International Carbon Flow s Global Flow s 1 | Global Flows International Carbon Flows Global flows Key facts Embodied carbon flows are large and growing Approximately 25% of all CO2 emissions from human activities „flow‟ (i.e. are imported or exported) from one country to another. Embodied carbon flows in both commodities and final products The flow of carbon is comprised of roughly 50% emissions associated with trade in commodities such as steel, cement, and chemicals, and 50% in semi-finished/finished products such as motor vehicles, clothing or industrial machinery and equipment. Embodied carbon imports are significant for many developed economies Major developed economies are typically net importers of embodied carbon emissions. UK consumption emissions are 34% higher than production emissions: Germany (29%), Japan (19%) and the USA (13%) are also significant net importers of embodied emissions. For some economies with very carbon efficient production processes, the relative importance of imported carbon is even greater. The high levels of net imports in France (43%) and Sweden (61%) reflect in part the low carbon intensity of their energy systems. Many developing countries export embodied emissions in international trade Developing countries are generally net exporters of CO2 emissions. For example, in 2004 China exported ~23% of all its domestically produced CO2. Implications for business Businesses are primarily responsible for importing and exporting traded goods on behalf of their customers (consumers). The carbon embodied in supply chains is both an opportunity and a risk: Business opportunities from international carbon flows The opportunity is to measure and reduce emissions across the supply chain and communicate this to consumers, in order to be rewarded for action through increased sales and reduced costs. Business risks from international carbon flows The risk in failing to take action is that consumers choose lower carbon alternatives and that ultimately new emissions abatement approaches force businesses to take action at a later date in any event. Around one quarter of greenhouse gas emissions are embodied in goods and services which “flow” between the country of production and the country of consumption via international trade. A key focus for business action, and the opportunity to further reduce GHG emissions over the next decade, will be to reduce the carbon intensity of traded goods.
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International Carbon Flows
Global Flows
1 | Gl obal Fl ow s Int ernat ional Carbon Flow s
Global flows
Key facts
Embodied carbon flows are large and growing
Approximately 25% of all CO2 emissions from
human activities „flow‟ (i.e. are imported or
exported) from one country to another.
Embodied carbon flows in both commodities
and final products
The flow of carbon is comprised of roughly 50%
emissions associated with trade in commodities
such as steel, cement, and chemicals, and 50% in
semi-finished/finished products such as motor
vehicles, clothing or industrial machinery and
equipment.
Embodied carbon imports are significant for
many developed economies
Major developed economies are typically net
importers of embodied carbon emissions. UK
consumption emissions are 34% higher than
production emissions: Germany (29%), Japan
(19%) and the USA (13%) are also significant net
importers of embodied emissions. For some
economies with very carbon efficient production
processes, the relative importance of imported
carbon is even greater. The high levels of net
imports in France (43%) and Sweden (61%) reflect
in part the low carbon intensity of their energy
systems.
Many developing countries export embodied
emissions in international trade
Developing countries are generally net exporters of
CO2 emissions. For example, in 2004 China
exported ~23% of all its domestically produced
CO2.
Implications for business
Businesses are primarily responsible for importing
and exporting traded goods on behalf of their
customers (consumers). The carbon embodied in
supply chains is both an opportunity and a risk:
Business opportunities from international
carbon flows
The opportunity is to measure and reduce
emissions across the supply chain and
communicate this to consumers, in order to be
rewarded for action through increased sales and
reduced costs.
Business risks from international carbon flows
The risk in failing to take action is that consumers
choose lower carbon alternatives and that
ultimately new emissions abatement approaches
force businesses to take action at a later date in
any event.
Around one quarter of greenhouse gas emissions are embodied in goods
and services which “flow” between the country of production and the
country of consumption via international trade. A key focus for business
action, and the opportunity to further reduce GHG emissions over the
next decade, will be to reduce the carbon intensity of traded goods.
International Carbon Flows
Global Flows
2 | Gl obal Fl ow s Int ernat ional Carbon Flow s
Annual global GHG emissions in 2004 were 42GtCO2e
Global greenhouse gas emissions by category in 2005 (GtCO2e)
Greenhouse gas (GHG) emissions, measured in tonnes of carbon dioxide and its equivalent (CO2e) are a
combination of emissions of different gases that arise from different sectors.
Global annual emissions have been rising over the last century, leading to global climate change. In 2004, human
activities contributed around 42GtCO2e to the atmosphere, of which around 33Gt was from CO2 emissions, with a
further 9Gt of non-CO2 greenhouse gas emissions (such as methane and other gasses).
This analysis focuses on CO2 emissions from direct human activities including industrial energy (e.g. burning of
fossil fuels in power stations), industrial process emissions (e.g. emissions arising from the manufacture of
cement), transport emissions (from fossil fuels) and household emissions (e.g. burning gas to heat homes).
Together these sources of emissions account for around 27Gt CO2e (2004).
Two additional significant sources of emissions, land use change and non-CO2 GHGs, add a further 14.3GT
CO2e each year. This analysis only considers non-CO2 emissions in relation to the cotton sector, where they are
a significant contributor to the overall footprint of the sector.
There is a strong relationship between the increasing value of global trade (and therefore emissions embodied in trade) and increasing trade relative to GDP
Value of world merchandise trade
International carbon flows have been increasing over time, in both relative and absolute terms. This increase
mirrors the increasing importance of international trade in the global economy, which has featured the increasing
separation of traditional demand centres in developed economies from rapidly expanding production capacity in
developing countries. Projections for the increase in imported or exported emissions for the UK and China are
given in following pages.
There are a wide variety of drivers behind this dislocation of production and consumption, most of which are
unrelated to greenhouse gas emissions. Differences in labour, energy and other input costs, access and proximity
to raw materials, different regulatory regimes and reporting requirements, financial incentives and a closing of the
technology and industrial leadership of developed countries will have all played a part in this evolution over time.
18 | Glo bal Fl ow s – Un i t ed Ki ng dom Int ernat ional Carbon Flow s
The significance of imported embodied emissions in UK consumption emissions is expected to increase over time Time series of UK consumption emissions, split by domestic production or imports
In 1992, the UK imported an additional 7% emissions (net) embodied in trade; by 2004, this had grown to 34%.
Net UK imports of emissions are projected to continue to grow to 73 – 96% of production emissions by 2025, the
range depending on the carbon intensity of production in other countries, and the anticipated reduction in the
UK‟s production emissions from 2004 to 2025. This will result in the UK potentially importing as much carbon as it
produces at home by around 2025, making imported carbon a significant issue.