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