Addressing the carbon emissions embodied in India’s bilateral trade with two eminent Annex-II parties: with input–output and spatial decomposition analysis


This paper quantifies the carbon emissions embodied in the bilateral trade between India from the non-Annex-I country list under the Kyoto Protocol (1997) with two of its biggest trade partners from the Annex-II country list, the USA and the UK, by applying the input–output modelling during the years of 2011 to 2014, to evaluate and analyse the conjecture around the carbon leakage. After the calculation of the embodied carbon in these bilateral exports and imports, the study further inspects the roles of important drivers those are influencing the calculated emission imbalances in trade. This study addresses a high emission-intensive energy consumption pattern of India relative to both the USA and the UK which is confirming the possibility of carbon leakage from Indian commodity production sectors and inducing a huge contribution from these bilateral trades into the global emissions. Finally, this study provides evidence from a spatial decomposition analysis that the differences among the emission-intensity of output between India and its major developed country trade partners create the maximum impact on the implied emission imbalances in the bilateral trades. With the anticipation of increased India–USA and the India–UK bilateral trade, this study proposes suggestion to reduce India’s emission intensity of output through fuel switching to the less emission-intensive energy options and relieve the pressure on the global environment.

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Fig. 1

Note: The volumes of export are measured in US$ Millions for the year 2016.

Fig. 2

Note: Carbon emissions measured in Kilo-Tonne unit.

Fig. 3

Note: Emission surplus is measure in Kilo-Tonnes, trade surplus is measure in million dollars.

Fig. 4

Source: United Nations Energy Statistics Yearbook 2015

Fig. 5

Note: Emissions measured in Mt.

Fig. 6

Note: Emissions measured in Mt.

Fig. 7

Note: Emissions measured in Mt.

Fig. 8

Source: Author’s Own Elaboration


  1. 1.

    The targets of the Kyoto Protocol during its first commitment period for 2008 to 2012 covered emissions of six main GHGs, namely carbon dioxide, methane, nitrous oxide, hydro-fluorocarbons, per-fluorocarbons and sulphur hexafluoride.

  2. 2.

    These assigned amounts are calculated based on a Party’s quantified emission limits and reduction commitments over a commitment period recorded in Annex-B of the Protocol based on their corresponding emission levels in the year 1990 (UNFCCC).

  3. 3.

    Besides all the mitigation initiatives, one important economic argument behind this break in the pattern of US emission trend may be due to the subprime mortgage financial crisis which slowed down the US economy since 2007 and caused a fall in aggregate demand.

  4. 4.

    Appendix B.1”, “B.2” and “B.3” elaborates the calculation of weights associated with each energy items in the broad energy groups for India, the USA and the UK, respectively. In “Appendix B.4.1”, the elaboration of carbon emission factors of electricity for India, the USA and the UK is shown. “Appendix B.4.2” shows the proportions of different sources as contributors in the electricity generation for the three countries. “Appendix B.4.3” elaborates on the calculation of the emission factor of heat for the USA and the UK.


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Correspondence to Suvajit Banerjee.

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Appendix A

See Table 8.

Table 8 Concordance between the sectors of modified input–output tables to the original tables

Appendix B

Appendix B.1

See Table 9.

Table 9 Carbon emission factor of energy groups for India

Appendix B.2

See Table 10.

Table 10 Carbon Emission Factor of Energy Groups for US

Appendix B.3

See Table 11.

Table 11 Carbon Emission Factor of Energy Groups for UK

Appendix B.4

Appendix B.4.1

See Table 12.

Table 12 Carbon Emission Factor of Electricity for India, UK and US
Appendix B.4.2

See Table 13.

Table 13 Electricity Production by Type (In Gigawatt-hours)
Appendix B.4.3

See Table 14.

Table 14 Carbon Emission Factor of Heat Production for UK and US (In Terajoules)

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Banerjee, S. Addressing the carbon emissions embodied in India’s bilateral trade with two eminent Annex-II parties: with input–output and spatial decomposition analysis. Environ Dev Sustain (2020).

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  • Emission embodied in bilateral trade
  • Carbon leakage
  • Input–output model
  • Spatial decomposition analysis
  • India
  • USA
  • UK
  • Emission intensity of output