Emissions intensity comparisons and consumption-based CO2 accounting of transportation services

As the international division of labour becomes more entrenched, the distance goods travel before they reach the final consumer increases; at least this was the case before the outbreak of the COVID-19 pandemic. International trade and cross-border cargo movements generate significant carbon emissions. Despite theoretical advances, empirical studies frequently draw contradictory conclusions and the influence of international trade on a country's decarbonization efforts is inconclusive. This study examines the carbon emissions caused by countries' transportation services on global value chains. The input-output (IO) model and the 2015 multi-regional environmental input-output table from the UNCTAD-Eora database are employed. The input-output approach was used to determine the carbon emissions generated by the transport sector, along global value chains, in 190 countries. Environmentally extended IO analysis then reallocates emissions responsibilities of the transport sector from production to consumption. The study identifies which country's transport sectors add more value or emit more CO2. Our findings indicated that: (1) the transportation industry of a country may have a detrimental effect on the environment while generating minimal economic benefit; and (2) a country's transport industry may be tightly related to global value chain operations, but does not create considerable environmental impact. Given the significant differences in emissions intensity, we propose not only calculating the production-based accounting (PBA) of CO2 emissions, but also the consumption-based accounting (CBA). If CBA emissions are lower than PBA emissions, a country's transport sector is in carbon-leakage credit. The top three countries with the highest carbon-leakage credit for the transport sector were China, Russia and USA. If carbon emissions are taken into consideration, some nations may cease to possess a comparative advantage in manufacturing and trade.