Greenhouse gas emissions linked to international trade now total more than 20% of the world’s emissions, equivalent to those of the EU, the US and Brazil combined, fresh data has revealed.
The traded emissions tracker, created by the European Climate Foundation (ECF) and climate consultancy Matière, found that trade-related emissions have grown 10 percentage points faster than global emissions since 1995.
“More than one tonne of CO2e [carbon dioxide equivalent] out of every five is emitted to produce a good or service that will ultimately be consumed in a different country than where it was produced,” the organisations said.
The tracker covers 45 economies, including the EU’s member states, all G20 countries – such as China and India – and a group labelled “rest of the world”. Data broken down by country, sector and type of gas is available for the period between 2010 and 2023.
In 2023, imports made up just over a third of the EU’s carbon footprint, which have risen seven percentage points since 2015, despite the fact that the bloc’s territorial emissions fell during this period.
For member states such as Sweden, Austria and Spain, imported emissions are more than 40% of their carbon footprint.
These findings show “the urgent need for international trade to finally begin its own decarbonisation”, the ECF and Matière said.
Richard Baron, director of industrial policy and trade at the ECF, told GTR the tracker provided a way to “measure how much we’re responsible for elsewhere” and to help determine whether the importing country can do anything about those emissions.
Baron said: “We’ve seen global emissions of greenhouse gases rise. We’ve seen traded emissions rise faster, and it’s not going to take long for countries to turn around and say, ‘I’m responsible for my emissions, but I’m also wondering about what’s happening with everything I trade’, and that’s going to force a conversation which might be uncomfortable.”
To date, no country has set a target to reduce imported emissions, though the organisations behind the tracker said this was beginning to change as France, Denmark and the Netherlands recently announced their intention to include them in national climate policies.
The ECF and Matière found that co-operation with trading partners could offer “the greatest potential for reducing emissions linked to trade”, to make sure emissions are measured in comparable ways when they cross borders.
If the EU and China, for example, created a tool that could translate methodology used by one region into criteria used by another, this could influence trade flows representing around 7% of global emissions, the organisations said.
“For now, we don’t have a common treatment of the carbon content,” Baron explained.
“Domestic climate policies are going to be different wherever you look – that’s a given. But we need to have those translation systems so that the CO2 contained in my steel is understood [in terms of] the CO2 contained in the steel you import.”
Other levers include greater efforts to make access to the European market conditional on carbon content, as well as building on the Carbon Border Adjustment Mechanism and the EU Deforestation Regulation.
“The tone of competition is changing and integrating carbon content”, Baron added, which could motivate action from financial institutions and the business community.
Upcoming legislation that might spur change includes the EU’s Methane Regulation, which will require importers to report on the methane intensity of the oil, gas and coal they are bringing to the EU market from August 5, 2028.
The European Commission has also proposed the Industrial Accelerator Act, which would aim to ensure manufacturing represents 20% of the EU’s GDP by 2035.
In May this year, governments agreed to map out ways to make progress on creating a fossil-fuel-free trade system at a global diplomatic forum in Santa Marta, Colombia to assess how nations can transition away from coal, oil and gas.
