How does trade adjustment influence national inventory of open - PowerPoint PPT Presentation

Institute for Global Environmental Strategies Towards sustainable development - policy oriented, practical and strategic research on global environmental issues How does trade adjustment influence national inventory of open economies? inventory of open economies? Accounting for embodied carbon emissions based on the multi ‐ region input ‐ output model 17 th International Input-Output Conference 17 International Input Output Conference Sao Paulo, 14 July 2009 Xin Zhou Institute for Global Environmental Strategies 1

Embodied Emissions in Traded Goods bod ed ss o s aded Goods � Hidden impacts of traded goods: emissions emitted from � Hidden impacts of traded goods: emissions emitted from each upstream stage of the supply chain of a product, which used or consumed by the downstream stage or consumer. � Annex I and non-Annex I countries in the UNFCCC and carbon leakage issue and competitiveness issue. � Current national GHG inventory and accounting method based on the territorial emissions (IPCC, 1996) � A large number of literature indicated the importance of embodied carbon in national and global emissions (e.g. 12% at global level). 2

How to calculate embodied emissions? o to ca cu ate e bod ed e ss o s Bottom-up method (life-cycle analysis) and top-down method (input-output analysis) and hybrid life-cycle analysis (input-output analysis), and hybrid life-cycle analysis. Life-cycle analysis Input-output analysis Sector (S1) C11 C11 C12 C12 C13 C13 C21 C21 C22 C22 S1 S2 S3 S4 C1 C1 C2 C2 S1 S2 S3 S4 S1 S2 S3 S4 S1 S2 S3 S4 S1 S2 S3 S4 Product Product S1 S2 S3 S4 S1 S2 S3 S4 3

Multilateral Trade System u t ate a ade Syste Three sets of elements Three sets of elements 8 units 0.2 unit S1R1 S2R1 � Countries/regions; � Sectors; 0.2 unit 0.4 unit S1R2 S2R2 � Actors (upstream � Actors (upstream producers vs. downstream producers Consumer Consumer 0 unit 0 unit _R1 _R2 and final consumers). 4

Multi-region IO Framework u t eg o O a e o Intermediate Demand Export to ROW Fi Final Demand l D d Total Output S1R1 S2R1 S1R2 S2R2 R1 R2 E 1 ROW 11 11 12 12 11 12 1 X X X X F F X S1R1 1 11 12 11 12 1 1 1 11 11 11 11 12 12 12 12 11 11 12 12 E 1 E 1 ROW ROW 1 1 X X X X X X X X F F F F X X S2R1 S2R1 Supply 2 21 22 21 22 2 2 2 E 2 ROW 21 21 22 22 21 22 2 X X X X F F X S1R2 1 11 12 11 12 1 1 1 E 2 ROW 21 21 22 22 21 22 2 X X X X F F X S2R2 2 21 22 21 22 2 2 2 ROW 1 ROW 1 ROW 2 ROW 2 M M M M Import from ROW 1 2 1 2 1 1 2 2 V V V V Value-added 1 2 1 2 1 1 2 2 X X X X Total input p 1 1 2 2 1 1 2 2 = = + + + + X X AX AX F F E E 5

