The Responsibility of CO 2 Embodied in Italy-China Trade: a Consumption-Based Approach

Transcription

1 IEFE Seminar Series 25/06/2010 The Responsibiliy of CO 2 Embodied in Ialy-China Trade: a Consumpion-Based Approach Valeria Andreoni Universiy of Huddersfield Deparmen of Transpors and Logisics

2 Andreoni V., The effec and responsibiliy of CO 2 embodied in Ialy-China rade. acceped for publicaion in Inernaional Journal of Susainable Economy Aim: To quesion abou carbon responsibiliies and relaed environmenal policies Scope: To inroduce a consumpion-based allocaion approach beside he presen producion-based allocaion approach Case sudy: Ialy-China bilaeral rade from 1997 o 2003 Objecive: To calculae he amoun of carbon dioxide (CO 2 ) emissions embodied in bi-laeral rade of manufacured producs Mehod: Inpu-Oupu Mehod proposed by Shui and Harriss (2006)

3 Background: Scienific and poliical concerns abou anhropogenic CO 2 emissions have been increasing: Kyoo Proocol: I is an inernaional agreemen o reduce he global CO 2 emissions o he amosphere Scope: Annex I counry should reduce heir collecive CO 2 emissions by 5.2% from 1990 levels by he year 2012 General Approach: Annex I counries have emission reducion commimens. Non-Annex I counries are commied o miigaion acions. Allocaion Mehod: Producion-based allocaion approach (erriorial responsibiliy)

4 CO 2 emissions are increasing boh in developed and in developing counries Kyoo Proocol Inefficiencies: 1. Excluding developing counries from he cuback mechanism, hey are no induced o: - Reduce heir emissions - Adop low emission echnologies 2. Adoping a erriorial principle: - Gap in undersanding he consumpion-environmen connecion - Carbon displacemen: developed counries are induced o reduce heir emissions responsibiliy by moving from a resource-inensive indusry owards knowledge inensive services, reallocaing polluan aciviies o poores naions. 3. The lack of disincion beween expor and domesic consumpion no allows o accoun for CO 2 embodied in rade

5 Research issues: 1) Carbon responsibiliy 2) How o accoun for CO 2 embodied in rade In a conex of Globalizaion where consumer naions differs form producer naions Who is responsible for CO 2 emissions??? Who has o reduce CO 2 emissions??? Producers ha benefis from economic growh generaed by CO 2 emissions? Consumers ha benefis form carbon displacemen o developing counries?

6 Previous Sudies: Wyckoff & Roop (1994): 13% of he oal CO 2 emissions of six of he main OECD counries was embodied in heir impors Schaeffer & Leal de Sa (1996): analyzing CO 2 emissions embodied in Brazilian impors ( ) finding empirical evidence of an increasing displacemen of CO 2 emissions from developed o developing counries. Gerilla e al.; Shui and Harriss; Li and Hewi (2002; 2006; 2008): China case sudy: China-Japan; China-US; China-UK. China is becoming he world s larges emier of CO 2 China one of he mos imporan exporers of goods Expors are an imporan cause for he rise in Chinese emissions

7 Ialy-China Case Sudy: Inernaional rade has always been an imporan facor for he Ialian economy boh in moneary and in maerial erms Today, almos 1/3 of he Direc Maerial Inpu of Ialy comes from foreign counries China is becoming one of he mos imporan commercial parners of Ialy: During he las five - rade value of Chinese expor o Ialy: 7 o 9 billion Euro - rade value of Ialian expor o China: 2.5 o 4 billion Euro Today China ranks six among he Ialian exra-european commercial parner

8 In order o: Quesion abou carbon responsibiliies embodied in bi-laeral rade of manufacured producs beween Ialy and China This paper propose: A heoreical model o share emission responsibiliy beween producers and consumers and calculaes: 1. The amoun of CO 2 avoided in Ialy by imporing Chinese goods; 2. The CO 2 embodied in Ialian manufacured producs expored o China; 3. The CO 2 emied in China o produce he goods expored o Ialy; 4. The amoun of CO 2 avoided in China by imporing Ialian goods.

9 Theoreical Model I refer o α-environmenal responsibiliy (Gallego and Lenzen, 2005; Lenzen e al., 2007) To propose A heoreical model o share emission responsibiliy beween producer and consumers, inended as counries Combining consumpion and producion responsibiliies in a Cobb-Douglas funcion wih CES [1] R = R C α R P (1-α) I share he emission responsibiliy R beween consumers (R C ) and producer (R P ) based on he value assumed by α Where 0 α 1 R C approximaes he Gross Naional Expendiure (GNE) R P approximaes he Gross Domesic Produc (GDP).

