How does trade adjustment influence national inventory of open economies? Accounting for embodied carbon emissions based on multi-region input-output model

Current national GHG accounting which does not consider emissions embodied in trade may cause issues such as carbon leakage from Annex I to non-Annex I countries through trade of carbon-intensive goods. Among other measures to address this issue, this paper presents an alternative approach by trade adjustment to national CO2 accounting with application to ten economies (Indonesia, Malaysia, the Philippines, Singapore, Thailand, China, Taiwan, the Republic of Korea, Japan and USA) in the year 2000, based on two responsibility allocation schemes: i) consumer responsibility and ii) shared producer and consumer responsibility. A multi-region input-output model and a single-region input-output model are applied to calculate embodied emissions, and the results are compared. Based on consumer responsibility, embodied CO2 accounted for 13% of total national responsible emissions of ten economies. Trade ad-justments also indicate significant changes to current national inventories of ten economies, ranging from –525 Mt-CO2 in China to 543 Mt-CO2 in USA. In terms of trade balance of embodied CO2, USA, Japan and Singapore have a deficit while other economies, in particular China, have a trade surplus.