Structural attribution of emissions along the global supply chain and implications for climate policy

Abstract

AbstractTo develop and implement effective policies to mitigate climate change, it is important to understand the emission profile of sectors that comprise the network of global supply chains. Focusing on the relationship between sectors’ positions in the global supply chain, this study develops a structural position analysis framework based on input–output analysis. Our framework reveals the highest‐priority sectors and transactions, and the best strategies for CO2 emission reduction in the global supply chain. The strategies identified focus on cross‐border transactions and highlight the need for inter‐sectoral and international collaboration. The results indicate that the United States and China have different priorities and characteristics (even vis‐à‐vis the same industry), and that joint emission reduction policies should be coordinated to take advantage of each country's emission reduction potential. Our findings suggest that, in the United States and Europe, policies to promote the reduction of direct emissions from production of goods for exports through carbon taxes are important. Contrarily, in Asian countries, carbon emissions originate mainly from intermediate goods trades, suggesting the need for mandatory life cycle assessment reporting and emissions disclosure. Our analytical framework thus proposes specific policies that could effectively reduce specific sectors' and transactions’ carbon footprints.