevertheless, traditional consumption-based indicators insufficiently account for cross-country discrepancies in production technologies or energy systems when quantifying actual emission displacement. By introducing the technology-adjusted balance of emissions embodied in trade we correct for these differences, identify global emission displacement from 1995-2009 and decompose it into the impact of its underlying drivers – trade specialization and the monetary trade balance. We find that Anglophone countries and particularly the USA have been net importers of carbon emissions as they specialized in carbon-heavy imports relative to less CO2-intensive exports and – especially in the US-American case – showed a drastic monetary trade deficit from 1995-2009. Conversely, most European countries did not display suchlike trade specializations and – driven by monetary trade surpluses – have largely been net exporters of carbon emissions. Furthermore, China is – other than most emerging economies and mainly based on increasing specialization in more carbon-intensive exports than imports – identified as the major net exporter of emissions. These distinctions, suggesting that carbon trade patterns across the developed and developing world have recently been far from clear-cut, represent a novel finding in the emission displacement literature.