Global supply chains as a way to curb carbon emissions

Norwegian University of Science and Technology

The coronavirus outbreak has companies from Apple to Amazon warning consumers, shareholders and governments about how factory shutdowns in China and across the globe have disrupted global supply chains. Many goods, including cars, mobile phones and medicines, have parts or components that are imported and exported several times before they are finally made into the finished product.

But beyond their vulnerability to a global health crisis, it turns out that these complex global supply chains also have a hidden climate secret.

When a piece of a product in a global supply chain moves across borders, it travels with the carbon emissions needed to make it. Not surprisingly, researchers call these emissions “carbon-in-transit.” A new publication shows that these travelling emissions account for a whopping 10 per cent of all global carbon emissions, and have tripled between 1995 and 2012.

“We have always been interested in the greenhouse gas emissions associated with what we consume, with little concern for the intricate ways in which the global economy provides us with the goods we consume,” said Edgar Hertwich, a professor at the Norwegian University of Science and Technology’s (NTNU) Industrial Ecology Programme. “It turns out that many countries participate in producing those goods.”

This matters as nations try to cut carbon emissions overall, whether by imposing carbon taxes in the countries where goods are produced or consumed, or by another measure called a border carbon adjustment, according to a paper that Hertwich recently published.

For example, Hertwich says, a carbon tax on imports would affect exports, because 10 per cent of global GHG emissions are exported more than once and enter complex global value chains. A border carbon adjustment could advance a further unravelling of global supply chains.

And that may not be a good thing, he says, because products that enter the global supply chain are more energy intensive than average products — but are, on average, with less emissions-intensive energy than other products.

“Global supply chains, overall, may contribute to reducing emissions associated with the production of individual products,” Hertwich said.

The European Union has made it clear that cutting carbon emissions are a top priority. On 4 March, EU Commission President Ursula von der Leyen announced that the commission had adopted a proposal for the first-ever European Climate Law, with the objective for the EU to be climate neutral by 2050.

“The science is very clear. Climate is part of the natural world that sustains us,” she said in a press briefing about the proposal. “And this natural world is severely endangered. It is high time to act and this Climate Law is part of the European contribution to this action.”

And earlier this year, at the Davos 2020 economic summit, von der Leyen warned China that it either needs to put a price on carbon emissions at home or face the possibility of a CO2 tax on imports.

“There is no point in only reducing greenhouse gas emissions at home, if we increase the import of CO2 from abroad,” von der Leyen told delegates at Davos, as reported by the Financial Times. “It is not only a climate issue; it is also an issue of fairness towards our businesses and our workers. We will protect them from unfair competition.”

But choosing the right way to force those cuts can be tricky, Hertwich said.

Like a dieter who wants to lose weight by tracking his daily calories, countries that want to cut their carbon emissions need to know the source of their emissions.

The challenge comes with products that are made in one country, such as China, but then are purchased and used in another country, like Norway or the United States. If the carbon emissions from these products are going to be taxed, for example, where should the taxes be levied — on the producer country or the consumer country?

Carbon-in-transit complicates this question immensely.

For example, China, the US and South Korea export the highest amount of carbon that was previously embodied in imports — this is carbon-in-transit, Hertwich said.

“For China and the US, 20 per cent of the exported carbon was previously imported, while for Korea, that number is 40 per cent,” he said.

So if a country — or the EU — decides to impose border taxes on carbon, carbon-in-transit will also be taxed, he pointed out. Given the amount of carbon in transit, estimated to be five billion tons, and if the tax were to be set at US$ 30 per ton, taxes on the carbon-in-transit alone would amount to more than US$100 billion a year.

“This would surely become a cause for contention” for countries and businesses, he said. “If border tax adjustments do not include a tax refund for exports at the border, companies will argue against an import duty for products used for export production to ensure competitiveness on the global market. If they do, the question is how to assess the emissions associated with imported intermediates or document previously paid import duties.”

Another approach is to tax carbon emissions where the products themselves are consumed — so even though your mobile phone was made in China, you as the owner would pay the carbon tax on the emissions from its production.

