Estimation of Embodied CO2 Emissions
by General Equilibrium Model

M. Kainumaa Y. Matsuokab, and T. MoritaaaGlobal Environment Division, National Institutefor Environmental Studies,
16-2 Onogawa, Tsukuba 305-0053, Japan
Tel: +81-298-50-2422, Fax: +81-298-50-2524
e-mail: mikiko@nies.go.jpbFaculty of Engineering, Kyoto University,
Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501, Japan

Abstract: This study estimates the extent to which embodied CO2 emissions are
increased or reduced when a socioeconomic structural change occurs. Embodied
CO2 emissions were estimated by input-output models (I-O models) and a generalequilibrium model (GE model), and the respective results were compared. The
embodied CO2 emissions differ greatly depending on the assumptions of the total
system. The embodied CO2 emissions obtained by I-O models are much larger
than those obtained by the GE model. In some cases, the total CO2 emissions
increase even if less intermediate inputs are required owing to technologicalimprovement. It is shown that taking I-O type embodied emissions alone into
consideration is insufficient for the estimation of policy effects. Carefulconsideration is necessary to effectively reduce emissions when production andconsumption are interconnected in a complex way.

Keywords: General equilibrium model, Economics, Environment, I-O model,
CO2 emissions,

1. Introduction
It is highly important to know what loads are added to the environment when goods areproduced and/or consumed. One way to express such loads is to quantify the embodied
pollutant emissions. A unit of embodied pollutant emissions is the additional amount ofemissions, including both direct and indirect emissions, when an additional one unit ofgoods is produced, or the amount of reduction when consumption of one unit of goods is1

saved. Input-output analysis has been used to estimate embodied pollutant emissions[Imura et al., 1995]. The input-output model was originally developed by Leontief[1966]. The model was widely applied to the analysis of energy consumption induced by
the final demands of goods and services in an economy [Miller et al., 1985]. Breuil[1992] tested the plausibility of the input-output model by attempting to replicate data on
French emissions of SO2 and NOx by combustion and processes. The input-output model
has also been used in life-cycle assessment to quantify the environmental implications ofalternative products and processes, tracing pollution discharges and resource use throughthe chain of producers and consumers [Lave et al., 1995]. Moreover, input-output
modelling has been used to estimate primary energy and greenhouse gas embodiments ingoods and services in Australia [Lenzen, 1998]. Hawdon et al. [1995] showed how anumber of the complex interrelationships between energy, the environment, andeconomic welfare could be investigated with an input-output model of the UK, using
pollution emission coefficients and a European sulphur deposition vector. Proops et al.
[1995] investigated how economic structural change has brought about increased
atmospheric concentrations of CO2, and how economic structural change may be used toreduce CO2 emissions over the next 20 years by input-output analysis.
The input-output method is highly effective for estimating emissions from the standpointof production. However, it is difficult to incorporate indirect effects caused by changes insocioeconomic structures such as utility and production efficiencies. A generalequilibrium model has the advantage of incorporating nonlinear effects of structuralchanges. Many types of general equilibrium models have been developed and applied tothe estimation of CO2 emissions and impacts of CO2 mitigation policies. MERGE,
developed by Manne et al. [1995], is an example of a general equilibrium model which
provides a framework for thinking about climate change management proposals.
Another example is CETA, which presents worldwide economic growth, energy
consumption, energy technology choice, global warming, and global warming costs overa time horizon of more than 200 years [Peck et al., 1995]. McKibbin et al. [1998(a)]developed the G-Cubed model, a multi-country, multi-sector intertemporal generalequilibrium model for studying a variety of topics such as greenhouse gas policy, tradeliberalization, tax policy, and macroeconomic policy. A programming environment foreconomic equilibrium analysis has also been developed by Rutherford [1994, 1997].
These models have been used to analyse the impacts of climate policies [Bernstein et al.,
1998; Jacoby et al., 1998; McKibbin et al., 1998(b); Kainuma et al., 1998; Manne et al.,1998].
In order to estimate embodied CO2 emissions incorporating direct and indirect emissions
through socioeconomic systems, it is necessary to clarify the extent to which indirectemissions are included. Many studies conducted to date have only considered directchanges in production. These studies used fixed-coefficient production functions andassumed there were no structural changes in consumption. Based on these assumptions,
Imura et al. [1995] estimated the embodied energy intensity; that is, the total energy
required directly and indirectly by the economy in supporting one unit of monetary valueof final demand.
However, CO2 emissions caused by the additional production of goods and services differ
greatly according to the reason why such changes occur. For example, reductions in2

