User:Manni0228/Manni0228/Embedded Emission

Introduction
Embodied or embedded emissions refer to the accumulated emissions that are emitted over the entire production process of a given product, process, or activity. Emissions include the direct emissions emitted during the production process as well as the indirect emissions that occur along the global supply chain as a result of energy acquisition, transportation, manufacturing, etc. On the global level, embodied emissions refer to the emissions embodied in trade, meaning the flow of emissions emitted through one country’s production to satisfy another country’s consumption. According to a research article, the definition of embedded emissions is the emission that includes the direct and indirect carbon emitted for the entire production process. These values are needed to estimate impacts on carbon emissions due to changes in consumption patterns.

There are several terms that are useful to understanding embedded emissions in international trade. EET refers to embedded emissions in trade; BEET refers to balance of emissions embedded in trade; EEI refers embedded emissions in import; EEE refers to embodied emissions in export.

The importance of embedded emissions is that it offers a better understanding of the environmental separation between domestic consumption and global production. Furthermore, the study of embedded emissions provides insight to carbon leakage, which is the shift in carbon dioxide pollution from developed countries to developing countries. Through international trade, developed countries that have stricter environmental regulations can outsource high pollution production in order to shift, rather than abate, their own emissions.

The first graph on the right shows the share of global cumulative energy-related CO2 emissions between 1890-2007.



The second image is a world image that shows the ratio of GDP to CO2 emissions according to the International Energy Agency in October, 2010. The countries range from low, middle, high income, European Union, and OECD countries. The green-colored countries indicate higher figure than the world and red-colored countries show a lower figure than the world.



Carbon Leakage
Carbon leakage is a term to describe a situation where some countries’ carbon emission is transferred or leaked to another country. It can arise from a variety of reasons, but relative to embedded emissions topic, it can be through international trade. For example, a developed country like United States may have reduced its carbon emissions by just counting its domestic use, however, by importing more carbon-intensive products from China, it leaked its carbon emissions to China. Also, other countries might have more strict regulations or cap on emissions produced, while other countries might have less stringent environmental regulations.

International trade theory in general, suggests that each nation will produce the goods or services it has a competitive advantage in making, potentially leading to high-value goods (electronics, personal services) being made in the developed world and low-value or pollution-intensive goods being made in developing nations. This theoretical background has driven substantial research on the issue of embodied emissions in trade (EET) and the potential for “carbon leakage” outside the regulatory control of the Kyoto Protocol.

Kyoto Protocol
Kyoto Protocol is an international agreement used to work towards greenhouse gases emissions. In the first commitment stage, 37 industrialized countries and the EU members agreed to reduce greenhouse gas emission to an average of 5% against 1990 levels. Under the latest revisions, the Annex B grouping has been broken down into Annex I countries, which include developed nations that are part of the OECD (Organization for Economic Co-operation and Development), as well as countries with economies in transition (EIT parties). Annex II countries only include the OECD nations, and not the EIT nations. Non-Annex I parties are the same as Non-Annex B parties. In the second commitment stage, countries committed to reduce greenhouse gas emissions by at least 18% below 1990 levels from 2013-2020. A special notice on the change of countries commitment is in the second commitment change. (For more information on United Nations Framework Convention on Climate Change: http://unfccc.int/kyoto_protocol/items/2830.php)

The data shows that 21.5% of global emissions are embedded in international trade. The Annex B countries, such as the U.S. and U.K. are net importers of CO2, while the non-Annex B countries, such as China and India, are net exporters of CO2, which can be an evidence of carbon leakage.
 * Export/Import expressed as % of production-based emissions

United States
The third graph on the right is from the Environmental Protection Agency. It shows the United States emissions per capita and per dollar GDP.



It has shown that United States’ imports rose 128% from 1996 to 2006 while exports rose only 65%.

In general, theory suggests that each nation will produce the goods or services it has a competitive advantage in making potentially high-value goods such as electronics and personal services being made in the developed world and low-value or pollution-intensive goods being made in developing nations.

According to one study that evaluated the embedded emissions from 1997-2004, it was estimated that the overall embodied CO2 in U.S. imports has grown from between 0.5 and 0.8 Gt of CO2 in 1997 to between 0.8 and 1.8 Gt of CO2 in 2004, representing between 9-14% and 13-30% of U.S. (2-4% to 3-7% of global) CO2 emissions in 1997 and 2004, respectively. Overall, the increased import from the seven largest trading partners such as Canada, China, Mexico, Japan, Germany, United Kingdom, and South Korea from 1997-2004, have led to a large increase in the U.S. embedded emissions in trade (EET) for CO2, SO2, and NOx.

The study, Embodied Environmental Emissions in U.S. International Trade, utilized the multi-country input-output model of the U.S. and its data sources were commodity trade data of approximately 18,000 commodities obtained from the U.S. Census (Bureau of Economic Analysis and its publication of annual input-output tables).

