24 Aug 2023
A Green Turn in Global Trade: Understanding the Emission Changes
ASPIRE Blogs
Climate change has been at the forefront of global conversations for years, and it’s a complex issue involving many moving parts. One of those parts is international trade. How does the movement of goods between countries affect our global carbon emissions? Let’s dig into the fascinating changes happening in global trade and how they impact our environmental goals.
From North to South: A Journey Through Emissions
Over the past decade, the world has seen a dramatic shift in where goods are produced and how they’re moved around the globe. Developed countries in the global North, such as the United States and Europe, have been increasingly outsourcing the production of goods to developing countries in the global South, like China and India. This shift has led to some surprising changes in global carbon emissions.
The Early 2000s: A Spike in Emissions
From 2004 to 2007, global emissions rose sharply. Why? Many goods previously manufactured in developed countries with relatively low emissions were suddenly being produced in places like China, where goods could be made at a lower cost but with a much higher carbon footprint. The global financial crisis between 2007 and 2011 made the trade patterns even more complex, but the general trend was clear: the total emissions related to trade were on the rise.
A Turnaround in Trade Patterns
But then something interesting happened. From 2014 onwards, the total emissions embodied in trade began to decrease. The global South started to reduce its emission intensities, and the pattern of trade began to shift.
The study shows that by 2017, global trade lowered total carbon emissions by 568 Mt. The bulk of this reduction came from developed countries outsourcing to the global South. Still, there was a remarkable decrease in the net effect of the South-North trade.
South-South Trade: A New Hope?
South-South trade (trade between developing countries) has been rising, which presents an opportunity to mitigate global emissions further. While the effect of South-South trade on global emissions is still tiny compared to North-South trade, the trend is promising. The convergence of emission intensities in the global South reduces concerns about carbon leakage, where carbon emissions simply move from one region to another.
China and India: The Big Players
The most significant contributors to the net emissions of trade are China and India. China’s contribution has fluctuated but decreased overall since 2007, while India’s contribution increased until 2011 before stabilising.
Where Do We Go From Here?
The mitigation opportunity to make the supply chain greener is real. The sectors to focus on include electricity, mineral, and chemical products. But the road ahead requires a universal assessment of emission intensities and a concerted global effort.
If managed correctly, global trade is a powerful tool that can help us reduce world emissions. The shift from outsourcing production to regions with higher emission intensities to a more balanced and environmentally conscious trade pattern is a step in the right direction. By understanding these dynamics, policymakers, businesses, and consumers can work together to make responsible choices that benefit the economy and the planet.
The changes in global trade patterns are more than just economic shifts; they represent an evolving understanding of how our global interconnectedness can be leveraged for environmental good. It’s a complex, multifaceted story that offers hope for a greener future. Whether you’re an eco-conscious consumer or a business leader looking to make responsible choices, this trend shows how global collaboration can lead us towards a more sustainable future.
Are you interested in learning more about how global trade can be a tool for environmental stewardship? Stay tuned for more insights on this evolving topic!