Embodied Carbon in Traded Goods

This 2008 research paper examines the concept of "embodied carbon"—the total CO2 emitted during a product's lifecycle from raw material extraction to delivery. It contrasts production-based emissions accounting with consumption-based accounting, noting that developed Annex B countries are typically net importers of embodied carbon. The paper discusses the potential for border carbon adjustments to address competitiveness imbalances but highlights significant legal uncertainties regarding non-discrimination principles in trade law and the technical challenges of data availability in developing nations.

• Embodied carbon is defined as the carbon dioxide emitted throughout all stages of a product's manufacturing, starting from the extraction of raw materials and continuing through distribution to the final consumer. Depending on the specific calculation used, the term may also encompass other greenhouse gases (GHGs).
• Calculating embodied carbon involves several methodologies, each with distinct challenges. Top-down methods using input-output analysis are effective for national-level estimates but struggle with sectoral or product-specific accuracy because they rely on estimated average carbon coefficients. Bottom-up methods provide product-specific detail but require vast amounts of primary data on every component and energy source, which may be unavailable in developing countries due to weak statistics agencies.
• There is a significant difference between production-based accounting (used by the Kyoto Protocol) and consumption-based accounting. Research by Peters and Hertwich (2008) indicates that Annex B countries (those with Kyoto targets) are generally net importers of CO2 emissions. For example, China's Balance of Emissions Embodied in Trade (BEET) was +585.5 MtCO2, while the United States' BEET was -438.9 MtCO2.
• Embodied carbon is central to competitiveness concerns in trade. Countries with mandatory emission reductions face higher production costs, leading to calls for trade measures, such as border carbon adjustments, to level the playing field against exports from countries without such mandates. An example is the U.S. Leiberman-Warner bill, which proposed requiring importers of GHG-intensive products from nations without comparable action to purchase U.S. offsets based on the good's embodied carbon.
• The legality of trade measures based on embodied carbon under the multilateral trading system depends on the definition of "like" goods. If a tonne of inefficiently produced steel is considered "like" a tonne of efficiently produced steel, then tariffs based on embodied carbon could violate the non-discrimination principles of national treatment and Most Favoured Nation (MFN) treatment.

APA

Kejun, J., Cosbey, A., & Murphy, D. (2008). Embodied Carbon in Traded Goods. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/cph_trade_climate_carbon.pdf

Chicago

Kejun, Jiang, Aaron Cosbey, and Deborah Murphy. Embodied Carbon in Traded Goods. International Institute for Sustainable Development, 2008. https://www.iisd.org/system/files/publications/cph_trade_climate_carbon.pdf.

Wikipedia

{{cite report |last1=Kejun |first1=Jiang |last2=Cosbey |first2=Aaron |last3=Murphy |first3=Deborah |title=Embodied Carbon in Traded Goods |publisher=International Institute for Sustainable Development |date=August 2008 |url=https://www.iisd.org/system/files/publications/cph_trade_climate_carbon.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kejun2008embodied, author = {Kejun, Jiang and Cosbey, Aaron and Murphy, Deborah}, title = {{Embodied Carbon in Traded Goods}}, institution = {International Institute for Sustainable Development}, year = {2008}, month = aug, url = {https://www.iisd.org/system/files/publications/cph_trade_climate_carbon.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }