International Trade and Global Greenhouse Gas Emissions: Could Shifting the Location of Production Bring GHG benefits?

The report examines the potential for reducing global GHG emissions by relocating production of carbon-intensive goods to regions with lower emissions intensities. It finds significant variation in GHG intensity across countries for products like clothing and steel, suggesting that shifting production could yield benefits that outweigh increased transport emissions. A case study on steel identifies the Americas as well-positioned for low-GHG production due to biomass and natural gas availability. The report also evaluates trade policies, noting that while border carbon adjustments and preferential tariffs are options, they face significant legal, political, and administrative hurdles, particularly regarding WTO compatibility and the principle of common but differentiated responsibilities.

• Emissions embodied in international trade are significant and growing; they increased from 4.3 Gt CO2 in 1990 (20% of global emissions) to 7.8 Gt CO2 in 2008 (28% of global CO2).
• There is wide variation in the GHG intensity of production across different countries for various consumer goods. For clothing, the ratio between the 80th and 20th percentile of GHG intensity is over five, while for vehicles and electronics, it is approximately two.
• Shifting production from high-intensity to low-intensity regions could reduce global GHG emissions, as the potential reductions often outweigh the emissions added by longer shipping distances. For steel, shipping from Brazil to China would add roughly 0.2 to 0.3 t CO2e per tonne, which is significantly less than the potential production intensity difference of about 2 t CO2 per tonne.
• In the steel industry, the lowest GHG intensities are found in Brazil and Turkey. Brazil's low intensity is driven by a high reliance on charcoal and hydropower, while Turkey's is primarily due to a heavy reliance on electric arc furnaces using scrap steel.
• The Americas (North and South) are identified as regions well-suited for future low-GHG steel production. The region is positioned for BOF steel using low-GHG biomass due to abundant biomass and iron ore reserves, and the U.S. specifically is suited for EAF steel due to planned low-GHG electricity and natural gas abundance.
• Global steel GHG intensity declined by 18% from a 1995 peak of 2.2 t CO2 per tonne to 1.8 t CO2 per tonne between 2001 and 2008, driven primarily by shifts to more energy-efficient technologies, particularly in China.
• Policy options to shift trade flows, such as border carbon adjustments (BCAs) and preferential tariffs, face a 'catch-22' regarding legal feasibility: measures consistent with WTO most-favoured nation treatment often conflict with the climate principle of common but differentiated responsibilities and respective capabilities (CBDRRC).
• Administrative feasibility varies by product; calculating embodied carbon is relatively straightforward for primary goods like steel or cement but 'incredibly complex' for downstream goods like cars and electronics due to multi-country assembly.
• A proposed mechanism to improve the political and legal feasibility of BCAs is to return the generated revenues to exporting developing countries as climate finance, which would align with the CBDRRC principle.

APA

Erickson, P., van Asselt, H., Kemp-Benedict, E., & Lazarus, M. (2013). International Trade and Global Greenhouse Gas Emissions: Could Shifting the Location of Production Bring GHG benefits? Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-3c-2013-pr-trade-ghg-lr.pdf

Chicago

Erickson, Peter, Harro van Asselt, Eric Kemp-Benedict, and Michael Lazarus. International Trade and Global Greenhouse Gas Emissions: Could Shifting the Location of Production Bring GHG benefits? Stockholm Environment Institute, 2013. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-3c-2013-pr-trade-ghg-lr.pdf.

Wikipedia

{{cite report |last1=Erickson |first1=Peter |last2=van Asselt |first2=Harro |last3=Kemp-Benedict |first3=Eric |last4=Lazarus |first4=Michael |title=International Trade and Global Greenhouse Gas Emissions: Could Shifting the Location of Production Bring GHG benefits? |publisher=Stockholm Environment Institute |date=2013 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/sei-3c-2013-pr-trade-ghg-lr.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{erickson2013international, author = {Erickson, Peter and van Asselt, Harro and Kemp-Benedict, Eric and Lazarus, Michael}, title = {{International Trade and Global Greenhouse Gas Emissions: Could Shifting the Location of Production Bring GHG benefits?}}, institution = {Stockholm Environment Institute}, year = {2013}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/sei-3c-2013-pr-trade-ghg-lr.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }