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June 2005

U.S. emissions:
The full story

By importing products from other nations, the United States is contributing to overseas emissions of carbon dioxide.

hiaper

Shui Bin (left) and Bob Harriss. (Photo by Carlye Calvin.)

The United States already draws criticism for producing almost one-fourth of global carbon dioxide emissions. Now research in ISSE indicates that the nation is indirectly responsible for even more carbon dioxide than widely perceived.

The reason is that other countries, such as China, emit tons of carbon dioxide while producing goods for U.S. consumers.

"These CO2 emissions are embedded in traded goods," explains Shui Bin, a postdoc in ISSE who specializes in economic and policy issues.

Carbon dioxide is a greenhouse gas that contributes to global climate change. When policy makers estimate a nation's CO2 output, they measure only emissions within that nation's borders. Shui, working with ISSE's Bob Harriss, decided to look at a more complete picture by analyzing America's imports and exports.

Their preliminary findings indicate that the United States—which emits about 5,700 million metric tons of CO2 annually, or 24% of the global total—may be responsible for more when its imports are taken into account. At the same time, major U.S. trading partners would emit less CO2 if not for producing goods for the American market.

Does that mean the net effect of global trade on CO2 emissions is zero? Not according to the unpublished ISSE research. Instead, trade may increase overall global CO2 emissions because the United States sometimes imports products from less-developed countries with a high reliance on carbon-rich fossil fuels.

Trading partners

Shui and Bob first explored the issue by looking at the North American Free Trade Agreement (NAFTA) and its impact on carbon dioxide emissions. They studied U.S. Census Bureau data on imported and exported items in 2000 among Canada, Mexico, and the United States. Using a software tool known as the Economic Input Output-Life Cycle Assessment developed by Carnegie Mellon University, they analyzed CO2 emissions embodied in all products traded among the three nations.

Their work indicated that the United States, because of its trade with Canada and Mexico, was responsible for 92 million metric tons of carbon dioxide in addition to what it emitted within its own borders. That's an amount equivalent to 2% of total U.S. emissions that year. In contrast, Canada's CO2 emissions would have been 9% lower, and Mexico's emissions 11% lower, if not for the goods they produced for the U.S. market.

The researchers next turned to trade with China. They looked at the period from 1997 to 2003, posing a hypothetical question: if the United States had manufactured the products it imported from China, how would that have affected each nation's CO2 emissions?

Their conclusion: American emissions of CO2 would have been 3% higher in 1997, and 6% higher in 2003, if the United States had been manufacturing products that it imported from China. China's emissions would have been 7–14% lower.

Impacts of Chinese imports

Shui says the imports from China are particularly worrisome from an environmental perspective. China is so reliant on fossil fuels, particularly coal, that it emits an enormous amount of CO2 when manufacturing goods for the United States. In fact, she and Bob estimated that, since the products were made in China instead of the United States, an additional 562 million metric tons of CO2 were emitted into the atmosphere during the 1997–2003 study period. That is equivalent to the total amount of CO2 emitted by the United Kingdom in 2002.

In contrast, less CO2 is emitted into the atmosphere when the United States turns to Canada for manufactured goods. That's because Canada relies heavily on hydroelectric power rather than fossil fuels.

Shui also notes that the CO2 emissions shed an interesting perspective on U.S.-China trade. Members of Congress, alarmed by the trade deficit with China, have demanded that China reform its trade practices and raise the value of its currency. But Shui points out that agreements such as the Kyoto Protocol envision nations paying for the right to exceed certain levels of CO2 emissions. If the United States eventually joins an international agreement to reduce greenhouse gas emissions, it can benefit financially by effectively moving its CO2 emissions offshore under the current carbon accounting framework.

"For any trade issue, we should look at its multiple dimensions including economic, environmental, and social aspects," Shui says. "For example, while the United States suffers huge trade deficits with China, it definitely enjoys significant CO2 embodiment."

If the researchers can obtain funding, they will next examine how the top 50 U.S. trading partners, which account for 95% of U.S. trade, affect the embodiment of CO2 and other greenhouse gases that contribute to climate change. Such a study could, potentially, enable researchers to estimate the full extent of U.S. greenhouse gas emissions.

• by David Hosansky


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