emissions due to changes in consumer preferences, technological changes, and policies
are different even if the direct reduction of consumption is the same. Moreover, a small
perturbation of the socioeconomic structure may sometimes cause large structuralchanges.
This study estimates the increase or reduction in CO2 when a structural change occurs.
Embodied CO2 emissions were estimated by input-output models (I-O models) and ageneral equilibrium model (GE model), and the respective results were compared. The
following section explains the economic and trade database used in this study, and themethod of analysis is described in Section 3. Section 4 shows the simulation results, andSection 5 presents concluding remarks.

2. Economic and Trade Database
Embodied CO2 emissions are estimated based on two sets of economic and energy
statistics. One is the GTAP database, which contains bilateral trade, transport, andprotection data characterizing economic linkages among regions, together withindividual-country input-output databases accounting for intersectoral linkages withineach region [Hertel, 1995; McDougall, 1997]. The GTAP database is widely used foranalysing international issues on trade and industry. As the database expresses economic
activities by monetary flow, data on energy flow are also necessary to describe CO2
emissions. Energy statistics by IEA/OECD [1995(a), 1995(b)] are therefore used tosupplement energy data, and an energy-balanced economic and trade database is preparedby combining these two sets of statistics.

2.1 International economic and trade statistics

The Global Trade Analysis Project (GTAP) was established in 1992, with the objective oflowering the cost of entry for those seeking to conduct quantitative analyses ofinternational economic issues in an economywide framework. GTAP continuously
updates its database. The database used here is GTAP 3, which was released in 1995 andconsists of a 37-sector, 24-region database. Its reference year is 1992.

2.2 IEA energy statistics

IEA reports data on production, consumption, and trade concerning energy-relatedmaterials such as oil, coal, petroleum products, gas, nuclear, hydro, and combustible
renewable and wastes. OECD has made considerable use of the United Nations' World
Energy Supplies database. This has been supplemented by material obtained directly3from the countries concerned in published or other form. There have also been wide
contacts made with industry, especially with international oil and coal companies[IEA/OECD, 1995(a), 1995(b)].

2.3 Integration of GTAP and IEA databases

The GTAP data are aggregated into 26 regions and 13 sectors. The data for sectors areprepared as follows.
(1) Energy sector: OECD energy balance data are used to estimate energy flows between
sectors such as coal, crude oil, petroleum products, gas, and electricity.
(2) Industrial sector: IEA statistics are basically used for five sectors; namely, primary
ferrous metals, chemicals, nonferrous metals, nonmetallic mineral products, and pulp
and paper. GTAP data are used for supplementing IEA data.
(3) Transport sector: Energy consumption in the transport sector is prepared using IEA
data. When energy data are missing in the transport sector, GTAP data are used by
calculating the share of transport in total energy use.
(4) Household sector: IEA statistics are used to estimate energy consumption in thehousehold and agriculture sectors. When these data are listed in an aggregated form,
GTAP data are used to separate them. When data are missing in the IEA statistics,
GTAP data are used.
(5) Government: GTAP data are used to estimate energy consumption in the government
sector.
(6) Miscellaneous sector: Energy consumption outside the above 13 sectors is allocated tothe miscellaneous subsector in the industrial sector.
The energy price data of IEA are also used for both imports and exports. The
consumption price in 1992 is used for the IEA statistics of the OECD countries, India,
Mexico, Korea, Taiwan, and Russia. For other countries, the average data of non-OECD
countries is used.

