The EU’s reductions have been offset by increases in China and India, where they increased by 200% and 144%, respectively.

Throughout the 21st century, most of the European Union (EU) countries have achieved outstanding results in reducing emissions within their territory. In particular, CO₂ emissions from burning fuels within Spain they fell by 12% between 2000 and 2018, according to the INE. In Germany they decreased by 16%; in France, 20%; in Italy, 25%; and in the United Kingdom, 32%.

Do these figures indicate that the European Union is adequately fighting climate change? The answer, unfortunately, is that not at all. The different Integrated Energy and Climate Plans that European countries have to present to face the Paris Agreement should be more ambitious when establishing measures that reduce emissions incorporated into international trade. Why more ambitious?

First, because the individual plans of each country added together are not sufficient for the objective of the Paris Agreement of limiting the increase in temperature at 2 degrees centigrade.

Second, because, in fact, most of the CO₂ incorporated in goods and services that we consume on a daily basis (clothing, mobile phones, household appliances, cars, restaurants, shopping centers, hospitals, hotels, etc …) is issued in the intermediate stages of manufacturing parts or inputs necessary to obtain the final product that take place in other parts of the world. These “emissions leaks” via international trade allow quantifying what part of the emissions incorporated in a final good is produced in other different countries.

Thus, in the same period, 2000-2018, global CO₂ emissions grew by 41%, which indicates that the reductions achieved within the EU have been offset by larger increases in emissions from other countries. like China and India, where territorial emissions increased by 200% and 144%, respectively.

Emissions Leak and Emissions Shelter

In today’s globalized world, production chains are geographically fragmented and distributed in different parts of the planet, and, therefore, the manufacture of a single product triggers the emission of CO₂ in different countries of the world.

For example, Apple’s iPhone is designed in the usa, in its manufacture components are used that have been produced in Malaysia, memory in India, with copper from Mongolia and Chile, and finally is assembled in China. This generates positive effects on employment and income in the countries mentioned. But, at the same time, it implies that the consumption of any product (imported or national) makes us responsible for a portion of the emissions generated in different foreign countries.

In an article recently published in ICE, Revista de Economía, we verified how in 2014, out of every 100 tons of CO₂ that were emitted into the atmosphere to produce everything that Spaniards consume, almost half, 49 tons, were generated outside the country. In that year, 75% of the emissions incorporated in Spanish imports were released in countries outside the EU, mainly in China (20%), Russia (6%), India (3%) and the United States (3%) ; while within the EU, the emissions imported from Germany (6%), France (4%) and Italy (3%) stand out.

China, refuge for Spain’s emissions

Among those countries, China is the one that stands out the most and it can be said that it has become an emissions haven for Spain, not only because of the size of its economy, but also because of its high energy dependence on coal, whose combustion generates enormous amounts of CO₂.

Emissions imported by Spain are concentrated in two sectors: machinery and equipment (industrial machinery, household appliances, computers, mobile phones, etc.) and chemical products and petroleum derivatives (all kinds of chemicals, cleaning products, medicines, plastic, gasoline, etc.). This is mainly due to the fact that production in the aforementioned sectors is energy intensive and many of its production stages take place in countries with an energy matrix highly dependent on fossil fuels.

Under these conditions, the problem of the leakage of emissions facing Spain and most developed countries are immersed in an economic dynamic in which multiple factors intervene. We highlight three:

  1. Greater productivity and competitiveness of producers in emerging countries with respect to Spanish producers (lower production costs, cheaper labor and energy, lower taxes and, therefore, lower sales prices) increase the incentives to import intermediate inputs and final consumer goods, which increases imported emissions;

  2. Emerging countries, in general, produce with a higher intensity of emissions that developed countries, so that products imported from developing countries have, on average, a greater burden of CO₂ emissions than those produced in Spain and than those imported from developed countries;

  3. Spanish consumption has increased year after year. Despite the fact that today production processes are more respectful with the environment, thanks to technological advances and the progressive penetration of renewable energies, the increase in the demand for products (partially) counteracts the emission reductions achieved through technological improvements.

Search for solutions

The reduction of carbon emissions outside of borders such as the Spanish or the European one faces the difficulty that the states do not have legislative capacity outside their territories. But it it does not mean that no action can be taken.

Part of the solution would come by establishing a carbon tax at border in such a way that imports were taxed in proportion to the carbon they incorporate. In this way, importers will be encouraged to seek suppliers in environmentally friendly countries.

Thus, the fact that the draft of the Law on Waste and Contaminated Soils of Spain proposes the establishment of a single-use plastics tax of € 0.45 per kilogram manufacturing and importing, is a sign that it is possible to establish policies that reduce our footprint in other territories if there is a political will to do so.

* María Ángeles Cadarso, Professor at the University, specialist in Economics and Environment, Castilla-La Mancha university; Luis Antonio López Santiago, Professor of Foundations of Economic Analysis, Castilla-La Mancha university and Mateo Ortiz, Predoctoral Researcher in Economics, Castilla-La Mancha university

This article was originally published on The Conversation.