10 If we assume ha: α=0 Then eq [1] becomes R = R P Producion Responsibiliy: environmenal responsibiliy of emission is assigned o he producer counry I is he assumpion adoped in he Kyoo Proocol If we assume ha: α=1 Then eq [1] becomes R = R C Consumpion Responsibiliy: environmenal responsibiliy of emission is assigned o he consumers counry I is he assumpion adoped in he empirical sudy developed in his paper

11 Formally emission responsibiliy is a funcion of emissions (e): [2] R = R(e) where [3] e = q y q = emission inensiy of economy y = economic value of economy (GDP) We assume 1) an open economy wih one producive secor: is economic value y can be divided beween z, ha is he economic value generaed o produce he expor and x ha is he economic value relaed o he producion of goods for domesic use. 2) k are he impors 3) all impors are consumed inside he counry

12 I follows ha responsibiliy R is: [4] R = [(q y) (q z) + (q k k)] α ( q y) (1-α) Producion Responsibiliy (R P ) (α=0) is: [5] R P = q y where producion responsibiliy is calculaed as he emission inensiy of he economy (q) muliplied by he economic value generaed by economy (y). Consumpion Responsibiliy (R C ) (α =1) is: [6] R C = (q y) (q z) + (q k k) where consumpion responsibiliy is equal o he emissions generaed inside he counry (q y) minus he oal emissions generaed o produce he expor (q z) plus he oal emissions generaed in he res of he world o produce he impor (q k k), where q k is he emission inensiy of impored goods.

13 Adoping a Consumpion Responsibiliy Approach, I calculaed: 1. The amoun of CO 2 avoided in Ialy by imporing Chinese goods; 2. The CO 2 embodied in Ialian manufacured producs expored o China; 3. The CO 2 emied in China o produce he goods expored o Ialy; 4. The amoun of CO 2 avoided in China by imporing Ialian goods.

14 1. The amoun of CO 2 avoided in Ialy by imporing Chinese goods ITACO 2 j, K j, RPPP CMA EF j K j, : value of he good j expored from China o Ialy in he year EF j : CO 2 emission facor of an Ialian produc j which is in he similar produc caegory of a Chinese expor j Since differen quaniies of goods have o be produced in Ialy and China o generae he same moneary value, he relaive purchasing power pariy (RPPP ) is used o ranslae he Euro value of a Chinese expor ino he acual quaniy of Ialian goods. To updaed economic daa, we muliplied he economic values of impors and expors for he coefficiens for moneary adjusmen (CMA ).

15 Table 1. China s relaive purchasing power pariy ( /RMB) Exchange Raa PPP Conversion Facor RPPP Years US$/ Euro RMB/ US$ Euro/RMB = (RMB/US$) / (US$/Euro) US$/ Euro RMB/ US$ Euro/RMB = (RMB/US$) / (US$/Euro) (Euro/RMB) = Exchange Raa (Euro/RMB) / PPP Conv. Facor (Euro/RMB) Source: OECD saisics and European Cenral Bank saisics

16 2. The CO 2 embodied in Ialian manufacured producs expored o China CCO Z 2 j, j, EF j CMA CCO 2j, esimaes he amoun of CO 2 emissions embodied in he Ialian expor o China in he year for he good j. Z j, : moneary value of he Ialian expor j o China in he year. EF j : emissions facor for he expor j. CMA is used o updae he economic daa.

17 3. The CO 2 emied in China o produce he goods expored o Ialy Since emission facors for CO 2 are no available for China, we correced he CO 2 emission facors of Ialy for he differences in he fuel mix beween China and Ialy. F ChinaIndFuel IalyIndFuel IalyIndFuel n, and ChinaIndFuel m, are he indusrial fuel mix of Ialy and China IalyCE n and ChinaCE m represen he CO 2 emission facors for fuel ype. m, n, ChinaCE IalyCE n m n and m are he fuel ypes in he year. F range from 2.67 o 3.0. This means ha he Chinese indusrial secor is 2.85 imes more carbon inensive han he Ialian indusrial secor.

18 Table 2. Fuel mix of indusrial secor in China (%) and CO 2 emission facor Coal Peroleum Elecriciy Coke Naural Gas Coke oven gas Hea Toal Emission facor (CO 2 /TJ) Source: Shui and Harriss, 2006 and Tonooka e al., 2003

19 Table 3. Primary fuel mix of indusrial secor in Ialy (%) and CO 2 emission facor Liquid Fuels Solid Fuels Gaseous Fuels Biomass Oher Fuels Toal Emission facor (CO 2 /TJ) Source: APAT, 2007

20 Then he esimaion for CO 2 embodimen in Chinese expors o Ialy : ICO K 2 j, j, EF j F RPPP CMA K j, : moneary value of Chinese expors j raded o Ialy in he year y. EF J : CO 2 emission facor for he Ialian expor F : raio of carbon in he fuel mix of Chinese indusrial secor compared o he carbon in he fuel mix of he Ialian indusrial secor in he year. The Relaive Purchasing Power Pariy (RPPP ) and he Coefficien for Moneary Adjusmen (CMA ) are used o updae economic daa.

