The Big 5 of The Carbon Trade
When we talk about a country’s carbon emissions we generally only consider those that occur within its borders. But where does the fuel for those emissions come from? And where do the products a country makes go?
In this second part of our series The Carbon Trade we look at who the big traders of carbon are. We’ll analyze the major importers and exporters of fuels and products and in doing so explain much of how carbon moves around the world, both before and after its combustion.
The Regions Fueling the World
In the first piece of this series, The Globalization of Carbon, we noted that in 2007 traded carbon totaled 17.6 Gt CO2, or 60% of total carbon emissions. More than half of this traded carbon was in the form of fuels, in particular oil and gas.
The big exporters of fuel carbon are those regions and countries that produce more fossil fuels than they use at home.
The big five fuel exporters are the Middle East, Russia, Sub-Saharan Africa, North Africa and Australia. Together these five regions export 63% of carbon in traded fuels.
Indeed they are each so rich in fossil fuels in the form of oil, natural gas and coal that each of them export more carbon in fuels than they create through combusting fuels within their borders.
Each tonne of oil, natural gas or coal that is exported by these regions is imported somewhere else. So let’s see where they go.
Living On Foreign Fuel
It is widely known that the US is dependent on foreign oil, so much so they banned crude exports back in the seventies oil shocks. But the US isn’t the only region living off fossil fuels from other regions.
This fact is plain to see when we look at who the big importers of carbon in fuels are.
When taken together the countries that make up Europe (EU27) import more carbon in the form of fuels than the US. These two regions are the big fuel importers followed by Japan, China and South Korea, based on 2007 data.
Together these five regions import a staggering 71% of all carbon traded as fuels.
China is the World’s Factory
Now that we have seen how carbon is traded before it’s combusted, it is worth looking a how it is embodied in the trade of products after its combustion. For clarity’s sake products in this case means both goods and services though the former dominates.
In the last two decades exports of Chinese made products have exploded, driven on by cheap labor, capital controls and government subsidies. This phenomenon is plain to see in the data for carbon in exported products.
In 2007 the carbon embodied in China’s exports of goods and services totalled 1,556 Mt CO2. About the same as the exports of the United States, Europe and Russia combined.
Although these five regions accounted for a healthy 58% of the trade of carbon embodied in products it is as a general rule less centralized than is the case for fuels.
Europe and the US Buy the World’s Stuff
If China is the big exporter of carbon embodied in products it will surprise few that the US and Europe are the big buyers.
In 2007 there was 1,514 Mt of carbon dioxide emissions embodied in European imports of goods and services, a quarter of which came from China. The US was the other major importer, followed by Japan, China and the Middle East.
The fact that so much European and American consumption is supported by emissions that occur in other parts of the world highlights the perils of focusing solely on terrestrial emissions for climate policy. The increased outsourcing of carbon intensive production to regions with weaker climate regulation risks undermining the effectiveness of national climate policies.
Such risks also exist regarding carbon in fuels. If factors reducing terrestrial emissions result in increased exports of fuels this can undermine the effectiveness of national action. The more than doubling of US coal exports since 2006 in reaction to the shale boom is a good example of this.
Join us for the final post in the series tomorrow when we Mind the Carbon Gap between country’s extraction, production and consumption totals.
All the data used in this series is based on the recent, and freely downloadable, paper ‘Climate policy and dependence on traded carbon‘ by Robbie Andrew, Steven Davis and Glen Peters. Many thanks to Robbie in particular for providing the data.
Lindsay is the founder of Shrink That Footprint, a resource that helps people understand and reduce their carbon emissions. He is also a member of the team at Maneas, a data driven corporate strategy group. With a background in economics he has previously worked as an analyst at Bloomberg New Energy Finance, and as a freelance consultant in energy strategy in the resources and government ...
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