Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Perspective
  • Published:

Interpreting trade-related CO2 emission transfers

Abstract

Most industrialized countries are net importers of carbon emissions, that is, they release fewer emissions for the production of their total exported goods and services than the amount generated (by their trading partners) for producing their total imported goods and services1,2,3,4,5,6,7,8. But what do such carbon trade-deficits imply in terms of global CO2 emissions and the design of carbon trade-policies? Drawing on trade theory, this Perspective argues that a deeper understanding of these observed net emission transfers is required to assess how international trade affects global emissions and proposes a method to disentangle the underlying determinants of such transfers.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

Figure 1: Decomposition of net exports of embodied emissions (in megatonnes of CO2) for selected countries.
Figure 2: Decomposition of selected net transfers of embodied emissions (in megatonnes of CO2) resulting from bilateral trade.

Similar content being viewed by others

References

  1. Davis, S. J. & Caldeira, K. Consumption-based accounting of CO2 emissions. Proc. Natl Acad. Sci. USA 107, 5687–5692 (2010).

    Article  CAS  Google Scholar 

  2. Peters, G., Minx, J. Weber, C. L. & Edenhofer, O. Growth in emission transfers via international trade from 1990 to 2008. Proc. Natl Acad. Sci. USA 108, 8903–8908 (2011).

    Article  CAS  Google Scholar 

  3. Guan, D., Peters, G., Weber, C. L. & Hubacek, K. Journey to world top emitter – an analysis of the driving forces of China's recent CO2 emissions surge. Geophys. Res. Lett. 36, L04709 (2009).

    Article  Google Scholar 

  4. Li, Y. & Hewitt, C. N. The effect of trade between China and the UK on national and global carbon dioxide emissions. Energ. Policy 36, 1907–1914 (2008).

    Article  Google Scholar 

  5. Pan, J., Phillips, J. & Chen, Y. China's balance of emissions embodied in trade: Approaches to measurement and allocating international responsibility. Oxford Rev. Econ. Pol. 24, 354–376 (2008).

    Article  CAS  Google Scholar 

  6. Peters G. P. & Hertwich, E. G. CO2 embodied in international trade with implications for global climate policy. Environ. Sci. Technol. 42, 1401–1407 (2008).

    Article  CAS  Google Scholar 

  7. Peters, G. P. & Hertwich, E. G. Post-Kyoto greenhouse gas inventories: Production versus consumption. Climatic Change 86, 51–66 (2008).

    Article  CAS  Google Scholar 

  8. Peters, G., Weber, C. L., Guan, D. & Hubacek, K. China's growing CO2 emissions - a race between increasing consumption and efficiency gains. Environ. Sci. Technol. 41, 5939–5944 (2007).

    Article  CAS  Google Scholar 

  9. Leontief, W. Domestic production and foreign trade: The American capital position re-examined. Proc. Am. Phil. Soc. 97, 332–49 (1953).

    Google Scholar 

  10. Leamer, E. E. The Leontief paradox, reconsidered. J. Polit. Econ. 88, 495–503 (1980).

    Article  Google Scholar 

  11. Dietzenbacher, E. & Mukhopadhyay, K. An empirical examination of the pollution haven hypothesis for India: Towards a green Leontief paradox? Environ. Resour. Econ. 36, 427–449 (2007).

    Article  Google Scholar 

  12. Caldeira, K. & Davis, S. J. D. Accounting for carbon dioxide emissions: A matter of time. Proc. Natl Acad. Sci. USA 108, 8553–8534 (2011).

    Article  Google Scholar 

  13. Fischer, C. Trade's growing footprint. Nature Clim. Change 1, 146–147 (2011).

    Article  Google Scholar 

  14. The Cost of Trade. The Economist (26 April 2011); available via http://go.nature.com/y3KOZk

  15. Harrigan, J. Technology, factor supplies, and international specialization: Estimating the neoclassical model. Am. Econ. Rev. 87, 475–94 (1997).

    Google Scholar 

  16. Clark, D. West Blamed for Rapid Increase in China's CO2 . The Guardian (23 February 2009); available via http://go.nature.com/XeDZvY

  17. Deardorff, A. V. & Hakura, D. S. in Trade and Wages: Leveling Wages Down? (eds Bhagwati, J. & Kosters, M. H.) 76–107 (AEI, 1994).

    Google Scholar 

  18. Copeland, B. & Taylor, M. S. Trade, growth, and the environment. J. Econ. Lit. 42, 7–71 (2004).

    Article  Google Scholar 

  19. Ismer, R. & Neuhoff, K. Border tax adjustment: A feasible way to support stringent emission trading. Eur. J. Law Econ. 24, 137–164 (2007).

    Article  Google Scholar 

  20. Elliott, J. et al. Trade and carbon taxes. Am. Econ. Rev. 100, 465–469 (2010).

    Article  Google Scholar 

  21. Steckel, J., Kalkuhl, M. & Marschinski, R. Should carbon-exporting countries strive for consumption-based accounting in a global cap-and-trade regime? Climatic Change 100, 779–786 (2010).