3. Embodied CO2 emissions
Fossil fuels are used to provide energy services. Estimating the CO2 emissions from eachservice is important in order to analyse the relationships between socioeconomic
activities and the environment. In this study, embodied CO2 emissions are assessed inthree ways:(1) embodied CO2 emissions in an I-O type closed system,(2) embodied CO2 emissions in an I-O type open system, and(3) embodied CO2 emissions in the GE model.
The flow of the study is shown in Figure 1, and the relationships among the CO24emissions are shown in Figure 2.
A direct CO2 emission is one that is directly emitted from the production of one unit ofgoods. In the production of some goods, however, intermediate inputs are necessary, andCO2 is also emitted during the process of producing intermediate goods. Embodied CO2
emissions include such indirect CO2 emissions.
Embodied CO2 emissions in the I-O type closed system comprise increases in CO2
estimated by means of a domestic input-output table. Here, the current production systemand prices are fixed. Embodied CO2 emissions of imported and exported goods are
assumed to be the same as those of domestic goods. In the I-O type open system, aninternational I-O table is used and embodied CO2 emissions of imported and exported
goods are estimated using the data for the region where the goods are produced. Anothermodel is the static general equilibrium model, which we refer to as the GE model. Thismodel takes changes in production systems and utility into consideration. For example,
improved efficiency reduces the cost of the associated energy service and therefore
stimulates increased demand for the energy service. Such structural changes are includedin the static general equilibrium model. This study compares direct emissions, embodied
CO2 emissions obtained by I-O type models, and embodied CO2 emissions obtained by
the GE type model.

3.1 Direct CO2 emissions
CO2 is emitted into the atmosphere in the process of burning fossil fuels. The direct CO2
emission d j,r in sector j in region r is expressed as follows:d j ,r

=

∑ k e
f

(1)

f , j ,rf

where kf represents the emission factor of fuel f , and e f , j ,r represents the input of fossil
fuel f in region r to produce one unit of goods j .

3.2 I-O type embodied CO2 emissions
Intermediate goods and energy are directly and indirectly necessary for the production of
goods. The embodied CO2 emission includes not only direct CO2 emissions, but also
indirect emissions for producing one unit of goods. The embodied CO2 emission xj,r ofgoods j in region r is calculated as follows:
x j ,r=d j ,r+∑ (aj ,i ,rx i ,r+t j ,i x i ,t )(2)ix i ,t=d t ,w+∑ at ,i ,rx i ,r(3)

r5

where aj ,i,r is an input-output matrix, t j ,i is the share of the international transportation
sector, suffix t represents transportation sector, and suffix w represents world.
The above equations assume that the embodied CO2 emissions of imported/exported
goods are equal to those of domestic goods. When imported/exported goods are notdistinguished from domestic goods, the system is called a closed system. The open
system distinguishes import/export goods from domestic goods, and hence uses different
emission factors. To calculate the embodied CO2 emissions in the I-O type open system,
equation (4) is used instead of equation (2).
x j ,r=d j ,r+∑ (aj ,i ,rx i ,r+t j ,i x i ,t )

i

+

∑ (m

r ' ,r , j

x j ,r ' )

(4)

r'

where m r' ,r , j is an input matrix representing inputs of intermediate goods from regionr ' for producing one unit of goods in region r .

