Carbon emissions embodied in international trade: The post-China era

• Published in: Applied energy Vol. 184; pp. 1063 - 1072
• Main Authors: Arce, Guadalupe, López, Luis Antonio, Guan, Dabo
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 15.12.2016
• Subjects: business enterprises; carbon; carbon dioxide; China; climate change; economic development; Emissions embodied in trade; greenhouse gas emissions; Input-output analysis; international trade; Post-China countries; China; Post-China countries; Emissions embodied in trade; China; Input-output analysis
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2016.05.084

•China’s trade with the rest of the world is replaced by the post-China countries.•Under the best scenario, the CO2 emissions in trade savings reach a peak of 18.2%.•Non-traded goods and indirect emissions are driving the global emissions reduction.•Trade diversion to less efficient countries could reduce the emissions only a 1.5%.•If environmental variables are ignored, a chance to mitigate could be overlooked. The so-called post-China countries (PC-16́s), distinguished by low wages and high economic growth, will replace China as the “world’s factory”. The aim of this paper is to assess the effect of these changes on global CO2 emissions pathways. To achieve this, a counterfactual is proposed wherein China’s trade with the rest of the world is replaced by the PC-16’s trade in a global multiregional input–output context. The emissions savings realized by trade replacement are significant in those scenarios where the current pattern of trade is maintained (−13% on emissions traded and −3.5% on global emissions) and in scenarios where enterprises relocate their production directly or indirectly to the most environmentally efficient countries (ranging from −15.2% to −18.2% on emissions embodied in trade). Nevertheless, the potential savings drop considerably (ranging from −1.5% to −7.1%) if companies and host countries take advantage of cheaper, but more polluting means of production and do not internalize the externalities. Through changes in international trade, there is a possibility of reducing emissions, which have to be included in international, multilateral and bilateral agreements to mitigate climate change if we do not want to lose the opportunities these changes present.