Trade fuelled faster rise in India's production-based emissions

India’s emissions of carbon dioxide (CO2) due to the production of goods grew faster than consumption-based emission estimates over the 10 years leading to the pandemic. 

India’s production-based estimates of CO2 emissions rose 63 per cent, from 1.6 billion tonnes in 2009 to 2.6 billion tonnes in 2019, reveals an analysis of numbers from tracker Our World in Data.

The consumption-based emission estimates grew 61.7 per cent, from 1.5 billion tonnes to 2.5 billion tonnes in the same period. This would suggest that some of the increased emissions in India are due to producing goods for other countries, essentially importing pollution in return for capital to raise domestic standards of living.

This gains importance in light of the United Nations calling for more action to control pollution on Monday. The Intergovernmental Panel on Climate Change sought a significant cut in emissions globally to manage climate change.

Separately, the European Union moved closer towards imposing carbon tariffs on polluting goods on Tuesday.

“The outsourcing of emissions is partly a consequence of developing economies’ need to accelerate their development and improve the poor conditions of their population,” said a 2020 Organization for Economic Co-operation and Development draft study titled, CO2 Emissions Embodied in International Trade and Domestic Final Demand, from authors Norihiko Yamano and Joaquim J M Guilhoto.

“The heterogeneous effects of trade openness on carbon emissions indicate that trade openness positively impacts the decoupling economic growth from carbon emission in rich countries, but negatively impacts poor countries,” according to a January 2021 study titled, The Effects of Trade Openness on Decoupling Carbon Emissions from Economic Growth — Evidence from 182 Countries from the China University of Petroleum authors Qiang Wang and Fuyu Zhang.

India’s annual CO2 emissions embedded in the trade as a proportion of total domestic production was minus 0.5 per cent as of 1990. Greater integration saw it rise over the years. It was at around 6.1 per cent in 2019.

This means emissions based on production exceeded consumption-based emission estimates by 6.1 per cent before the pandemic. The 2020 figure was around 6.9 per cent, but this may have been affected by the pandemic.

A similar figure was examined across major economies. The five largest economies such as the US, China, Japan, Germany, and India were included, as was the UK. India’s emerging market peers like Brazil and Russia were also analysed for emissions for a broader picture.

The developed countries showed a higher consumption-based estimate of emissions. This meant that they consumed more goods than they produced, in terms of emissions exported or imported as a percentage of domestic production emissions. It was 41 per cent in the UK, 19.2 per cent in Germany, and 13 per cent in Japan.

In addition to India’s minus 6.1 per cent, indicating lesser consumption than production emissions, similar negative figures were seen for China (minus 7.3 per cent) and Russia (minus 18.5 per cent). Russia’s numbers also reflect large exports of energy products.