The global CO2 emission cost of geographic shifts in international sourcing

Highlights: • We simulated the global direct CO₂ emission cost of geographic shift of international sourcing. • Global CO₂ emissions would have been much lower without the geographic shift. • The geographic shift was mainly dominated by developed economies and occurred in high-tech industries. • The global climate change mitigation requires stronger energy technology breakthroughs, especially in the developing world. - Abstract: In this paper we simulated the global direct CO₂ emission cost of geographic shift of international sourcing for the period 1995–2011 by comparing the scenarios with and without geographic shift. Our simulations indicate that in 2011, had the share of trade by the sourcing economy remained at the level of 1995, 2000, 2005, and 2008 whereas the global final demand remained the same, global CO₂ emissions in production processes would have been 2.8 Gt, 2.0 Gt, 1.3 Gt, and 540 Mt., respectively, lower than the actual emissions. As there is a general outsourcing trend shifted from developed economies to developing economies, the overall direct emission costs have always been significantly positive. Further investigations by economy and industry show that such a geographic shift was mainly dominated by developed economies themselves and occurred in high-tech industries, such as production of Information and Communication Technology (ICT) goods and machinery, leading to positive emission cost in developing economies, especially China. Moreover, there is potentially even larger influence of geographic shift of sourcing on global CO₂ emissions, as such a shift would stimulate the economic growth and consumptions in developing economies, consequently this may bring additional energy demand and CO₂ emissions. Our results addressed the urgency of eliminating in carbon emission intensity gap between developing and developed economies and the successful development of new, scalable low carbon energy sourcing and technologies across the world.