3.3 Embodied CO2 emissions in the GE modelA static general equilibrium model of the world economy has been developed to estimate
embodied CO2 emissions including structural changes. In this model, the following
assumptions are made:(1) Goods are produced by intermediate goods, energy goods, and primary factors (laborand capital).
(2) The goods produced in one region are consumed domestically or exported. Goods forexport use are not distinguished from goods for domestic use.
(3) Crude oil is traded freely among regions and its quality is assumed to be the same.
(4) The ratio of investment/savings to production is assumed to be constant.
(5) Imported goods are assumed to be Armington goods excluding crude oil. Consumers
can distinguish domestic goods from foreign ones.
(6) The elasticity of final consumption goods is zero.
Non-energy goods, energy goods (oil, coal, gas, and electricity) and primary factors(labor and capital) are necessary for the production of goods. Energy goods are combinedby a constant elasticity of substitution (CES) production function with a small elasticity(0.5). Primary factors (labor and capital) are combined by a Cobb-Douglas production
function. A fixed-coefficient (Leontief) production function is used to estimate theproductions of domestic and export goods. Figure 3 shows the structure of the production
functions used in the model.
These production functions are expressed as follows:
Yi ,r

=

Y f ,e ,r =LS ( Y1 ,r , Y2 ,r , L , Y f ,e ,r )(5)

C E S ( ES f ,r , ES oil ,r , ES col ,r , ES gas ,r ES egw ,r )(6)

6

E S f ,r=(7)

CD ( K r , Lr )where,: non-energy goods i produced in region r ,E S e ,r : energy goods e = {oil , col , gas , egw} produced in region r ,Yi ,rES f ,r: primary factor f used in region r ,Kr:capital in region r , andLr:labor in region r .

Suffix i represents goods, and r represents region. LS, CES and CD represent Leontief,
constant elasticity substitution, and Cobb-Douglas production functions, respectively.
When changes take place in socioeconomic factors such as population, lifestyle, andtechnological improvements, global CO2 emissions change not only because of direct
structural changes, but also indirect socioeconomic changes such as prices, demand andsupply. The general equilibrium model simulates CO2 emissions including such indirect
effects. Changes in CO2 emissions depend on production activities, consumption, andpolicies; that is, they depend on the causes of structural change. Equation (8) shows therelationships among the production system, policies, and CO2 emissions.
F ( Y j ,r , S , C w )

=

(8)

0

where, Y j , r is the production of goods j in region r ; S is a parameter representing
scenarios concerning policies, preferences of consumers, and production structures; andCw is world CO2 emissions. The embodied CO2 emission εw estimated based on theequation (8) is called the embodied CO2 emission in the GE model. It is calculated basedon the following equation:

ε wj ,r=d Cw
d Y j ,r

=

∂ Cw
∂S
∂ Y j ,r(9)∂S

Perturbations are caused by different types of policies and preferences. For example,
efficiency may be improved in the production process by technological developments,
consumption may be reduced by changes in consumer preferences, and governments may
impose specific taxes and regulations.

4. Simulation Results
4.1 Embodied CO2 emissions in I-O models
Direct emissions and embodied emissions in I-O models are presented. A total of 26
regions and 13 types of goods are used to estimate CO2 emissions based on 1992 data.
Direct emissions and I-O type embodied CO2 emissions in 7 regions (Australia, Japan,
China, India, USA, EU, and Central and Eastern Europe, and the Commonwealth of7

Independent States (CEE&CIS)) and 4 categories of goods (primary ferrous metals;
nonferrous metals, agriculture, fisheries and livestock; and transportation equipment) are
shown in Figure 4.
Several interesting observations are obtained. Emissions in OECD countries are smaller
than those in non-OECD countries except in a few cases. Emissions in China are thehighest in each sector except the agriculture sector. In the agriculture sector, emissions in
CEE&CIS are the highest. Embodied emissions of the I-O type in CEE&CIS, EU, andJapan are large in the agriculture sector, although direct emissions are not so large. Thissuggests that the structures of agricultural production are complex and affected by foreignindustries in these regions. Figure 5 shows the percentage change in embodied CO2
emissions of the open system compared to the closed system. In OECD countries except
Australia, embodied emissions in the open system are larger than those in the closed
system. In non-OECD countries and Australia, on the other hand, embodied emissions in
the open system are smaller than those in the closed system. This reflects the fact that
direct emissions in these countries are relatively large.