The results showed that the three pollutants (CO2, SO2, and NOx) between 1997 and 2004 rate of growth was faster between the 2 year period of 2002 to 2004 than for the 5 year period of 1997 to 2002. It is also clear that these are very large masses of emissions: for example, best estimates for CO2 embedded in U.S. imports doubled from 0.6 to 1.3 Gt between 1997 and 2004, which represents 3-5% of world CO2 emissions in each respective year.

The top seven trading partners, (Canada, China, Mexico, Japan, Germany, the UK, and Korea) accounting for approximately 60% of dollar-valued trade in each year, account for 65-80% of embedded CO2, 70-86% of embedded SO2, and 64-79% of embedded NOx emissions in the time series.

There are several figures in this study that explains the different commodity groups imported. For example, one figure shows that U.S. export structure contains a relatively low-energy mix of commodities, such as services and advanced chemicals such as pharmaceuticals, while import structure contains many energy-intensive goods such as raw materials, energy goods, electronics, and several types of machinery.

Large portions of the growth in EEI which is shown in the research article of Figure 2 are due to increased imports of electric and electronic goods and components (growing from 11 to 18% of total), machinery and equipment (16 to 19%), miscellaneous manufacturing (4 to 8%) and textiles (6 to 9%). Most other commodity groups decreased in relative share of EEI, but increased in volume of emissions, including primary metals and raw materials, chemicals and plastics, and transportation equipment.

Switzerland
In Switzerland, the national greenhouse inventory are prepared under the guidelines of the Climate Convention. But these guidelines only take domestic emissions into account. Switzerland tried to quantify its embodied emissions by trying to account for emissions due to imports and exports.

It has been found that when considering the embedded emissions due to imports and exports, the total greenhouse gas emissions are quantified to be “12.5 tonnes CO2-equivalents (10.7 tonnes CO2) per capita. Only 7.2 tonnes CO2-equivalents (6.0 tonnes CO2) out of this are domestic emissions.”

According to the study (available in the above website) done by Niels Jungbluth, Roland Steiner, Rolf Frischknecht, compared to other countries Switzerland has low per-capita emissions of greenhouse gases because only domestic emissions are considered. The calculation is based on foreign trade statistics and life cycle assessment studies.

United Kingdom
Embedded emissions in United Kingdom may appear to be doing well in reducing its carbon emissions, however it has shown that when they count the emission due to imports and trade, the figures actually is increasing.

Without counting the imports, United Kingdom has cut greenhouse gases just under 9% from 2008-2009 and approximately 18% since 1990, which seems to show a good sign of reaching its 2050 goal of 80% reduction in its carbon footprint.

A 2008 report by the Stockholm Environment Institute (SEI) (http://sei-international.org/publications?pid=831) revealed an 18% increase in emissions related to UK consumption between 1992 and 2004, for example, with those embedded in imports rising from 35 per cent of UK emissions to 67 per cent over the same period.

Professor David Mackay, a professor of natural philosophy in the department of Physics at the University of Cambridge also said that historically, Britain was among the top three worst polluters in the world along with America and Germany. He said in the early 1900s Britain was burning per capita the same amount as Americans do today.

Britain's greenhouse gas emissions are actually twice as high as current estimates says the government's new chief energy scientist. Speaking to the BBC, Professor David MacKay said that Britain is exporting a large part of the carbon emissions to developing countries. 'Our energy footprint has decreased over the last few decades and that's largely because we've exported our industry,' he said.

CO2 emissions in EEI are higher than EEE for all years and there is a clear trend towards increasing EEI, which went up from 4.3% of producer emissions in 1997 to 21% in 2004. From the three world regions investigated in this project, the Rest of the World region (which includes Asia) contributes most to EEI. This dominance has increased sharply in the last couple of years while EEI from non-European OECD countries have fallen significantly at the same time.

Another interesting result is that from all emissions embedded in UK exports (EEE), 27% came from imports to the UK in 1992; this figure increased steadily over the years ending up with 39% of EEE coming from import sources in 2004. The results for embedded CO2 emissions from the UK-MRIO 1 model are in line with findings from other researchers. Previous studies applying a range of different methodologies such as material flow analysis also suggest that more embedded CO2 emissions are imported to the UK than exported.

Defra (Department for Environment, Food and Rural Affairs in UK) stresses that according to the University of Leeds's center for sustainable accounting - which has been contracted by the department to measure these statistics - the UK's carbon footprint fell by 9% between 2008 and 2009 (if the UK follows global trends, this may well be a short term fall due to the financial crisis, however, rather than a longer-term trend).

But the figures also reveal that the UK's 2009 carbon footprint was 20% greater than it was in 1990, with a huge doubling in CO2 emissions related to imports. When the CO2 embedded in imported goods and services is taken into account, the UK carbon footprint calculated on the basis of consumer spending is nearly double the figure that comes from measuring emissions from UK production - just over 700 million tonnes of CO2 as opposed to around 400 million tonnes.

China
This is a graph comparing the CO2 emissions between China and U.S. from 1990 to 2006. As you can see, over the years China has been catching up to US's emission level.



