Embodied Carbon Emissions in International Trade

Embodied carbon emissions refer to the total greenhouse gases released along the entire supply chain of internationally traded goods and services. As production migrates across borders, differences in national emission intensities and regulatory regimes create shifts in global CO₂ burdens. International trade thus decouples the place of consumption from the place of production, challenging traditional production-based accounting and creating a need for more comprehensive consumption-based or hybrid approaches. Quantifying these flows relies on multi-regional input-output modelling, which allocates emissions to final consumers and reveals hotspots in sectors such as electricity, heavy industry and agriculture. Recent analyses highlight how converging emission intensities between developed and developing regions have begun to mitigate net carbon leakage, while evolving trade agreements and agricultural supply chains introduce new complexities. Improved measurement underpins fairer policy frameworks, strengthens national climate commitments and guides decarbonisation strategies across global value chains.

Research from Nature Portfolio

Recent studies have shown that the long-standing disparity in emission intensity between exporting and importing countries has narrowed significantly in the last decade, leading to a decline in net emissions embodied in North–South trade. This convergence suggests that South–South trade will not exacerbate carbon leakage to the same degree as in the early 2000s. Research on regional trade agreements demonstrates that full tariff elimination in major blocs can drive notable increases in global CO₂ emissions from fuel combustion, though technological spillovers may partially offset this effect over time. In the agricultural sector, trade-adjusted accounting reveals pronounced differences between production-based and consumption-based emissions for key commodities such as ruminant meat, milk and rice, underscoring the potential for more effective national reduction targets that internalise partner-country emission intensities.

Embodied Carbon Emissions in International Trade publication trend

The graph below shows the total number of articles in embodied carbon emissions in international trade across all publications each year (not limited to Nature Index journals).

Technical terms

Embodied carbon emissions: Total greenhouse gas emissions released during the production, transportation and disposal of a traded good or service.

Emission intensity: Quantity of CO₂ emitted per unit of economic output or physical product.

Production-based accounting: Attribution of emissions to the country where they are physically released.

Consumption-based accounting: Attribution of emissions to the country where final demand for goods and services occurs.

Carbon leakage: Increase in emissions in one jurisdiction resulting from the relocation of carbon-intensive production to another jurisdiction with less stringent regulations.

References

1. The narrowing gap in developed and developing country emission intensities reduces global trade’s carbon leakage. Nature Communications (2023).
2. Regional trade agreement burdens global carbon emissions mitigation. Nature Communications (2022).
3. Adjusting agricultural emissions for trade matters for climate change mitigation. Nature Communications (2022).
4. Embodied carbon emissions generated by international trade of China's light industry sector based on global supply chains perspective. Energy Strategy Reviews (2023).
5. Consumption‐based carbon accounting: does it have a future?. Wiley Interdisciplinary Reviews Climate Change (2016).