4.2 CO2 emissions in GE model
Changes in emissions caused by structural changes are also estimated. Such changes
depend on what scenarios for reduction of emissions are considered. The following two
types of perturbation are assumed.
(1)

Preference change: End users (household and government) evaluate goods
differently and are satisfied with smaller amounts of goods.
(2) Efficiency Change: Intermediate inputs are reduced due to technologicalimprovement.
The first case, called GE(1), assumes that the utility of goods to end users changes due tovarious reasons such as education and changes in lifestyle. The utility of one unit ofgoods is assumed to change so that the same utility can be obtained by (1-δ) unit of goods,
where δ is a small positive number.
The second case, called GE(2), assumes that the same amount of goods is produced withless intermediate goods because of technological improvement, and that thecorresponding CO2 emissions are reduced. Let us explain this situation with the systemof two inputs and one output. Assume Y0 is produced using x 1 , 0 and x 2 , 0 in the baseyear. Further assume that the same amount of goods is produced with (1−δ) x 1 , 0 . The
equation (10) shows the CES production function after perturbation:

Yt

=

ρ
ρ
 

 x 2 ,t  
x 1 ,tY0  θ 
 + (1 − θ )  
x 2 ,0    (1 − δ ) ⋅ x 1 ,0 




1/ ρ

(10)

8

θ =

p 1 ,0 ⋅ (1 − δ ) x 1 ,0
p 1 ,0 ⋅ (1 − δ ) x 1 ,0 + p 2 ,0 x 2 ,0

where ρ is an elasticity parameter, p 1 , 0 is the price of goods 1, and p 2 , 0 is the price ofgood 2 in the base year. The improvement in efficiency of the production system changes
not only the production of goods 1, but also other related goods in the domestic region as
well as goods in foreign regions. The embodied CO2 emissions are calculated byequation (9) focusing on production of the goods of interest.
Figure 6 shows embodied CO2 emissions in the I-O open model and GE model in 7
regions for 4 goods. GE(1) is the result when the structure of utility is changed, andGE(2) corresponds to the case when efficiency is improved. The embodied CO2
emissions in the I-O open type show an increase in CO2 emissions when 1000 US$ worthof products are added. The embodied CO2 emissions in GE(1) show the reduction in CO2emissions when satisfaction is attained with lower amounts of goods corresponding to thevalue 1000 US$, while the embodied CO2 emissions in GE(2) show the reduction in CO2emissions when 1000 US$ worth of intermediate goods can be saved. In the I-O open
system, plus values indicate an increase in emissions, while in the GE model, plus values
indicate a reduction in emissions.
Emissions decrease in the industrial sectors in most regions, although increases are seen
in some cases. For example, emissions increase when efficiency is improved in thenonferrous metals sector in China. This is because when efficiency is improved in that
sector, the production of ferrous metals increases, causing an increase in China's total CO2
emissions. This phenomenon occurs in the agriculture sector, also. Figure 7 shows the
production change when the consumption of intermediate and final goods in thenonferrous metals sector is reduced by 1% in China and Japan. In China, the amount offerrous metals produced increases by 0.16% and the consumption of other goods such as
paper, oil, coal, and gas also increases. This causes an increase in the total energy
consumption. In Japan, the consumption of goods such as chemical products and paper
increases, but the amount is not so large and the total energy consumption decreases.
In the agriculture sector, the embodied CO2 emissions become negative. Figure 8 shows
the changes in final consumption in China and the USA when consumption decreases in
the agriculture sector. When China decreases agricultural consumption by 1%, theconsumption of other goods increases by about 1%. For example, the consumption ofchemicals increases by 0.87%. This leads to an increase in production of other goods in
China as well as in foreign countries. When the USA reduces consumption ofagricultural products by 1%, the consumption of other goods also increases but by lessthan 0.1%. Consequently, the increase in production is not so large. The CO2 emissions
resulting from the increased production of other goods are less than those resulting fromthe reduced agricultural consumption. What creates this difference? Figure 9 shows theamounts of goods produced and used in final consumption when final consumption in the
agriculture sector is assumed to be 100. In China, production in the agriculture sector
accounts for a large part of the total production, so savings of agricultural goods influence
the consumption of other goods. In contrast, the share of agricultural production in the
USA is not so large compared to China, so savings in agricultural production in the USA
do not have much impact on the consumption of other goods. This structural difference9causes the difference in embodied CO2 emissions.
In the transportation sector, improvement of efficiency promotes the consumption ofenergy, especially in CEE&CIS, China, and India. These are cases where the current costof transportation is very high, and transportation will be supplied much more cheaply by
the improvement of efficiency. The reduction of costs in the transportation sector
promotes consumption in other sectors.
It can be seen that embodied CO2 emissions calculated by the GE model are much smaller
than those calculated by the I/O models. Sometimes, in fact, they become negative.
When there is a saving in the consumption of a particular type of goods, the share of those
goods in the total expenditure decreases and the consumption of other goods is promoted.
If the embodied CO2 emissions of the increased goods estimated by the I-O model arehigher than those of the decreased goods, the change in CO2 emissions becomes negative.
When the efficiency of production processes is improved, production costs are reduced
and the price of the goods is decreased. This promotes the consumption of goods. In
endeavoring to reduce CO2 emissions by reducing the consumption of goods, care should
be exercised because sometimes an adverse effect occurs and emissions increase. This
adverse effect is called CO2 "leakage".
"leakage" is defined by equation (11) as the difference between emissions calculated by
the I-O open model and emissions calculated by the GE model, divided by emissions
calculated by the I-O open model.
Emissions in I-O open model - Emissions in GE model
Leakage (%) =

x 100

(11)

Emissions in I-O open model
Zero leakage means that the emissions when one unit of goods savings is achieved are thesame as the emissions when the goods are produced. That is, there is no "take back" or"rebound." A value of greater than 100 means that goods savings through preferencesand efficiency changes will, on the contrary, increase emissions.
Figure 10 shows CO2 leakage. In the ferrous, nonmetallic, and nonferrous industries,
leakage is relatively small. However, total emissions increase when savings or
improvement of efficiency are undertaken in the agriculture sector. Leakage in the GE(2)model is generally larger than that in the GE(1) model. One reason is that the effects oftechnological improvement activate the economy and promote consumption.
How much do domestic and foreign regions contribute to emission reductions? The total
emission reduction consists of the domestic reduction and the foreign reduction, in which
the domestic share represents the reduction in the domestic region and the foreign sharerepresents the reduction in the foreign region. These are defined by equations (12) and(13):

Domestic CO2 reduction
Domestic share =

(12)

10

| Domestic CO2 reduction | + | Foreign CO2 reduction |Foreign CO2 reduction
Foreign share =(13)| Domestic CO2 reduction | + | Foreign CO2 reduction |A plus sign indicates reduction and a minus sign indicates increase. Figure 11 shows thedomestic and foreign contributions to the total emission reduction in the oil, gas,
nonferrous metals, and agriculture sectors. Reductions in oil and coal consumption
directly reduce emissions in the domestic region, but slightly increase emissions inforeign regions. This comes from the fact that a decrease in energy prices promotes
increased consumption in other regions and increases the total CO2 emissions. However,a reduction in gas consumption decreases emissions in foreign countries as well. This isbecause a shift to gas from oil or coal is promoted in foreign countries, which decreases
CO2 emissions as the emission factor of gas is less than those of oil and coal. In the
agriculture sector, the domestic share becomes negative, but the foreign share is positivein many regions.