Chinese CO2 emissions increased by 45% from 2002 to 2005, according to a 2009 report by the Center for International Climate and Environmental Research (Cicero): ‘Half of the increase was due to export production, 60 per cent of which was exported to western countries.’

More than 30% of consumption-based emissions were imported in countries including the UK, France, Sweden, Switzerland and Austria in 2004, according to a March 2010 report by the Carnegie Institution. Consumption-based accounting of CO2 emissions found 6.2 gigatonnes of CO2 (23 per cent of global carbon dioxide emissions) were traded internationally in 2004 – ‘primarily as exports from China and other emerging markets to consumers in developing countries’.

It calculated that factoring in net imports would add 4 tonnes to the annual carbon footprint of the average European (currently 11 tonnes a year) and 2.4 tonnes to that of the average American (currently 20 tonnes). It also revealed that 22.5% of China’s net emissions in 2004 were embodied in goods exported to foreign consumers, primarily in the US, Japan and Western Europe.

Embedded Emission Calculation Methods
Multi-regional input-output analysis and Emission Embodied in Trade are both using input-output model.

1. Multi-regional input-output analysis (MRIOA)

MRIOA is a top-down approach which was first used in supply chains supply, then is applied to environmental problems in 1970. It allocates emissions along the supply chain and provides a relationship between producers and consumers, or exporters and importers. MRIO table (MRIOT) is a tool used for such analysis. During production, externalities occur and MRIOA reallocates the externalities in the global carbon emission supply chain to consumption. An allocation example is allocating from agriculture sector to food consumption. The two main components for MRIOA approach are intermediate and final consumption. Compared to EET, multi-regional input-output analysis copes with a bigger group of data. “Input-output analysis (IOA) has seen growing use in the field of environmental assessment recently, but its origins date back to Leontief’s development from the 1930s to the 1960s.”

2. Emission Embodied in Trade

EET is also derived from the supply chain. The EET approach requires the standard IOA framework and separates the framework into domestic and traded components. Emission Embodied in Export (EEE), Total Emission Embodied in Imports (EEI) and the Balance of Emission Embodied in Trade (BEET) are indicators of EET. EET approach is important in the discussion of global climate policy because it can show some insight into the carbon leakage issue. Comparing the MRIOA, EET is a smaller scale of calculation on embedded emission. It is used on calculating embedded emission on individual country.

Calculation variation There are some variations in calculating embedded emission because scholars and organizations use various data source. Existing data source include, CDIAC, UNFCCC, EDGAR, GTAP7.1 and GTAP 7.1+NAMEA. In CDIAC, its data includes fossil fuel, cement production, gas flaring, but it does not include other process emissions. Its international transport (bunk fuels) is included in global total, not in its own item. In UNFCCC (United Nations Framework Convention on Climate Change), its data includes fossil fuels, cement production, gas flaring, and other process emissions. It international transport is measured as a memo by the fuel supplier. In EDGAR, it includes data includes fossil fuels, cement production, gas flaring, and other process emissions and its international transport is measured into countries based on fuel use.

In GTAP 7.1, it includes only fossil fuel and international transport, which has uncertainty as well. In GTAP 7.1 +NAMEA, it includes data includes fossil fuels, cement production, gas flaring, and mixed other process emissions. Its international transport varies by country in principle. Even scholars and researchers used different data set to calculated embedded emission and thus the resulting calculations are different, however the general trend on the result is the similar.

Conclusion
Implications to Global Climate Policy

The United States is the biggest embedded energy importer and embedded energy surplus receiver. In contrast, China is the biggest exporter and deficit receiver. However, China’s growth rate, particularly the export growth sector, suggests that it will be the biggest emitter of the greenhouse gas.



Conflict Under the prevailing conditions, China is to replace the United States as the world’s leading embodied energy consumer in 2027, when per capita EEC in China becomes one quarter of that in the States.

As China and other developing exporters watch their emissions increase rapidly relative to the OECD countries, they are beginning to question why they are criticized for such rising emissions by the very consumers whose market demands they are supplying. On top of their historic responsibility for cumulative emissions, a central question for a post-Kyoto framework is whether developed countries should take responsibility for a portion of current emissions from developing exporters like China. This is an argument that was raised by senior Chinese officials at the Bali conference in December 2007.

Possible Solution or Attempts for Policy Change: To prevent the lagging effect of policy implementation, a reasonable projection on the energy consumption situation plays a significant role in policy making.

Regarding international cooperation, the collective simulation with a consistent basis may motivate technology transfer from high efficiency to low efficiency countries and economic subsidy by net embodied energy importer to net embodied energy exporter. Meanwhile, the comparative advantage determined by embodied energy cost can be applied to make more appropriate allocation of the limited energy resources. The presented results with economic network taken into account provide substantial basis for domestic energy use regulation as well as international trading structure adjustment. For example, if a country tries to develop its automobile industry with given energy constraint, what the policy makers concern is how much energy use will be induced for the whole economy instead of for this single industry.

While the effect of current mitigation policy associated with the production responsibility principle has been questioned due to the separation between energy input and energy consumption, the embodiment analysis seems to be a promising approach to overcome such problem.