From a pure economic standpoint, taxing carbon emissions at the consumer level is effective, Hertwich said, but there are still potential pitfalls in structuring such a tax.

“For a consumption tax, the challenge is how to assess the level of emissions which depends on the respective technologies of the many countries participating in complex global value chains,” Hertwich said.

Another approach is to look at how components in the global supply chain are produced, and tax their major inputs, Hertwich said. Technology exists, however, to track the origin of components.

For example, chemicals are the most involved in complex global value chains, followed by cars, machinery and ICT.

The most emitting foreign inputs to the production of these products are crude petroleum, steel, chemicals and fabricated metal products. Companies can also be compelled to report the carbon intensity of these products.

“Taxing these inputs would do the most to clean up supply,” he said. “Global supply chains have driven economic development over the past two decades and have contributed more than any development policy to lift one billion out of abject poverty. Their benefit provides a rationale for countries to work together in implementing a global carbon price regime.”

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Reference: Edgar Hertwich. Carbon fueling complex global value chains tripled in the period 1995-2012. Energy Economics. Volume 86, February 2020

From EurekAlert!

54 thoughts on “Global supply chains as a way to curb carbon emissions

  1. If only the intellectual effort that goes into inventing these ‘Climate Change/Global Warming’ boondoggle could be channelled into productive and necessary activities, the whole World would benefit immensely.

    • As well as the money wasted on the scam. The GWPF have requested the government remove all the green taxes from the UK energy system which increases costs by 40%. The obvious problem for the government is that would expose the costs of creating an unreliable generating system which the vast majority are unaware of. The media still push the line that the power companies are to blame and they are generally too spineless to stand up for themselves or are too beholden to the government for subsidies.

  2. This virus is an internet one a complete furfy nothing burger billions have been wasted and debt imposed upon future generations. Britain, Australia and USA are at risk from becoming from being one of the smartest intelligent nations to become fourth world countries mentally in my view of course. Where I life in South America lifts all restrictions Sunday isolates over 60.s and Positives keeps borders closed for another few weeks Wake up Britannia! LOL

    • Being confined to home also has its risks

      “In the UK every year, almost 6,000 people die in home accidents and 2.7million visit their local accident and emergency departments seeking help. ” (ROSPA.22.08.2019) 698 people died from falling down the stairs.” Allowing for the length of time of a close down but setting it against the far greater amount of time people will spend in their homes that will equate to roughly the number of people now expected to die of CV. (highly theoretical of course)

      In an extraordinary roll of the dice of fate of course many who will have died of flu won’t because they are not out and about, many who would have died in road accidents or murder or other causes won’t. At the end of all this I suspect that the overall additional mortality rates from cv won’t show up as a significant factor in the UK tally of 6000,000 deaths a year of which 140,000 are ‘avoidable’

      tonyb

    • …billions have been wasted and debt imposed upon future generations…

      The Greatest Tax is the hidden tax of Inflation.
      The inflation of the currency is not waiting generations, its diluting savings and investments Right Now.

      Makes pointless governments attacking counterfeiters – when these same governments are destroying their own currency orders of magnitude faster than any other criminal racket.

        • In less than 30 days from the first coronavirus fatality in Italy, their reported death toll per 10M population is about the same as an entire 12-month flu season in the US. Some say Italy’s death total is under-reported because the overall deaths during that period are much more than the those deaths attributed to coronavirus (thanks to Willis for his data analysis).

          • There could be a problem with reliable data as in the UK if there a positive test for the virus when a person dies that will be recorded as a virus death when it is something else that caused the death. This is not unlike saying that deaths from pneumonia are brought on by pollution where pneumonia is the final cause of death for lots of diseases such as leukaemia.

  3. The carbon alarmists have hit a brick wall called the coronavirus. Jamming a reeling world economy with an excess of new taxes designed to cramp the economy further in pursuit of a non-existent problem just won’t wash any more.

    The world populace has no need for pontificating central planners without a clue. We have seen their dystopia and we don’t like it.

    If the climate alarmist movement wasn’t slowly dying before, they are on ventilators now. The delegates have become derelicts. Their island is sinking.

    • Maybe they should work for nothing restoring honestly aquired wealth to those that have had it evaporated.