    Article  CAS  Google Scholar 

  22. Hoel, M. Efficient climate policy in the presence of free-riders. J. Environ. Econ. Manag. 27, 259–274 (1994).

    Article  Google Scholar 

  23. Jakob, M., Marschinski, R. & Hübler, M. Between a Rock and a Hard Place: A Trade-Theory Analysis of Leakage under Production- and Consumption-Based Policies (EAERE Annual Conference, Rome, 2011); available via http://go.nature.com/dEzsRI

    Google Scholar 

  24. Vanek, J. The factor proportions theory: The n-factor case. Kyklos 21, 749–756 (1968).

    Article  Google Scholar 

  25. Leamer, E. E. Factor-supply differences as a source of comparative advantage. Am. Econ. Rev. 83, 436–439 (1993).

    Google Scholar 

  26. Helpman, E. The factor content of foreign trade. Econ. J. 94, 84–94 (1984).

    Article  Google Scholar 

  27. Helpman, E. & Krugman, P. Market Structure and Foreign Trade (MIT Press, 1985).

    Google Scholar 

  28. Maskus, K. E. A test of the Hecksher-Ohlin-Vanek theorem: The Leontief commonplace. J. Int. Econ. 19, 201–212 (1985).

    Article  Google Scholar 

  29. Bowen, H. P., Leamer, E. E. & Sveikauskas, L. Multicountry, multifactor tests of the factor abundance theory. Am. Econ. Rev. 77, 791–809 (1987).

    Google Scholar 

  30. Estevadeordal, A. & Taylor, A. M. A century of missing trade? Am. Econ. Rev. 92, 383–393 (2002).

    Article  Google Scholar 

  31. Harrigan, J. in The Handbook of International Trade (eds Choi, K. E. & Harrigan, J.) 85–118 (Wiley, 2003).

    Book  Google Scholar 

  32. Markusen, J. R. Factor movements and commodity trade as complements. J. Int. Econ. 14, 341–356 (1983).

    Article  Google Scholar 

  33. Helpman, E. The structure of foreign trade. J. Econ. Perspect. 13, 121–44 (1999).

    Article  Google Scholar 

  34. Davis, D. R. & Weinstein, D. E. International trade as an “integrated equilibrium”: New perspectives. Am. Econ. Rev. 90, 150–154 (2000).

    Article  Google Scholar 

  35. Hall, R. E. & Jones, C. I. Why do some countries produce so much more output per worker than others? Q. J. Econ. 114, 83–116 (1999).

    Article  Google Scholar 

  36. Hakura, D. Why does HOV fail? The role of technological differences within the EC. J. Int. Econ. 54, 361–82 (2001).

    Article  Google Scholar 

  37. Deardorff, A. V. The general validity of the Heckscher-Ohlin theorem. Am. Econ. Rev. 72, 683–94 (1982).

    Google Scholar 

  38. Davis, D., Weinstein, D. E., Bradford, S. C. & Shimpo, K. Using international and Japanese regional data to determine when the factor abundance theory of trade works. Am. Econ. Rev. 87, 421–46 (1997).

    Google Scholar 

  39. Trefler, D. The case of the missing trade and other mysteries. Am. Econ. Rev. 85, 1029–46 (1995).

    Google Scholar 

  40. Bernstein, J. & Weinstein, D. E. Do endowments predict the location of production? Evidence from national and international data. J. Int. Econ. 56, 55–76 (2002).

    Article  Google Scholar 

  41. Choi, Y-.S. & Krishna, P. The factor content of bilateral trade: An empirical test. J. Polit. Econ. 112, 887–914 (2004).

    Article  Google Scholar 

  42. Maskus, K. E. & Nishioka, S. Development-related biases in factor productivities and the HOV model of trade. Can. J. Econ. 42, 519–553 (2009).

    Article  Google Scholar 

  43. Reimer, J. Global production sharing and trade in services of factors. J. Int. Econ. 68, 384–408 (2006).

    Article  Google Scholar 

  44. Trefler, D. & Zhu, S. C. Beyond the algebra of explanation: HOV for the technology age. Am. Econ. Rev. 90, 145–149 (2000).

    Article  Google Scholar 

Download references

Acknowledgements

We want to thank J. Steckel for discussions and general support. Further comments from O. Edenhofer, J. Siegmeier and J. Minx are gratefully acknowledged. K. Caldeira provided an extensive review that helped to remove several inaccuracies. We are also indebted to M. Wodinski for designing the figures and U. Kornek for assistance with the trade data. All remaining errors are those of the authors.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Robert Marschinski.

Ethics declarations

Competing interests

The authors declare no competing financial interests.

Supplementary information

Supplementary Information

Supplementary Information (PDF 370 kb)

Rights and permissions

Reprints and permissions

About this article

Cite this article

Jakob, M., Marschinski, R. Interpreting trade-related CO2 emission transfers. Nature Clim Change 3, 19–23 (2013). https://doi.org/10.1038/nclimate1630

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/nclimate1630

This article is cited by

Search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing