The Carbon Trust Policy & Markets team set out to understand the role international carbon flows play in national accounts of greenhouse gas emissions.
The International Carbon Flows analysis presented here explores the magnitude and impact of the movement of embodied carbon around the world, at a global scale and for five selected sectors. By tracking this flow of emissions from the region of production to the region of consumption, this analysis provides new insights into the drivers of GHG emissions production, and the opportunities for reduction, in the globally integrated flow of carbon embodied in products.
Around one quarter of greenhouse gas emissions are embodied in goods and services which "flow" between the country of production and the country of consumption via international trade. Over the next decade, reducing the carbon intensity of traded goods will be a key focus of business and policy action, and an important opportunity to further reduce GHG emissions.
- Embodied carbon flows are large and growing
Approximately 25% of all CO2 emissions from human activities 'flow' (i.e. are imported or exported) from one country to another.
- Embodied carbon flows in both commodities and final products
The flow of carbon is comprised of roughly 50% emissions associated with trade in commodities such as steel, cement, and chemicals, and 50% in semi-finished/finished products such as motor vehicles, clothing or industrial machinery and equipment.
- Embodied carbon imports are significant for many developed economies
Major developed economies are typically net importers of embodied carbon emissions. UK consumption emissions are 34% higher than production emissions: Germany (29%), Japan (19%) and the USA (13%) are also significant net importers of embodied emissions. For some economies with very carbon efficient production processes, the relative importance of imported carbon is even greater. The high levels of net imports in France (43%) and Sweden (61%) reflect in part the low carbon intensity of their energy systems.
- Many developing countries export embodied emissions in international trade
Developing countries are generally net exporters of CO2 emissions. For example, in 2004 China exported ~23% of all its domestically produced CO2
Implications for business
Businesses are primarily responsible for importing and exporting traded goods on behalf of their customers. The carbon embodied in supply chains is both an opportunity and a risk:
- Business opportunities from international carbon flows
The opportunity is to measure and reduce emissions across the supply chain and communicate this to consumers, in order to be rewarded for action through increased sales and reduced costs.
- Business risks from international carbon flows
The risk in failing to take action is that consumers choose lower carbon alternatives and that ultimately new emissions abatement approaches force businesses to take action at a later date in any event.
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