Embodied Carbon in Traded Goods

The document defines embodied carbon as the CO2 emitted throughout a product's manufacturing process and discusses the tension between production-based and consumption-based accounting in climate agreements. It evaluates measurement tools like Life-Cycle Assessment (LCA) and ecological footprint analysis, noting significant data gaps and methodological challenges. The paper highlights how embodied carbon affects competitiveness and the potential for trade measures, such as border carbon adjustments, while questioning their compatibility with non-discrimination principles in multilateral trade law.

• Embodied carbon is defined as the carbon dioxide emitted during all stages of manufacturing, spanning from the extraction of raw materials through distribution to the final consumer, and may include other greenhouse gases depending on the specific calculation used.
• There is a fundamental tension in climate policy regarding whether emissions should be allocated at the point of manufacture (production-based), as used in the Kyoto Protocol, or at the point of consumption (consumption-based).
• Initial research suggests that Annex B countries (those with Kyoto targets) are generally net importers of CO2 emissions, whereas countries like China and India are net exporters. Specifically, China's balance of emissions embodied in trade (BEET) was 585.5 MtCO2, while the United States' BEET was -438.9 MtCO2.
• Calculating embodied carbon faces significant hurdles, including the high cost and time required for analysis, lack of detailed technological data in developing countries, and difficulties in defining boundaries, such as whether to include equipment used in the manufacturing process.
• The concept of embodied carbon is central to competitiveness concerns, as countries with mandatory emission reductions face higher production costs than those without. This has led to proposals for trade measures, such as the U.S. Leiberman-Warner bill, which would require importers of GHG-intensive products to purchase offsets based on the good's embodied carbon.
• The legality of trade measures based on embodied carbon under the multilateral trading system depends on whether 'like' goods can be distinguished by their carbon intensity; if an inefficiently produced tonne of steel is considered 'like' an efficiently produced one, such tariffs may violate non-discrimination principles.

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} }