  4. Why should anyone be paying anything for the ‘sin’ of Co2? Show me the damage that has resulted from the minor increase of temperatures during my lifetime (75yrs)- there are none. Virtually everything has improved since I started watching a long time ago. I’m from Santa Monica, but ‘show me’ what has become worse since 1945. The only danger ahead is for humanity to run out of affordable energy and there is no reason for that to happen since we discovered nuclear energy about the time I was born. Wake up, folks!

    • ah but a billion in thinair c02 taxes makes it Imperative!!
      someone/the consumer will once again be fleeced to make money for the eurocrats
      whole damn story inc their reasoning for who what where is utter rubbish

  5. CO2 warrior girl Greta never even visited China although the Trans Siberian railway is available. Her kind of non- sense only works on the 97% gullible / naive Western public, prepped by the bought and sold Western MSN.

    Indeed al that imported stuff adds at least 10% CO2 due to intercontinental transport. Shipping is quite polluting but hardly seen or shown.
    Reduce globalism and produce more nationally if possible.

  6. “For example, China, the US and South Korea export the highest amount of carbon that was previously embodied in imports — this is carbon-in-transit, Hertwich said.”

    Yes, let’s see the EU slap a carbon import tax on goods form the US, China, and Korea and see how long they can last without the affordability of products made there send those politicians packing by the voters. The EU seems to forget Germany and Russia are coming closer to Nordstream-2 to make Germany a puppet state of Russia. What happens then? When your biggest EU economy becomes dependent on an oil-gas oligarchy-dictatorship?

    • More coal and gas for Germany. And they will continue to import nuke power. I’m guessing the wind mills will wear out and not be rebuilt. The rest of the twits in the EU will have to find some other other source of free money. Yet another happy ending!

    • That’s the problem for the EU. It is not a government. It is a bunch of conniving bureaucrats appointing each other to run the government and the economy. The nationally elected European Parliament, the primary voter on laws, is one of 7 parts of the government. There are six other branches of the government with interlocking limits on their power, including the European Commission, the executive branch.
      The EU government is such and elephantine abortion it is a wonder it works at all, much less works effectively.

  7. There is an expense involved in shipping parts and assemblies multiple times. Manufacturers wouldn’t do that if it weren’t the most profitable/efficient strategy. I’m guessing that the researchers are missing something important. My question is, why is it more efficient/profitable to ship things around so much?

    It also seems likely that the researchers are making assumptions that are decades out of date, given the progress in manufacturing technology. What are they missing in that regard?

    Manufacturers are neither stupid nor lazy. Researchers might be.

    • Energy cost and reliability is only one reason.
      European workers are unwilling to compete with Asia on wages, Union demands, health and safety standards, environmental protection, waste treatment, CFC emissions and Coal use.

      We have not fixed those problems, we have exported them.

      • That we have RLu… yet there are so many who adapt to out of sight out of mind and think that all is just fine, nothing to see here.

      • Bingo!! And multiplied CO2 by 1.1 in the process. Wages are the key…the puppet masters who care only about money are getting exponentially richer while the 99.9% of the rest of us are getting progressively poorer. Yeah, the cheap JUNK from China masks that for the average consumer…but then the Coronasarus reared it’s ugly head…other than Joe Biden have not heard much MSM clamor for open borders of late….and when’s the last time you saw the concept of “carbon-in-transit” on the boob tube?

        • The vast growth of the middle class all over the world, never happened in your world?
          Your evidence that everything cheap is by definition junk is????
          I would love to see your evidence that 99.9% of the world’s population is getting poorer.

          • Merely stating something makes it true. Didn’t you know..?

            cf. AGW facts.

            Ignore the millions of Chinese that have been lifted out of subsistence-activity, etc etc etc.

            Hans Rosling wrote a book about it.

          • Pay taxes and export jobs so the “Chinese can be lifted out of subsistence lifestyle.” I need to go re-read my Constitution and see which part directs me to take care of other nations.

