U.S. state-level consumption-based accounting of greenhouse gas emissions: a scenario analysis
Creators: name: Fei, Da
Publisher: name: No Publisher Supplied
Year: 2020

description: With President Trump’s decision to withdraw from the Paris Agreement on climate change, some local governments and states are taking their own initiatives to reduce greenhouse gas (GHG) emissions. But with interstate trade, state environmental policies may cause emission rises in neighboring states as goods can be shipped from anywhere to meet local consumption needs. This would undermine the intentions of such subnational climate policies. Given that states can set up their own policies to reduce greenhouse gases, state-level accounting is important within the U.S. The primary objectives of this research are to measure GHG emissions associated with the consumption of goods and services in each state and how state emissions might change with state environmental policies, e.g. carbon taxes. Moreover, regarding the close relationships between interstate trade and freight transportation, this research allocates interstate freight emissions to industries within each state. As freight emissions increase much faster than transportation emissions as well as overall emissions in the U.S., by identifying the state responsibility, interstate freight emissions can be regulated by state environmental policies. This research also examines whether fuel price increases could drive substantial mode shifts away from emissions-intensive modes (i.e. truck and air) to reduce interstate freight emissions.This research uses a multiregional input-output (MRIO) framework that provides a concise and accurate means for articulating the interrelationships among industries of different states. Building a state-level MRIO model within the U.S. requires two sets of data: state input-output (I-O) tables and interstate trade flows. This research estimates state I-O tables based on the 2012 U.S. benchmark I-O tables (the most recent ones with 405 sectors at the highest level of disaggregation) (BEA, 2018a). Due to limited interstate trade data, gravity models are used to estimate trade flows based on the Freight Analysis Framework 4 State Database for 2012 (BTS, 2016). Comparing state consumption-based emissions to the corresponding production-based ones, states along the east and west coasts are net importers of GHG emissions and states in the Central and Mountain regions are net exporters. The emissions embodied in state consumption are mainly from within the home-state and nearby states. Texas and California pollute for all other states as they export a relatively large amount of embodied emissions nationwide. For interstate freight emissions, emissions-intensive states, e.g. Wyoming, North Dakota, and Nebraska, have the highest inbound and outbound transportation emissions per capita, besides Hawaii and Alaska. Mining (except oil and gas), food and beverage and tobacco products, and wood products involve both large transportation emissions and significant shares of trade-related emissions from transportation.The MRIO framework is applied to examine the sensitivity of state consumption-based GHG emissions to potential state carbon taxes. Besides the taxing state, nearby states and states with strong economic connections with the taxing one have larger emission reductions and bear more economic loss in the short run. The MRIO framework also allows me to estimate changes in interstate freight emissions due to fuel price increases. Emission reductions from interstate freight transportation are very limited with fuel price increases alone. The findings of this research can be used to advise policy-making that accounts for both producer and consumer responsibilities.