5. Concluding Remarks
In this study, embodied CO2 emissions were estimated using I-O models and the GE
model. From these estimations, the following observations can be made.
(1) The embodied CO2 emissions per unit of goods of one region estimated by I-O models
are much larger than those estimated by the GE model. In some cases, the total CO2
emissions increase even if less intermediate inputs are required owing to technologicalimprovement.
(2) Embodied CO2 emissions saved per sector and region depend on the way in whichsocioeconomic structural change occurs. A reduction achieved by a change in utility
is larger than that achieved by a change in efficiency for most goods. Emissions will
increase in some cases. When there is a saving in the consumption of a particular typeof goods, the share of those goods in total household expenditure decreases,
promoting the consumption of other goods. This increases the production of othergoods. When the efficiency of a particular type of production increases, the cost of thegoods concerned decreases and the consumption of those goods increases. In bothcases, embodied CO2 emissions do not decrease as expected.
(3) The embodied CO2 emissions of non-OECD countries are larger than those of theOECD countries.
(4) The reductions in the industrial sectors are positive while those in the agriculture andtransport sectors are negative in most cases. Rebound is largest in the agriculture
sector, especially in China. The production share of the agriculture sector is very large
in China. When there is a saving in the agriculture sector in China, resources are used11

in another sector and this increases consumption in other sectors. This, in turn,increases the total CO2 emissions, as direct emissions in the agriculture sector are
small.
It is found that embodied CO2 emissions depend on the form of socioeconomic structuralchange. Many previous studies have estimated embodied CO2 emissions by I-O models,
keeping the consumption structure constant. However, a change in production structure
usually leads to a change in the consumption structure. If less intermediate goods arenecessary to produce one unit of goods, the price of those goods decreases, promoting
their consumption. It is shown that the reduction of CO2 by reducing the consumption of
one unit of goods is less than the embodied CO2 emissions of those goods calculated by
the I-O model. In some cases, the total CO2 emissions increase even if less intermediate
inputs are required or the consumption of one goods of interest is reduced. Carefulconsideration is necessary in using the concept and the estimated values of embodied
emissions. The total system should be carefully designed to effectively reduce CO2
emissions when production and consumption are interconnected in a complex way.

Acknowledgement
This research was funded by the Environment Research Program of the Japan
Environment Agency. The authors are grateful to Eiichi Okeya for his extensive support.

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13

World Economic/Trade
Statistics

IEA Energy
Statistics

Energy- Balanced Economic/Trade Statistics

Input-Output
Model

General Equilibrium
Model

Domestic
Input-Output
Table

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ｏｎａｌ
Input-Output
Table

Embodied CO2
Emissions in I-O
Type Closed
SystemEmbodied CO2
Emissions in I-O
Type Open
SystemUtility, Production
Structure, Policy, etc.

Embodied CO2 Emissions
in General Equilibrium
Model

Figure 1 Flow for calculating embodied CO2 emissions

14

Foreign
CO２

ExportCO２

CO２ImportMoney
I-O Type Open System

Domestic Direct
Emission
CO２ Production 1000 US$

Goods
Intermediate
Input & Output
CO２

I-O Type Closed System

General Equilibrium

Figure 2 Relationships among embodied CO2 emissions

Yi,rSubstitution of primary factors,
energy, and non-energy goods(Leontief)…
Substitution of primary factors
and energy goods (CES)Y…
Y
1,r 2,rSubstitution of laborand capital(Cobb-Douglas)
Kr

Figure 3

ES
ES
ES
ES
oil,r col,r
gas,r
egw,r
L

r

Production structure of GE model

15

2.0
1.6
1.2
0.8
0.4
0.0
ClosedDirectemissions system

Opensystem(c) Agriculture sector

CO2 emissions (tC/1000US$)CO2 emissions (tC/1000US$)

ClosedDirectOpenemissions system system(a) Ferrous metals sector

5.0
4.0
3.0
2.0
1.0
0.0
Direct ClosedOpenemissions system system(b) Nonferrous metals sector