          • In the US it now takes 2 incomes for a “middle” class family to get by. That was not true before we were sold out to China. Junk is stuff like shoes or furniture that literally falls apart in your apartment (home ownership not what it used to be for the “middle”). Having lived and worked in China I can tell you they were better off before the massive amounts of pollution dumped into their air and water…cancer rates projected to rise there or maybe already through the roof. The country I live in is large enough to be self sufficient and have clean air and clean water and a high std of living for all…wait it used to be that way before we “couldn’t live without globalizm…” remember back when you could work, save and collect interest on your savings? Been a long while since I got 4% or better return on a savings account, evidence enough for me.

          • meiggs, you have the option of not buying anything made in China if that’s what floats your boat. How does voluntarily buying stuff force you to support anybody?

          • Go try to not buy Chinese. I don’t have that much time to spend money as I must work for a living.

            Sounds like you are heavily invested in China.

          • It takes two incomes to support a modern middle class lifestyle, which includes two cars, preferably less than 3 years old, a car for the kids when they reach the teenage years.
            Dining out 2 to 3 times a week.
            Big screen TV and a cable package with most of the pay channels included.
            Family vacations every year and not to grandma’s.
            A phone for every family member that can walk.
            A house with a separate bedroom for every child.
            There are also taxes that are 10 times more than what your parents paid.

            You seem to think that there has been no improvement in that “middle class” lifestyle over the years.

            Regardless, even if your example was true, it still wouldn’t support your claim that 99.9% of the world’s population is getting poorer.

          • MarkW how dare you, expecting facts in support or a claim made on nothing but feelings. meiggs feels it so it must be so and if you don’t agree than you must be “heavily invested in China”!

      • Have you ever considered the possibility that union demands and environmental regulations might be excessive?

      • “RLu March 28, 2020 at 2:54 am”

        Correct. Exported jobs, emissions and wealth. But China and India are now becoming too expensive as wages and living standards increase. There is even A Simpsons episode that touches on the subject wages, worker rights and benefits.

        • This has been a repeating pattern that those who are against trade in general keep missing.
          Back in the 70’s cheap Japanese wages were stealing our jobs. Then Japan got wealthy.
          Then it was cheap Taiwanese wages were stealing our jobs. Then Taiwan got wealthy.
          Then it was cheap S. Korean wages were stealing our jobs. Then S. Korea got wealthy.
          The it was cheap Singapore wages were stealing our jobs. Then Singapore got wealthy.
          And so on.
          And during this whole period, American standards of living kept going up.

          • “MarkW March 28, 2020 at 5:00 pm”

            Japan after WW2 received massive investment from the allies. Many British car makers went to Japan to train the engineers in car making, as one example. The Japanese simply improved the processes and quality of the products, could make them cheaper, better and more reliable than either the British, German, French or Americans. But what has been happening since the mid-90’s is the export of industry as a whole to countries that do not have a good record of wages or environmental protection. That is why you will find many European car makers build their cars in countries that don’t pay workers very much and are not bothered about emissions, and then hold their hands out for Govn’t support.

    • Example:

      Parts manufactured in highly automated factories in the north are shipped to Mexico for labor intensive final assembly. What’s the effect on CO2 output?

      No matter how you cut it, Mexican workers emit about 1/4 the CO2 as do American and Canadian workers. link Heck, they only emit about half what Chinese workers do.

      It seems likely that shipping stuff to Mexico and back results in lower CO2 emissions.

      • Mexico isn’t the world sheriff.

        The US being the sheriff has a cost (monetary and in term of “CO2 pollution”).

        (We may discuss whether that policing did a lot in the middle east.)

  8. I don’t know if they’ve thought about it but I’m sure that Australia isn’t the only country that imports most of it’s wind and solar renewables components from China. If they are going to impose carbon taxes on these components that will make them even less worthwhile than they already are. Bring it on, we will be forced to stop all orders as manufacture of these components creates massive amounts of CO2 and stopping the orders will reduce further financial disaster.

    Who pays the carbon tax on the coal we send to China? I’m still trying to wrap my head around this. Is it us for supplying a product that creates CO2 or is it them for burning it? If they didn’t buy ours then they would be forced to use their own brown coal which creates even more CO2.