Two Types of Multipliers o ypes o u t p e s ∑ ∑ ⎡ ⎤ ⎡ ⎤ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞ 1 s 1 s 1 1 ROW 11 12 1 n 1 ROW F L F X E B B B E ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎢ ⎢ ⎥ ⎥ ⎢ ⎢ ⎥ ⎥ s s ∑ ∑ ∑ ∑ ⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ 2 2 s s 2 2 s s ⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ 2 2 2 2 ROW ROW 21 21 22 22 2 2 n 2 2 ROW ROW ⎢ ⎥ L ⎢ ⎥ F F F F X E B B B E − = − + = + 1 ⎜ s ⎟ ⎜ s ⎟ ( I A ) ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎢ ⎥ ⎢ ⎥ M M M M M M O M M ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎢ ⎥ ⎢ ⎥ ⎜ ⎟ ∑ ⎜ ⎟ ⎜ ⎟ ∑ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ns ns n ⎢ nROW ⎥ n 1 n 2 nn ⎢ nROW ⎥ L ⎝ ⎠ F ⎝ ⎠ ⎝ ⎠ F ⎝ ⎠ X E B B B E ⎝ ⎝ ⎠ ⎠ ⎝ ⎝ ⎠ ⎠ ⎣ ⎣ ⎦ ⎦ ⎣ ⎣ ⎦ ⎦ s s s s ⎛ ⎞ ⎛ − ⎞ − 1 11 1 L X ( I A ) 0 0 ⎜ ⎟ ⎜ ⎟ − − ⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ 2 22 1 L X X 0 0 ( ( I I A A ) ) 0 0 = × ⎜ ⎟ ⎜ ⎟ M M M O M ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ − − n nn 1 L ⎝ ⎠ ⎝ ⎠ X 0 0 ( I A ) ∑ ∑ ⎡ ⎤ ⎛ ⎞ ⎛ ⎞ + ⎛ ⎞ 1 11 1 s s s 1 ROW A X F F E ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎢ ≠ ≠ ⎥ s 1 s 1 ∑ ∑ + ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ 2 s s 22 2 s ⎢ 2 ROW ⎥ A X F F E + + ≠ ≠ ⎜ ⎜ s 2 ⎟ ⎟ ⎜ ⎜ s 2 ⎟ ⎟ ⎜ ⎜ ⎟ ⎟ ⎢ ⎢ ⎥ ⎥ M M M M M ⎜ ⎟ ⎜ ⎟ ⎜ ⎟ ⎢ ⎥ ⎜ ⎟ ∑ ∑ ⎜ ⎟ ⎜ ⎟ + ⎢ ⎥ ns s nn ns nROW A X F F ⎝ ⎠ ⎝ ⎠ ⎝ ⎠ E ⎣ ⎦ 6 ≠ ≠ s n s n

7 How to allocate responsibility for embodied Consumer Products International Trade emissions? ? ROW ROW i i Producer

National Accounting Adjusted for Trade at o a ccou t g djusted o ade Basic Scheme: Producer responsibility (UNFCCC) = + + r r r r C C c c X X C C prod d hh hh Scheme 1: Scheme 2: Consumer Consumer Shared producer Shared producer responsibility: and consumer MRIO vs. SRIO responsibility 8

Shared Producer and Producer Consumer Consumer Responsibility Responsibility Responsibility Upstream Producer: Upstream Producer: Upstream Producer: Full 0 Partial Downstream Downstream Downstream Producer: Producer: Producer: 0 0 Partial Final Final Final Consumer/Exports: Consumer/Exports: Consumer/Exports: 0 Full Partial

Data ata � T � Ten economies: i IDN, MYS, PHL, SGP, THA, CHN, TWN, ROK, JPN, USA, ROW � 10-region 24-sector Asian Input-output (MRIO) Table 2000 (IDE-JETRO) � GTAP E-database (2001) for carbon emissions ( ) 10

Consumer Responsibility: Sch1-MRIO Co su e espo s b ty Sc O ROW Nine Economies Region S ( ) = ∑ + s r rs ss C c B F _ con M 1 4 2 4 4 3 4 r r P 1 _ M [ [ ] ] ( ( ) ) ∑ ∑ ∑ ∑ + + r rn ns s s c B F C C ≠ ≠ im hh 1 4 4 4 2 4 4 4 3 n n s s r r 2 _ P 3 P 4 P M 11

Consumer Responsibility: Sch1-SRIO Nine Economies Region S Region S ROW [ ] ( ) − 1 = − + s s ss ss C c I A F 1 4 2 4 4 3 4 con _ S 1 P [ S ] ( )( ) ∑ ≠ + + + w w ns s ns s s c B A X F C C im hh 1 1 4 4 4 4 2 4 4 4 4 3 3 n s P 3 P 4 P 2 S 12 12