Japan
USA
EU
Australia
CEE&CIS
China
India

2.5
2.0
1.5
1.0
0.5
0.0
Directemissions

ClosedsystemOpensystem(d) Transport sector

Figure 4 Direct and embodied CO2 emissions in I-O type models

10
8
6
4
2
0
-2
-4
-6
-8
Fe
rro
us
N
on
m
et
al
lic
N
on
fe
rro
Pu
us
lp
&
pa
pe
Ag
r
ric
ul
tu
re
Tr
an
sp
or
t

Percentage change in emissions (%)

CO2 emissions (tC/1000US$)CO2 emissions (tC/1000US$)

7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Japan
USA
EU
Australia
CEE&CIS
China
India

Figure 5 Percent change in embodied CO2 emissions of open
system compared to closed system((Open - Closed ) / Closed x100)

16

I-O open GE(1)GE(2)

CO2 emissions (tC/1000US$)CO2 emissions (tC/1000US$)

6
5
4
3
2
1
0

2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
I-O open GE(1)GE(2)(c) Agriculture sector

Japan
USA
EU
Australia
CEE&CISChina
India
I-O open GE(1)GE(2)(b) Nonferrous metals sector
CO2 emissions (tC/1000US$)CO2 emissions (tC/1000US$)(a) Ferrous metals sector

5
4
3
2
1
0
-1
-2

2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
I-O open GE(1)GE(2)(d) Transport sector

Figure 6 Embodied CO2 emissions in I-O open and GE models

17Production change (%x100)

16Nonferrous metals
12

Ferrous metals
Chemicals

8

Pulp & paper
4
Oil
0

Coal

-4

Gas

-100
China

Japan

Domestic

China

Japan

Foreign

Final consumption change (%x100)

Figure 7 Production change when efficiency isimproved in nonferrous metals sector

100
80
60
40
20
0
-20
-40
-60
-80
-100
DomesticForeignDomesticForeign
China
USA

Coal
Gas
Electricity
Oil
Chemicals
FerrousNonferrous
Nonmetallic
Agriculture
Paper
Transport
Miscellaneous

Figure 8 Change in final consumption caused by 1%
decrease in agricultural final consumption

18

Ratio of production

Coal

2400
2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0

Gas
Electricity
Oil
Chemicals
FerrousNonferrous
Nonmetallic

Production
Final
Production
Finalconsumption
consumption
China

USA

Agriculture
Paper
Transport
Miscellaneous

Figure 9 Ratio of production assuming
final consumption in agriculture = 100

19

Fe
rro
us
N
on
m
et
al
lic
N
on
fe
rro
us
Pu
lp
&
pa
pe
r
Ag
ric
ul
tu
re
Tr
an
sp
or
t

Leakage (%)

Japan
USA
EU
Australia
CEE&CIS
China
India

300
250
200
150
100
50
0

300
250
200
150
100
50
0
Fe
rro
us
N
on
m
et
al
lic
N
on
fe
rro
us
Pu
lp
&
pa
pe
r
Ag
ric
ul
tu
re
Tr
an
sp
or
t

Leakage (%)(a) Leakage calculated by GE(1)(b) Leakage calculated by GE(2)Figure 10 CO2 leakage in GE model

20

Contribution (%)

Contribution (%)

100
80
60
40
20
0
-20
-40
GE(1) GE(2) GE(1) GE(2)Domestic

100
80
60
40
20
0
-20
GE(1) GE(2) GE(1) GE(2)Domestic
Foreign

Foreign(a) Oil sector(b) Gas sector

100

100
80
60
40
20
0
-20
-40
-60
-80
-100

Contribution (%)

Contribution (%)

Japan
USA
EU
Australia
CEE&CIS
China
India

50
0
-50
-100
-150

GE(1) GE(2) GE(1) GE(2)GE(1) GE(2) GE(1) GE(2)Domestic

Domestic

Foreign(c) Nonferrous metals sector

Foreign(d) Agriculture sector

Figure 11 Domestic and foreign contributions

21