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Carbon Emissions Embodied in India–United Kingdom Trade: A Case Study on North–South Debate

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  • Suvajit Banerjee

Abstract

This study is an appraisal of North–South trade and environmental debate on the context of ‘carbon leakage hypothesis’. This article attempts to quantify the CO 2 emissions embodied in the bilateral trade between India and the United Kingdom (hereafter mentioned as the UK) using an input–output model-based analysis for the year 2015. It further proposes a hypothetical situation of no trade between India and UK in order to calculate and analyse the contribution of this bilateral trade in global CO 2 emissions. The results from this study confirm the possibility of ‘carbon leakage’ from Indian commodity production sectors and find that among two trade partners, the UK is able to avoid more carbon emissions than India through trade which helps the UK to reach their carbon emission mitigation targets. On the average, manufacturing of commodities in India those are to be exported to the UK generates 1.053 kilo-tonnes of CO 2 emission per million dollars of export annually and manufacturing of commodities in the UK which are imported to India generates only 0.141 kilo-tonnes of CO 2 emission per million dollars of import from the UK annually for the years 2011, 2013 and 2015. This is because of the proportionately higher consumption of more emission-intensive energy items, like coal, and coal products by India in industrial production than the UK. At the end of the article, this study proposes a few suggestions to ensure a decent level of emission imbalance in the trade flows for the anticipation of increasing India–UK bilateral trade in coming days due to post-BREXIT eventualities to reduce the pressure on the global environment. JEL Codes: C67, F64, Q37, Q42

Suggested Citation

  • Suvajit Banerjee, 2020. "Carbon Emissions Embodied in India–United Kingdom Trade: A Case Study on North–South Debate," Foreign Trade Review, , vol. 55(2), pages 199-215, May.
    • Handle: RePEc:sae:fortra:v:55:y:2020:i:2:p:199-215
    DOI: 10.1177/0015732519894149
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    Cited by:

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    2. Shifali Goyal & Areej A. Siddiqui, 2021. "Estimation of carbon emissions embodied in India’s exports," Working Papers 2156, Indian Institute of Foreign Trade.
    3. Li, Rongrong & Wang, Qiang & Wang, Xuefeng & Zhou, Yulin & Han, Xinyu & Liu, Yi, 2022. "Germany's contribution to global carbon reduction might be underestimated – A new assessment based on scenario analysis with and without trade," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    4. Banerjee, Suvajit, 2020. "Border vis-à-vis Domestic Carbon Adjustment: Implications of Alternative System Boundary for India to Reduce Carbon Emissions," Conference papers 333129, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Banerjee, Suvajit, 2021. "Conjugation of border and domestic carbon adjustment and implications under production and consumption-based accounting of India's National Emission Inventory: A recursive dynamic CGE analysis," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 68-86.

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    More about this item

    Keywords

    CO2 emission embodied in bilateral trade; carbon leakage hypothesis; North–South debate; input–output model;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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