CO2 emissions embodied in international trade (multi-country input-output
framework)
1. Framework of multi-country input-output model (MCIO)
Productions of countries in MCIO model (2 countries, 2 sector) is described as
(1)
, where
X12 is output of country 1’s product 2, A is input coefficient of multi-country framework
i.e.
is coefficient for the input of country 1’s sector 2 from country 2’s sector 1 and
F121 is final demand expenditure by country 2 on sector 1 of country 2.
Then, the induced output by country 1’s final expenditure of domestic and imported
good and services become
(2)
and
(3)
, respectively.
On the other hand, the output induced by demands on products of country 1 is written
as
(4)
.
2. Production-based CO2 emissions is defined as the sum of fuel combustion at
household and industry. Therefore, production-based CO2 emissions of country j in our
simulation example can be written as
(5)
PBEj=
where
is emissions intensity for electricity generation activity by sector i of country j,
is emissions intensity for road transportation activity (fuel consumption) by sector i,
is emissions intensity for other industrial activity by sector i,
is emissions factor
of final consumption related to road transportation (e.g. petroleum consumption for
passenger cars),
is emissions factor of other final consumption of fuel (e.g. natural
gas consumption for heating and cooking at household), N is number of sectors and Xi is
output of sector i.
3. Consumption-based CO2 emissions of country j’s resident, on the other hand, is
conceptually defined as
Consumption based CO2 emissions of country j =
Production-based emissions +
Emissions embodied in imports –
Emissions embodied in exports
Or alternatively,
Consumption based CO2 emissions of country j =
Emissions required producing outputs for the final expenditures of domestic
and imported goods and services + emissions due to combustions of fuel in household
Consumption-based emissions of country j’s resident =
(6)
where
(
CBEj=
is emission factor of final consumption of the products of country j’s sector i
),
is industrial emissions intensity of country j’s sector i (
R is number of countries, B is Leontief inverse, N is number of sector and F1ji is final
),
expenditure by country j for the country 1’s product of sector i.
Note that this total consumption-based emission can be separated by expenditure
category and sources of emissions. For example, the emissions regarding the final
expenditures of machinery products from electricity generation source is derived using
the same formula of (6), if
and
= 0 for non-machinery expenditures.
The available types of final expenditures in our simulation example are summarized in
the following table.
Description
ISIC Rev.3 a
COICOP b
Food and textile products
01-05, 15-19
01, 02, 03,
Machinery products
29-35
05
Other goods products
10-14, 20-28, 36-37
06* 12*
Utility services
40-41
04
Transport services
60-63
07
Other services
45-95 ex. 60-63
06,08,09,10,11,12*
* part
a International Standard Industrial Classification of All Economic Activities
b Classification of Individual Consumption According to Purpose
Emissions due to global consumption of goods and services produced in country j =
Emissions due to household’s direct consumption of fuel of a country +
Emissions embodied in all industrial activities across countries (from 1 to R) which are
induced by the final expenditure of each country for the product of country j
Emissions due to the consumption of country 1’s sector 1=
(7)
where e1 is industrial emissions intensity of country 1 (e=
countries, B is Leontief inverse, and
of country j.
Fjk
), R is number of
is final expenditure of country k for the product
The carbon footprint vector for unit consumption (F=1) is simply given as
Using above measurement framework of consumption-based emissions, bilateral flow
matrix of consumption-based emissions can be written as
.
Then total embodied emissions in exports from country j to country k is estimated as
where
is export vector of final goods from j to k,
induced by final demands of all countries given as
is an intermediate flow matrix