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 carbonemissions embodied in the bilateral tradebetween 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 thecarbon 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 theemission-intensity of outputbetween 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.