    We have mandated (foolishly) against nuclear power, we have very little hydro electricity (not enough water) no geothermal (no volcanic activity), now it looks like we could be priced out of the wind and solar industry and we’re blowing up our coal-fired power plants.

    Australia, the lucky country.

    Our top level politicians need to grow some, pull out of the Paris agreement, give wind and solar the flick and put the money into some reliable power. First step, remove the mandate on nuclear energy, then work toward powering up our country with a reliable long lasting source of energy. In the meantime we use our own coal in combination with gas till the nuclear power is up and running.

    With nuclear energy we would reduce mining, free up a whole lot of land taken up by the wind and solar industry and reduce waste. The waste from mining byproducts, manufacture and disposal of wind and solar is far greater than nuclear waste.

    We have to do something, we are limiting our own manufacturing through lack of reliable power. An aluminum smelting plant was forced to shut down due to an unstable grid, the aluminium solidified in the pipes and now that plant has closed down permanently. It would have cost millions to repair. I don’t know about the lucky country, Australia will soon be the laughing stock. Our government allows the greens to run our country, they think it’s ‘what the people want’. They are so wrong, the greens are destroying our country.

    CO2 is not going to do the damage that is claimed by leftist scientists. They’ve been weeping and wailing for fifty years or more, none of their past predictions have come true and neither will their present predictions! Wake up Australia, this isn’t about climate, it’s about destroying us financially, it’s about totalitarianism and global rule, it’s about socialism.

    Maybe someone on this site who has experienced socialism could explain the difficulties that come with it, there are so many people on the left who have idealised it into some sort of utopia.

    • Nuclear power isn’t foolish, but radiophobia is.

      If you make any trivial amount of anything in an industry “toxic” by fiat, you are going to increase the cost of that industry.

      With the equivalent of the rules on radiation exposure, I bet no other industry, and probably no other human activity would survive. Firefighting in particular wouldn’t be imaginable under the equivalent of EURATOM.

  9. This is extremely hypocritical of the EU of which we are thankfully no longer a part. Car making as an example involves up to 10 processes of sending one part from one country to another back again, on to another one and so on. A part can in consequence travel many thousands of miles around the EU before it then appears in say a BMW.

    That all involves just in time delivery using highly polluting trucks shedding noxious pieces from tyres brakes and emissions. In addition a truck exerts up to 120000 times more pressure on a road surface than a domestic car, with all that entails.

    I am no fan of globalisation to the extent it has developed. There is still plenty of scope to import and export but we don’t need to buy everything from China and should have a greater degree of self sufficiency especially in food stuffs.

    tonyb

  10. This global warming virus has to run its cause and will in the meantime effect the brains of certain so called intellectuals. Those who have developed the virus are likely to increase their beliefs to a level of absurdity, and are not likely to recover from their tragic malady.

  11. “The European Union has made it clear that cutting carbon emissions are a top priority. On 4 March, EU Commission President Ursula von der Leyen announced that the commission had adopted a proposal for the first-ever European Climate Law, with the objective for the EU to be climate neutral by 2050.

    “The science is very clear. Climate is part of the natural world that sustains us,” she said in a press briefing about the proposal. “And this natural world is severely endangered. It is high time to act and this Climate Law is part of the European contribution to this action.””

    When people say that the natural world is endangered, it’s clear that they have no idea what they are talking about. The natural world is not and will not ever be endangered by anything people can do (at least until we can chuck Moon-sized rocks at the Earth). They are just hypocritical totalitarians who want complete control over everything the *rest* of us do.

  12. “A border carbon adjustment could advance a further unravelling of global supply chains.”

    So these ‘academics’ want to ‘unravel’ global supply chains…..

    At least their bias is clear!

  13. Yet despite these abrupt mass global lockdowns it has had zero effect on CO2 readings at Mauna Loa.
    Surely this is a unique opportunity to assess the raw data and divide out the human signature from the background and thus far it’s look long that we have zero control over these levels:
    Is the Manmade CO2 / Global Warming theory being finally bust with this unique data:

    https://www.co2.earth/daily-co2

  14. From the article: “And earlier this year, at the Davos 2020 economic summit, von der Leyen warned China that it either needs to put a price on carbon emissions at home or face the possibility of a CO2 tax on imports.

