Literature on Emissions Embodied in Trade

Abstract

This chapter critically reviews the findings of the “literature on emissions embodied in trade” on the desirability and consequences of adopting consumption-based approaches in international climate policy. This literature strand has established that emissions transfers via international trade from emerging to industrialized countries are large and increasing. In the last decades, industrialized countries have managed to stabilize their production-based, but not their consumption-based emissions. Some authors deem this worrying for the environment and they suggest that a switch to a consumption-orientation in climate policy might serve as a remedy: it would bring a larger share of global emissions into the scope of the policy, would reduce “weak” carbon leakage, and could further the diffusion of “clean” technologies. This study points out that although these arguments have their merits, they cannot guarantee that consumption-based policies are environmentally more effective than production-based ones. Another central argument of the literature on emissions embodied in trade is that consumption-based policies may be “fairer”, as not only producers, but also consumers are “responsible” for emissions. In this study it is however argued that our assessment of “responsibility” should not determine the choice between production- and consumption-based policies; rather, in order to promote justice, we should look at the distributional effects of each of the policy variants.