CO₂Emissions Embodied In China’s Trade Based On Supply Chain

Climate change is the common issue that the whole world concern, with a lot of attention focused on greenhouse emissions, mostly are carbon dioxide (CO2) emissions. The further development of globalization causes production, consumption and investment separate geographically from each other, international trade gradually becomes the transfer support of CO2emissions. However, from the perspective of currently applied accounting principle of CO2emissions, which is the production-based principle (PP), only emissions occurred within the national territories are considered, emissions transferred by international trade are totally ignored. In order to complete the targets of reducing emissions that were established based on PP, some CO2-consuming countries import high polluting and emitting products instead of producing themselves, or invest high polluting and emitting industries to another country. This constructs the transfer mechanism on a global scale, causes pollution in other countries, and makes a big difference from taken responsibilities to real responsibilities. Thus, emissions occurred within the national territories may be reduced, but emissions from the whole world may not. This is against the intention of reduction targets, and people start to raise questions about the fairness of the applied accounting principle. This paper uses the Input-Output technique to build a Multi-regional Input-Output (MRIO) model of global CO2emissions, calculates the emissions embodied in trade from the perspective of both upstream and downstream of supply chain, and then evaluates the influence of international trade on CO2emissions of the world and China, specifies each country’s difference from taken responsibilities and real responsibilities. This paper has six main points as follows:Firstly, this paper distinguishes between upstream embodied emissions and downstream embodied emissions from concept, calculation method and policy effectiveness. And points out that the research of CO2emissions embodied in trade shouldn’t overemphasize the upstream and ignore the downstream.Secondly, this paper analyzes the CO2emissions embodied in trade on a global scale, including the analysis of total amount of emissions and the influence of international trade on the total amount. According to each country’s characteristics of upstream and downstream embodied emissions, the world can be divided into four categories, which are the importers of CO2emissions responsibility, the exporters of CO2emissions responsibility, the exporters of fossil fuel and other. The paper describes the specific characteristics of each category, and illustrates the global transfer mechanism. It shows that82%emissions transfer of the world occurred among countries of category Ⅰ,Ⅱ and Ⅲ. Category Ⅰ has imported the most emissions responsibilities from both upstream and downstream, Category Ⅱ has exported the most emissions responsibilities, and Category Ⅲ has earned income from exporting primary factors of production.Thirdly, this paper analyzes China’s embodied emissions in trade from a macro perspective, including the analysis of total amount of emissions occurred within the national territories, upstream and downstream embodied emissions and the CO2trade partner. It shows that in2009, China’s domestic CO2emissions were23%of the world, so China is indeed a big emissions generator. However, China is a big CO2exporter and payer as well, and she belongs to Category II. China has already taken much more than her real responsibilities under the currently applied accounting principle.Fourthly, this paper analyzes each industry’s embodied emissions in trade of China from a meso perspective. Uses influence coefficient, response coefficient and non-competitive Input-Output model, combining the environment factors and industrial structure, to build a reasonable index, and then measure the reasonableness of China’s CO2trade structure. The results show that the pillar industries and bottleneck industries are mainly the third industry, and the structure of upstream is better than the downstream. The optimization of CO2trade structure of downstream is much more complicated than the upstream due to the CO2trade structure of downstream has its own characteristics. China’s reasonableness of CO2trade structure is lying in the second place compared to USA, Japan and Australia.Fifthly, this paper compares four accounting principles of CO2emissions, which are production-based principle(PP), consumption-based principle(CP), income-based principle(IP) and shared principle(SP), and points out that SP is the fairest one, and CP, IP take the second place, PP is the worst among these four principles. Countries of Category II, which are represented by China, are the biggest victims of PP.Finally, in order to enable China to obtain a favorable position in the coming climate negotiations and finally embark on the path of low-CO2emitting development, in the end the paper proposes some suggestions such as supporting SP, reaching negotiating partners, developing the third industry and advocating the green consumption concept, based on the empirical analysis results and the comparison of four principles.