Article: Consumption-based versus production-based CO<SUB align="right"><SMALL>2</SMALL></SUB> emissions: drivers of carbon leakage between countries Journal: International Journal of Green Economics (IJGE) 2024 Vol.18 No.1 pp.1 - 31 Abstract: While an increasing number of countries have adopted targets for their production-based (or territorial) emissions, very few have started to analyse their consumption-based emissions through empirical studies. This poses a challenge for policymaking if consumption emissions increase while production emissions decrease and, if emissions are effectively migrating to areas without carbon reduction targets or capabilities through carbon leakage. In order to look at these questions, this article accesses the drivers in the production and consumption emission accounts available for 101 countries, for the period between 1990 and 2017. Our results show that an increase in GDP per capita, trade balance, energy intensity, service sector share and urbanisation will increase production-based emissions more than consumption-based emissions. Conversely, an increase on imports of goods and services and a decrease of exports will increase consumption-based emissions more than production-based emissions. However, it is in urban centres, in developed countries, that there is a higher consumption, relatively to production, so it means that there is also a higher carbon import, otherwise production-based emissions would be higher. Therefore, in these regions there is evidence of carbon leakage. Inderscience Publishers - linking academia, business and industry through research

Title: Consumption-based versus production-based CO₂ emissions: drivers of carbon leakage between countries

Authors: Margarita Robaina; Maria Inês Cunha

Addresses: Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal; GOVCOPP – Research Unit in Governance, Competitiveness and Public Policy, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal ' Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal

Abstract: While an increasing number of countries have adopted targets for their production-based (or territorial) emissions, very few have started to analyse their consumption-based emissions through empirical studies. This poses a challenge for policymaking if consumption emissions increase while production emissions decrease and, if emissions are effectively migrating to areas without carbon reduction targets or capabilities through carbon leakage. In order to look at these questions, this article accesses the drivers in the production and consumption emission accounts available for 101 countries, for the period between 1990 and 2017. Our results show that an increase in GDP per capita, trade balance, energy intensity, service sector share and urbanisation will increase production-based emissions more than consumption-based emissions. Conversely, an increase on imports of goods and services and a decrease of exports will increase consumption-based emissions more than production-based emissions. However, it is in urban centres, in developed countries, that there is a higher consumption, relatively to production, so it means that there is also a higher carbon import, otherwise production-based emissions would be higher. Therefore, in these regions there is evidence of carbon leakage.

Keywords: consumption-based accounting; CBA; production-based accounting; PBA; CO₂ emissions; carbon leakage; energy intensity; international trade.

DOI: 10.1504/IJGE.2024.138510

International Journal of Green Economics, 2024 Vol.18 No.1, pp.1 - 31

Received: 24 Jan 2024
Accepted: 28 Feb 2024
Published online: 08 May 2024 *

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Title: Consumption-based versus production-based CO2 emissions: drivers of carbon leakage between countries

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Title: Consumption-based versus production-based CO₂ emissions: drivers of carbon leakage between countries