02 August 2008

Where Do Carbon Footprints Step?

The notion of a carbon footprint is seemingly easy. Your carbon footprint is how much greenhouse gas you are responsible for kicking into the atmosphere. A big carbon footprint is bad because it contributes to global warming.

But, the accounting and regulation of carbon footprints is not so straight forward. Third World countries have fewer pollution controls, but also tend to have small carbon footprints because they have little industry. Developed countries have big carbon footprints already, so a cap and trade regime (where increasing carbon use is banned unless you can buy the right to do so from someone who pollutes now and gives up that right) favors them.

The trouble is that much of the Third World and developing world's carbon footprint is traceable to the production of goods exported to developed countries.

Suppose China makes 1 billion t-shirts that are exported to the United States, and spews a million tons of carbon into the atmosphere in the process of doing so. Whose carbon footprint should those million tons of carbon belong to, China or the United States? If the carbon footprint associated with export industries is charged to the people who buy the exports and not to the people who make them, the developed world's carbon footprint looks much bigger, and a cap and trade system of pollution control looks very different.

This is far from being a hypothetical question:

As of 2005, the most recent year for which data are available, China was spewing greenhouse-gas emissions equivalent to some 1.7 billion metric tons of carbon dioxide annually — just to produce goods for foreign consumption. That number corresponds to roughly one-third of the nation’s greenhouse-gas emissions, the new study finds. Since then, China’s exports have continued to climb.

In turn, in China,

from 1987 to 2005, the share of domestic CO2 emissions avoided by China as a result of buying imports has climbed mightily: from a little more than 19 percent of the CO2 releases that would have been projected on the basis of China’s activities to a whopping 43.7 percent of the total.

In other words, by 2005 more than 40 percent of the greenhouse-gas emissions associated with China’s activities — including the manufacturing of goods for export — were incurred elsewhere, and before Chinese companies laid their hands on these feedstocks, components, or manufacturing machinery.

Bottom line:

So what share of the CO2 associated with U.S. goods and services is being outsourced to China? “Somewhere in the ballpark of 10 percent of U.S. emissions,” he says — or between 500 million Mt and 600 mMt, based on some earlier work by Weber’s group.

Add countries like Taiwan, Japan and Mexico to the analysis, and the issue of accounting for carbon associated with imports and exports becomes pivotal.

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