The Impact on Global Greenhouse Gas Emissions of Geographic Shifts in Global Supply Chains

- There have been shifts in the geography of Global Supply Chains (GSCs) in recent decades.
- The shift of GSCs toward China directly increased global GHG emissions by 919 Mt. CO2 annually.
- The indirect effects on global emissions attributable to the GSCs shift to China may be as large as to 1.6 Gt CO2/yr.
- A likely further GSC shift from China to South Asia, Africa and Latin America would increase the global GHG emissions.

During the past two decades there has been a shift in the geography of Global Supply Chains (GSCs) from developed countries to China, and more recently from China to successor developing countries in South Asia, Africa and Latin America. The shift in GSC geography influences global greenhouse gas (GHG) emissions because of an energy efficiency and low-carbon technology gap between developed and developing economies. Our simulations indicate that changing GSC geography toward China positively contributed, on average (2001-2008), 919 Mt CO2 equivalents to global GHG emissions annually. In addition, there are potentially even larger indirect effects, including import-related and transportation-related emissions that are attributable to GSC shift-related improvements in developing world consumption and infrastructure. We then investigate the emission impact of a further GSCs shift toward South Asia, Africa and Latin America. Although the direct impact of such a shift is likely negative due to a lower dependency on coal as well as lower carbon intensities in South Asia, Africa and Latin America relative to China, it is likely that the direct effects are more than offset by the indirect shift-related effects associated with improvements in consumption and infrastructure. Our results have policy implications for future climate change mitigation.