    “There is no point in only reducing greenhouse gas emissions at home, if we increase the import of CO2 from abroad,” von der Leyen told delegates at Davos, as reported by the Financial Times.”

    The EU should not be imposing CO2 taxes. This would only end badly. I think I can say with assurance that if the EU imposes a CO2 tax on U.S. imports, that the U.S. will be imposing tariffs on the EU equal to the CO2 taxes. I imagine China will do the same.

    The EU’s attempt to “force” their political agenda on others is not going to work. They need another plan, like accepting that CO2 is a harmless gas and letting the human-caused climate change issue go the way of all bad ideas.

  15. [1] It is IMPOSSIBLE to remove Carbon from our lives. All life is carbon based and carbon is an abundant, naturally occuring, incredibly important and useful element.
    [2] Based on the saying ‘What goes up must come down’ then an explanation is required as to why CO2 drove temperatures up at the last Inter-Glacials but was unable to prevent temperatures falling when the same Inter-Glacials ended?

  16. This is just an overly complex way of saying that what we’ve really done is to export our high carbon industrial production to places that do not care about carbon emissions. And their solution to the problem is always the same: More taxes, which is part of the reason this industrial production left in the first place.

  17. Am I missing something or what???

    So if a country — or the EU — decides to impose border taxes on carbon, carbon-in-transit will also be taxed, he pointed out. Given the amount of carbon in transit, estimated to be five billion tons, and if the tax were to be set at US$ 30 per ton, taxes on the carbon-in-transit alone would amount to more than US$100 billion a year.

    If you take their figures
    5,000,000,000 tons of CIT (5 billion)
    x $30 – ton
    = $150,000,000,000 ($150 billion)

    $100 billion would be $20 per ton

    Me thinks EurekaAlert needs to take another look at their figures.

    But hey, what’s $50 billion a year among friends?

  18. Here is a bit of lunacy from this global “NETWORK”. It has to do with Canola oil used for cooking and the processing of it. An international agriculture company in Canada has a Canola processing facility near me. The Canola seeds are acquired from the local farmers and shipped to this facility by truck and rail car. The seeds are processed into Canola oil but due to the seed “Polishing” process using volatile mineral solvents This oil is labeled Black liquor oil. These volatile solvents that removes the last 3% of the recoverable oils from the seed husks this oil IS NOT usable for human consumption. The oil must be refined in a distillation tower to remove the solvents that form the Black liquor. After the solvent removal this oil can be bottled and sold to the consumer market as 100% Pure Canola oil. The main market for these oils is China and the US.

    After the US Senate was lobbied by the US producers of similar cooking oil products the US senate passed a Tariff on the import of finished cooking oils from Canada. The agriculture company in this story shutdown the seed finishing refinery section and bottling line plant at this facility. The Black Liquor oil now is loaded into 90 ton rail tank cars shipped to Vancouver BC where it is loaded onto chemical tankers. Those tankers ship this unfinished oil to China where there is another sister plant owned by this agriculture company. There the oil is finished and bottled to be shipped back to the North American markets to be sold to the consumers. There was NO tariff from China till a last year. So what is the carbon foot print of that supply chain.

  19. Apart from cheap labor many of these arrangements just take advatage of disparate and distorted tax regimes around the world, instead of adding more layers of tax perhaps some sense of existing tax regimes.

  20. It should be no surprise that energy and therefore carbon is contained in all the sub parts of everything sold. Businesses are very good at identifying efficiencies, if it is more efficient to make it overseas and ship sup parts three times before it is a final product then that is what will be done. The buyer is the winner and therefore has more wealth to do other good things.
    Would those who object desire LESS efficient production? It is exactly these efficiencies multiplied millions of times rhat results in the standard of living we now enjoy. How far back do we want to go – because that is the question at the root of the issue. And I want a vote in that decision!

  21. When the term energy independence was touted for the first time during the shale revolution, many still thought that this was insanity and that it was better to buy the oil. Today we see how vulnerable those global supply lines ae and that here is value in preserving one’s ability to do function with local produce. That’s not always possible but when it is, go for it.

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