Emissions-embodied exports

Context

Key points

• The 2009 United Nations Climate Change Conference in Copenhagen witnessed a direct argument between countries such as India and China consuming polluted goods produced and having an obligation to clean up the mess.
• The Organisation for Economic Co-operation and Development (OECD) indicates that India is one of the leading exporters of Carbon emissions- embodied products and there is a steady increase in the total carbon emissions embodied in exports.
• China is the largest exporter of Carbon emissions-embodied products followed by the U.S., Russia and India.
• India's total carbon emission exports increased from 80.3 million tonnes at the time of its joining the World Trade Organization (WTO) in 1995 to 426.1 million tonnes in 2018.
• India is closer to the U.S.A Carbon emissions exports and more or less stagnant between 1995 and 2018.
• An increased GDP as a result of expansion in export revenue can be utilised for improving environmental quality.
  As per the environmental Kuznets curve, there is an inverted U-shape relationship between the income of a country and its environmental degradation.
  This implies that as income increases environmental quality begins to deteriorate but improves after some time.
• The largest net importers of carbon emission-intensive goods are the U.S., Japan and Germany.
  The U.S. net carbon imports increased from 262.3 to 834.1 million tonnes from 1995 to 2018.
   

Calculation methods

• Net CO2 Exports can be calculated by taking the difference between carbon emissions-embodied exports and carbon emissions-embodied imports.
• China's net exports began to decline from 2007 to 08 but India started to steadily increase during the period. In 2007 (-11.6 million tonnes) at present, the net exports are 55.4 million tonnes.
• Another way of calculating the net export of carbon emissions is by taking the difference between domestic and foreign carbon emissions embodied in gross exports.
• There is a steady increase in net exports of carbon emissions from India. In 1995, net exports were 75.8 million tonnes to 372 million tonnes in 2018.

Indian scenario

• India is virtually exporting some of its depleting natural resources such as water through exports.
• India is the leading exporter of rice in the world market.
• Given that rice is a water-intensive crop, India is indirectly exporting water to other countries.
• This virtual water trade will hurt the long-term sustainability and food security of the country although there has been an overall improvement in water-use efficiency.
• As per the water use efficiency index developed as part of the sustainable development goals, water efficiency has risen from 0.95 ($/m3) during the period 1993-97 to 3($/m3) during the period 2018-22.
• The agricultural water withdrawal as a percentage of total available renewable water resources has increased from 26.7 per cent in 1993 to 36 per cent in 2022.
• The total per capita renewable water resources have also declined from 1909 cubic meters to 1412 cubic meters during this period.
• India's recent export performance has been attributed to petroleum products, electronics and chemicals.
• Although net carbon emission exports have been declining in the case of chemical and electronics as imports have been rising at a greater rate.
• The carbon emissions -embodied exports of all these products have been steadily increasing over the years.
• For example, the domestic carbon emissions-embodied exports of the chemical were only 2.1 million tonnes in 1995, which increased to around 9.8 million tonnes in 2018.
• Electronics increased from 1.3 million tonnes to 8 million tonnes and exports of petroleum carbon increased from 6.6 to 25.5 million tonnes during this period.
• The net exports of carbon emissions of petroleum products have increased.

The way forward

• The growing consumption in rich countries has come at a cost for developing countries such as India.
• Countries have begun imposing an environmental tax to address a broad spectrum of environmental issues.
• For example, in OECD countries, the tax roughly constitutes 2 per cent of the GDP.
• The environmental tax in India is around 1 per cent and the tax percentage of GDP has marginally come down from 1.38 per cent in 2005 to 1.07 per cent in 2019.
• To ensure long-term sustainability, strict environmental measures need to explore.
• Such as revisiting the possibilities of increasing the environmental tax, even though the short-run implications, especially on the trade front may not be pleasant.
• Similarly, water-saving policies that seek to improve water use efficiency are also the need of the hour.
• To promote sustainable production of rice and also safeguard food security in the country.

Organisation for Economic Co-operation and Development

• It is an intergovernmental economic organisation founded to stimulate economic progress and world trade.
• It was founded in 1961 and its headquarters is in Paris, France.
• India is not a member but a key economic partner.
• The OECD member countries are developed, net importers.
• Due to the stringent environmental measures adopted by developed countries, pollution-intensive industries show a tendency to relocate from developed countries to developing countries.
• With the lowest environmental standards or weak enforcement o environmental standards to cut resource and labour costs a phenomenon researchers term pollution has a hypothesis.
• Thus, developing countries that are lax in enforcing environmental policies eventually become pollution havens.

Reports and Indices by OECD