Assessing the role of international trade in global CO2 emissions: An index decomposition analysis approach

Trade-related CO2 emissions are an important component in global emissions. Understanding the role of international trade in emissions is of direct relevance to global and national emission reductions, particularly for major exporters and importers. In the literature, the issue has seldom been studied using index decomposition analysis (IDA), which is a popular tool in assessing growth in national-level CO2 emissions. In this paper, based on a multi-region I-O analysis, we introduce three inter-linked IDA models to quantify the impacts of trade on the production-based emissions, the consumption-based emissions, and the emission balance of economies, respectively. A salient feature of the models, when applied together, is that they can help to assess the role of trade and the emission performance of economies from multiple perspectives. We discuss the relevant methodological issues as well as the advantages and limitations of the models. We then apply the models to evaluate the impact of international trade on changes in global CO2 emissions from 1995 to 2009. It is found that while the growing trade volume drove up the total emissions, changes in the emission intensity and goods composition related to trade led to some degree of emission mitigation, particularly after 2005.