Trade Balance of CO 2 ade a a ce o CO 2 • Emissions embodied in imports Emissions embodied in imports [ ] ( ) ∑ ∑ + r rn ns s c B F C ≠ im 1 4 4 4 2 2 4 4 4 3 n s r P 3 P 2 M • Emissions embodied in exports [ [ ] ] ( ( ) ) ∑ ∑ r r = rs sn P 5 c B F ≠ M n s r ( ( ) ) ∑ ∑ r r = rs rs sROW sROW P 6 c B E M r • Trade balance = + − + s C ( P 5 P 6 ) ( P 2 P 3 ) tb _ M M M M

Shared Producer and Consumer R Responsibility: Sch2-MRIO ibilit S h2 MRIO [ ] ( ) − α + + Upstream Producer c ( 1 ) AX F E ( ( ) ) c α AX AX Downstream = + + cX c ( ( AX F E ) ) Producer [ ] ( ) [ ] ( ) α + = − α + + + c F E c ( 1 ) AX F E 1 4 4 4 4 2 4 4 4 4 3 Final C 1 : upstream p producer p C Consumer/Exports /E t [ ] ( ) ( ) α + α + c AX c F E 1 4 2 4 3 1 4 2 4 3 C 2 : downstream C 3 : final consumers producer and exports [ ] ( ) − α + + ⎧ ⎫ [ [ ] ] ( 1 ) Ax F E = − α ) α − 1 ⎨ ⎨ ⎬ ⎬ cX cX c c ( ( I I A A ) + α + α ⎩ ⎭ F E 14

Origin and Share of Imports in Intermediate Inputs (2000) I t di t I t (2000) Gross Input Import Share (%) (10 9 US$) ( ) 40% 10000 8000 30% 30% 6000 20% 4000 4000 10% 2000 0% 0 IDN MYS PHL SGP THA CHN TWN ROK JPN USA IDN MYS PHL SGP THA CHN TWN ROK JPN USA 15 Source: The author complied based on MRIO (IDE ‐ JETRO).

Origin and Share of Imports in Final Consumption (2000) Fi l C ti (2000) Total Final Consumption Import Share (%) ( 10 9 US$) ( 10 9 US$) 20% 10000 8000 15% 15% 6000 10% 4000 5% 2000 0% 0 IDN MYS PHL SGP THA CHN TWN ROK JPN USA IDN MYS PHL SGP THA CHN TWN ROK JPN USA 16 Source: The author complied based on MRIO (IDE ‐ JETRO).

Origin and Share of Emissions Embodied in Final Consumption - Scheme I (2000) Fi l C ti S h I (2000) Consumption-based Import Share (%) Import Share (%) Emissions (Mt) 15% 6000 5000 12% 12% 4000 9% 3000 6% 2000 3% 1000 0% 0 IDN MYS PHL SGP THA CHN TWN ROK JPN USA IDN IDN MYS MYS PHL PHL SGP SGP THA THA CHN CHN TWN TWN ROK ROK JPN JPN USA USA 17 Source: The author’s calculation.

National Responsible Emissions Based on S h1 MRIO (i Sch1-MRIO (in Mt-CO 2 2000) Mt CO 2000) Region PI_M P2_M P3 P4 Consumer Producer Difference Difference (%) responsibility responsibility IDN 133 4 19 53 209 273 -64 -23% MYS MYS 47 47 7 7 15 15 15 15 84 84 118 118 -34 34 -29% 29% PHL 36 3 9 17 65 69 -4 -6% SGP 36 7 28 4 75 60 15 25% THA 92 6 20 21 139 155 -16 -10% CHN 2,252 9 65 311 2,637 3,176 -539 -17% TWN 94 14 38 56 202 217 -15 -7% ROK 267 11 63 88 429 435 -6 -1% JPN 862 82 155 310 1,409 1,179 230 20% USA 4,318 163 551 1,105 6,137 5,702 435 8% Total 8,137 306 963 1,980 11,386 11,384 2 0.02% 18