Analyses of CO2 emissions embodied in Japan-China trade

Abstract

This paper examines CO2 emissions embodied in Japan-China trade. Besides directly quantifying the flow of CO2 emissions between the two countries by using a traditional input-output (IO) model, this study also estimates the effect of bilateral trade to CO2 emissions by scenario analysis. The time series of quantifications indicate that CO2 emissions embodied in exported goods from Japan to China increased overall from 1990 to 2000. The exported CO2 emissions from China to Japan greatly increased in the first half of the 1990s. However, by 2000, the amount of emissions had reduced from 1995 levels. Regardless, there was a net export of CO2 emissions from China to Japan during 1990-2000. The scenario comparison shows that the bilateral trade has helped the reduction of CO2 emissions. On average, the Chinese economy was confirmed to be much more carbon-intensive than Japan. The regression analysis shows a significant but not perfect correlation between the carbon intensities at the sector level of the two countries. In terms of CO2 emission reduction opportunities, most sectors of Chinese industry could benefit from learning Japanese technologies that produce lower carbon intensities.