One way of attributing greenhouse gas (GHG) emissions is to measure the embedded emissions of goods that are being consumed (also referred to as "embodied emissions", "embodied carbon emissions", or "embodied carbon"). This is different from the question of to what extent the policies of one country to reduce emissions affect emissions in other countries (the "spillover effect" and "carbon leakage" of an emissions reduction policy). The UNFCCC measures emissions according to production, rather than consumption.[1] Consequently, embedded emissions on imported goods are attributed to the exporting, rather than the importing, country. The question of whether to measure emissions on production instead of consumption is partly an issue of equity, i.e., who is responsible for emissions.[2]
The 37 Parties listed in Annex B to the Kyoto Protocol have agreed to legally binding emission reduction commitments. Under the UNFCCC accounting of emissions, their emission reduction commitments do not include emissions attributable to their imports.[3] In a briefing note, Wang and Watson (2007) asked the question, "who owns China's carbon emissions?".[4] In their study, they suggested that nearly a quarter of China's CO2 emissions might be a result of its production of goods for export, primarily to the US but also to Europe. Based on this, they suggested that international negotiations based on within country emissions (i.e., emissions measured by production) may be "[missing] the point".
Recent research confirms that, in 2004, 23% of global emissions were embedded in goods traded internationally, mostly flowing from China and other developing countries, such as Russia and South Africa, to the U.S., Europe and Japan. These states are included in a group of ten, as well as the Middle East, that make up 71% of the total difference in regional emissions. In Western Europe the difference in the import and export of emissions is particularly pronounced, with imported emissions making up 20-50% of consumed emissions. The majority of the emissions transferred between these states is contained in the trade of machinery, electronics, chemicals, rubber and plastics.[5]
Research by the Carbon Trust in 2011 revealed that approximately 25% of all CO2 emissions from human activities 'flow' (i.e. are imported or exported) from one country to another. The flow of carbon was found to be roughly 50% emissions associated with trade in commodities such as steel, cement, and chemicals, and 50% in semi-finished/finished products such as motor vehicles, clothing or industrial machinery and equipment.[6]