Outsourcing CO2 within China

Abstract

Recent studies have shown that the high standard of living enjoyed by people in the richest countries often comes at the expense of CO2 emissions produced with technologies of low efficiency in less affluent, developing countries. Less apparent is that this relationship between developed and developing can exist within a single country's borders, with rich regions consuming and exporting high-value goods and services that depend upon production of low-cost and emission-intensive goods and services from poorer regions in the same country. As the world's largest emitter of CO2, China is a prominent and important example, struggling to balance rapid economic growth and environmental sustainability across provinces that are in very different stages of development. In this study, we track CO2 emissions embodied in products traded among Chinese provinces and internationally. We find that 57% of China's emissions are related to goods that are consumed outside of the province where they are produced. For instance, up to 80% of the emissions related to goods consumed in the highly developed coastal provinces are imported from less developed provinces in central and western China where many low-value-added but high-carbon-intensive goods are produced. Without policy attention to this sort of interprovincial carbon leakage, the less developed provinces will struggle to meet their emissions intensity targets, whereas the more developed provinces might achieve their own targets by further outsourcing. Consumption-based accounting of emissions can thus inform effective and equitable climate policy within China.

Keywords: embodied emissions in trade; multiregional input–output analysis; regional disparity.

Fig. 1.

Upper Left shows largest interprovincial fluxes (gross) of emissions embodied in trade (megatonnes of CO₂ per year) among net exporting regions (blue) and net importing regions (red). Upper Right shows the largest interprovincial fluxes of emissions embodied in products consumed by households, with regions shaded according to value of household consumption per capita (from high in red to low in green). Lower left shows the largest interprovincial fluxes of emissions embodied in products consumed by capital formation, with regions shaded according to the value of capital formation per capita (from high in red to low in green). Lower Right shows the largest interprovincial fluxes of emissions embodied in products destined for international export, with regions shaded according to the share of GDP related to international exports (from high in red to low in green). Note: carbon fluxes caused by government expenditure are not shown separately in this figure but are included in the total emissions embodied in trade (Upper Left).

Fig. 2.

Emissions embodied in interprovincial and international trade for 30 provinces. Colors represent trade in domestic finished goods by industry sector. Traded domestic intermediate goods (dark gray) are those used by industries in the importing provinces to meet consumer demand for domestic goods. Internationally traded goods (light gray) are those goods purchased from or sold to international markets. Italicized labels at the right of each bar indicate to which of the eight aggregated regions the province or city has been assigned.

Fig. 3.

The top 10 provinces by net domestic imports (row 1), net domestic exports (row 2), and consumption emissions (row 3), and the bottom 10 provinces by consumption emissions (row 4), all presented as regional totals (left column), per unit GDP (center column), and per capita (right column). The color of bars corresponds to provincial GDP per capita from the most affluent provinces in red to the least developed provinces in green (see scale).