Eco-nomics: Importing Carbon

Randy L. Rasmussen, The Oregonian

Via the Roger Harrabin at the BBC, my attention is drawn to the Carbon Trust which points out that as high-income countries actively reduce their carbon emissions they are countervailing such efforts by simply importing such emissions.

Which is, in essence, what the pollution havens hypothesis is all about: as carbon-intensive economic activity becomes more expensive in countries that are actively curtailing carbon emissions, the comparative advantage switches to countries that are not and we should expect an increase in carbon emissions from those countries.

From the BBC article:

The extent of carbon dioxide (CO2) emissions "hidden" in imported goods is growing, according to two studies.

Official statistics do not include emissions created by making imported goods but researchers say they should.

It comes as the Proceedings of the National Academy of Sciences reports 26% of global emissions come from producing goods for trade.

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Researchers want all nations to publish their data on embedded emissions.

Glen Peters of research group Cicero, lead authors of the PNAS report, told BBC News: "There is a degree of delusion about emissions cuts in developed nations. They are not really cuts at all if countries are simply buying in products they used to manufacture.

"We really need all countries to be developing and publishing the full extent of their emissions, whether they are produced domestically or outsourced through traded goods."

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"It raises questions about consumption patterns, and whether countries should consider border taxes on imports from countries with no controls on CO2 emissions… though this is controversial and will be some way down the line."

A UK think tank, the Public Interest Research Centre (Pirc), has been discovering how uncomfortable this issue is proving for rich nations.

A succession of Freedom of Information requests reveals a degree of frustration among some British civil servants that the UK insists on basing its emissions calculations solely on domestic emissions.

One piece of government correspondence reveals: "While technological efficiency has improved the CO2 impacts of our products since 1992, the rise in UK consumption has outstripped the improvements achieved.

"The government needs to be cautious about over-claiming on its achievements in decoupling economic growth from environmental degradation."

Which is all to say that if you want to reduce carbon emissions world-wide than a global carbon tax is necessary. This is clearly impossible, so the major importing nations of the world will probably have to impose carbon tariffs.