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ARTNeT Alerts on Trade and Climate Change -- Development of the Emission Intensity Indices

trade and climate change

The purpose of constructing ‘Emissions Intensity Indices’ (EIIs) for trade (import and export) is to identify how much trade contributes to emissions. Let M isr be the import of commodity i from source s to destination r . Let EP is and EP ir be the e missions per unit of production of this commodity in regions s and r respectively, and let ET isr be the emissions associated with the transport of this commodity from region s to region r . 1 If there were no import, then region r would have to produce this commodity domestically, and assuming that this is possible, the emissions level would have been EP ir per unit of M isr . If, however, there is import, then the total emissions associated with this activity are ( EP is + ET isr ) per unit of M isr . The Emissions Intensity Index associated with this import is therefore MEII isr = [( EP is + ET isr )/( EP ir )], or the ratio of sum of emissions created through trade and local production. If the ratio is greater than 1, then the import of this commodity is more emission-intensive than domestic production. If it is less than 1, then the import of the commodity is less emission-intensive than domestic production. Ratio equal to 1 makes the import of commodity emission-neutral.

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