21 4. The amoun of CO 2 avoided in China by imporing Ialian goods. CHACO Z, EF F X CMA 2 j, j j CHACO 2j, : Chinese avoided CO 2 emissions for he manufacured produc j (1,..21) in he year (from 1997 o 2003). Z j, : value of he good j expored from Ialy o China in he year. EF j : CO 2 emission facor of an Ialian expor j. F : raio of carbon in he fuel mix of Chinese indusrial secor compared o he carbon in fuel mix of he Ialian indusrial secor in he year. CMA is used o updae he economic daa.

22 1. The amoun of CO 2 avoided in Ialy by imporing Chinese goods Ialian emissions avoided by imporing manufacured producs form China: 19 Mm I is 1.8% of he oal CO 2 emissions produced by he Ialian manufacuring secor : Avoided emissions increased 155% (1.5 MMT o 3.8 MMT) Main increase: Meallurgy (+ 540%) Moor vehicles (+ 507%) Coke and oil producs (+ 425%) Main cause: Increasing level of Chinese expor o Ialy: from 4.2 billion Euro o 9.3

23 2. The CO 2 embodied in Ialian manufacured producs expored o China To produce he indusrial producs expored o China, Ialy emied 2 Mm 0.2% of he oal emissions of Ialian manufacuring secor : Ialian expor o China increased from 2.5 billion euro o : CO 2 emissions increased from ons : CO 2 emissions decreased as a consequence of he decreasing expor from Ialy o China. Since main expor reducions have been regisered in he high carbon-inensive secors (mechanical producs) he decreasing rae of emissions is larger han he decreasing rae of expor

24 3. The CO 2 emied in China o produce he goods expored o Ialy To produce he indusrial producs expored o Ialy, China emied 56 Mm : CO 2 emissions increased from 4 MMT o 11.5 MMT Main causes: increasing quaniies of Chinese impor o Ialy increasing carbon-inensiy of China (F y : )

25 4. The amoun of CO 2 avoided in China by imporing Ialian goods Chinese emissions avoided by imporing manufacured producs form Ialy: 5.8 Mm : Avoided emissions increased from 0.76 MMT o 1.24 MMT Main Causes: Increasing expor from Ialy o China Increasing carbon-inensiy of China compared o Ialy

26 1. The amoun of CO 2 avoided in Ialy by imporing Chinese goods ITACO 2 j, K j, RPPP Ialy avoided 19 Mm of CO 2 by imporing manufacured producs from China CMA EF j 2.The CO 2 embodied in Ialian manufacured producs expored o China CCO Z, 2 j, j EF j CMA Ialy emied 2 Mm of CO 2 o produce he indusrial producs expored o China The CO 2 embodied in Chinese manufacured producs expored o Ialy ICO K, 2 j, j EF j China emied 56 Mm of CO 2 o produce manufacured producs expored o Ialy F RPPP CMA 4. The amoun of CO 2 avoided in China by imporing Ialian goods. CHACO Z, EF F X CMA 2 j, j j China avoided emiing 5.8 Mm of CO 2 imporing manufacured produc from Ialy.

27 MMTCO2 or Billion Euro Trade value of Chinese expor o Ialy (Billion Euro) Trade value of Ialian expor o China (Billion Euro) Avoided CO2 emission in Ialy by imporing Chinese goods (MMTCO2) Avoided CO2 emissions in China by imporing Ialian goods (MMTCO2) CO2 emissions in Ialy o produce expor o China (MMTCO2) CO2 emissions in China o produce expor o Ialy (MMTCO2) Figure 1. Trade value and CO 2 emissions from 1997 o 2003.

28 Resuls: 1) Adoping a Consumpion-Based approach: Ialy is responsible for 54 Mm of CO 2 emied in China 2) In erms of Carbon-inensiy: if he buying goods from China had been produced in Ialy he ne conribuion of CO 2 would have been reduced by 37 Mm

29 Conclusions: 1. A change in Responsibiliy approach can : Inernaional carbon reducion policies Improve susainabiliy of consumpion 2. However in a conex of globalizaion where: Exporers benefi rfom economic growh generaed by expors Imporers benefi from he displacemen of carbon dioxide emissions 3. A full responsibiliy approach (producers or consumers responsibiliy) is no able o share he amoun of emissions for he benefis obained by individual counries. 4. Third Perspecive ha share responsibiliy beween producers and consumers could be more poliically accepable and more efficien in erms of emission reducions.