Improving and evaluating the methodology for calculating offshoring of emissions

Improving and evaluating the methodology for calculating offshoring of emissions

Wiersema, Jeroen (TU Delft Technology, Policy and Management)

Schröder, E. (mentor)
Blok, K. (mentor)

Delft University of Technology

Management of Technology (MoT)

2020-08-11

This research aimed to improve the method to calculate offshoring of emissions to understand if developed countries were increasingly offshoring emissions towards developing countries. By offshoring, developed countries can achieve their climate goals without improving their carbon efficiencies. The widely-used method of the balance of emissions embodied in trade (BEET) is not a suitable method to calculate offshoring because it is influenced by differences in technologies between countries. Therefore, it may seem that countries are offshoring emission-intensive industries, while in reality, they are improving their domestic carbon efficiencies. To deal with this issue, previous work adjusted the BEET for technology differences between countries by adjusting for differences in emission intensities based on output. We proposed to use the value-added instead of output to adjust the emission intensities to deal with the issue of double-counting. We used both technology adjustments to calculate the BEET for the years from 2000 to 2014 using a multi-regional input-output analysis with data from the World Input-Output Database 2013 and 2016. Globally, offshoring was not increasing during this period and stabilized at less than 5% of global emissions for both technology adjustments. Furthermore, using linear regression analysis, we did not find a relationship between income and specialization towards emission-intensive industries. This result suggests that developed countries were not displacing emission-intensive industries towards developing countries. Finally, we found that the differences in emission intensities between countries were not only caused by differences in technologies, but also by the heterogeneity of firms aggregated within the same sector. However, with increased sector granularity, this limitation of both technology adjustments decreases. While the value-added adjustment solved the issue of double-counting, it had the limitation that firms differ in their value-capturing ability. Therefore, we concluded that the value-added adjustment was not a significant improvement of the output adjustment.

Emissions
Offshoring
Economics
Sustainabilty
Specialization

http://resolver.tudelft.nl/uuid:8b51cbf0-d335-4430-a72a-a67da98e74d2

Student theses

master thesis

© 2020 Jeroen Wiersema