When Goods Get Traded, Who Pays For The CO2?

'... which country is responsible for the carbon emitted in global trade? The buyer or the seller?'

Indeed - who is buying all of China's products?

This is why Ecological Footprint is important, it corrects for trade!

Living Planet Report 2008, see p29

Reposted in full from TIME, 9 March 2010

'Popularly, China is a villain in climate change. Many people who attended last year's chaotic UN climate-change talks in Copenhagen — especially those who belonged to the US delegation — singled out China as the main reason the summit nearly collapsed. Chinese diplomats fought hard against any form of emissions regulation, even though their country is now the world's No. 1 national carbon emitter, and will emit far more carbon in the future than any other. In Washington, opponents of carbon cap-and-trade also point to China, which is unlikely to take on a carbon cap of its own, and wonder why the US should have to restrain its emissions. (See pictures of Beijing trying to improve its air quality.)

But a new study published in the March 8 edition of Proceedings of the National Academy of Sciences (PNAS) shows that the carbon equation isn't as straightforward as we might think.

Scientists at the Carnegie Institution of Washington at Stanford University synthesized carbon emissions and trade patterns and found that more than one-third of CO₂ emissions related to the consumption of goods and services in developed countries are actually emitted outside their national borders. Rich nations are essentially outsourcing some of their carbon emissions to developing nations through global trade — by importing goods and services from abroad — thereby shrinking their carbon footprints while inflating those of major exporting nations like China. "It's surprising just how much this effect is driven by the US and China," says Steven Davis, an ecologist at the Carnegie Institution and the lead author of the PNAS paper. "It is significant." (See the top 10 green ideas of 2009.)

How significant? Davis and his co-author Ken Caldeira estimate that 23% of global CO₂ emissions — about 6.2 billion metric tons — are traded internationally, usually going from carbon-intensive developing nations like China to the comparatively less carbon intensive West. In a few rich nations, such as France, Sweden and Britain, more than 30% of consumption-based emissions could be traced to origins abroad; if those emissions were tallied on the other side of the balance sheet, it would add more than four tons of CO₂ per person in several European nations.

The effect in the US is less extreme because the country exports more than Western Europe and because the US economy has a higher carbon intensity — but it made a difference. Imports accounted for 10.8% of US carbon emissions, enough to add an additional 2.4 metric tons of CO₂ per person. China, of course, fell into the opposite camp: 22.5% of the carbon emitted in China is actually exported to other countries, reducing its per capita carbon footprint from 3.9 tons to 3 tons. (See pictures of the world's most polluted places.)

Climate-change critics like Republican Senator James Inhofe may rail against China, but the PNAS paper shows that while Beijing may be leading the world in carbon emissions, that output is in large part due to the fact that it is using energy to make clothes, cars and toys for the rest of us. It also demonstrates that Europe — whose per capita carbon footprint is less than half that of the US — essentially imports some of its green virtue from abroad by outsourcing its carbon emissions. "It does shrink the gap somewhat between the US and Europe," says Davis.

But the real implications of the new paper could come in international climate policy. The UN system is built around the idea of capping carbon emissions from individual nations. But which country is responsible for the carbon emitted in global trade? The buyer or the seller? The study demonstrates that carbon leakage — emissions moving from relatively green countries like France or Germany to more carbon-intensive ones like Russia or China — is already occurring.

The question is whether the leakage will accelerate if, for instance, developed nations institute tough carbon caps and drive out carbon-intensive industries, which will set up in uncapped developing nations — as cap-and-trade opponents allege. Or has any leakage that will occur already occurred? If industry hasn't already been outsourced from developed nations due to their higher labor costs and other disadvantages, a carbon cap may not make a difference. "The study definitely cuts both ways," says Davis. (See TIME's special report on the environment.)

What's clear is that for all the blame being put on major developing countries for failing to take on carbon regulations, climate change is still chiefly the responsibility of rich nations. We emitted most of the man-made CO₂ currently warming the planet, and even today, thanks to trade, we are still responsible for the majority of new carbon emissions.

As Davis and Caldeira write, "Consumption-based accounting of emissions provides grounding for ethical arguments that the most developed countries — as the primary beneficiaries of emissions and with greater ability to pay — should lead the global mitigation effort." That's hard to argue with.'