A structural decomposition analysis of the emissions embodied in trade

The aim of this study is to quantify the driving forces behind the growth of carbon dioxide emissions embodied in trade (EET). The World Input–output Database is used to estimate EET in 40 countries during 1995–2007 after which a structural decomposition analysis is applied. To avoid biases in the results, we have used the input–output tables in previous year's prices and chained the outcomes. In many developed countries, the growth of emissions embodied in imports is much higher than the growth of emissions embodied in exports. A key reason for this finding is the change in the structure of trade, both in intermediate and in final products. Emerging economies like the BRIC countries have increased their share in production and trade at the expense of developed countries. Producers and consumers in developed countries have shifted towards importing a larger share of products from emerging countries. This is the distinguishing feature that led to an increase of emissions embodied in imports for developed countries and an increase of emissions embodied in exports for emerging countries. These results suggest policy makers to monitor EET more carefully and take the effects of trade on emissions into consideration.