Work

Identifying critical EU carbon emissions risk through global value chains

Year: 2025

Type: article

Abstract: Global value chains (GVC) are a key element in discussions about trade dependencies/bottlenecks and recent EU policy proposals. Similarly, carbon-emissions reduction measures feature predominantly in the design of EU strategies and require sector-detailed knowledge about where emissions are generated along GVC. We use input-output techniques to identify carbon upstream and downstream sectoral hotspots within EU’s GVC and classify industries according to their exposure to changes in carbon-related and trade policy. We introduce a novel (climate-reshoring, CRI) index to measure carbon dependency and apply it to sectors currently targeted by EU policy for potential backshoring. Our results show that sectors demanding and supplying high-carbon-emissions goods are different, implying that EU countries' differences in exposure depend on their industrial structure and trade patterns. Top downstream-imported emissions come from Russian refined petroleum products, while upstream-emissions EU hotspots include Electricity & gas, Basic metals from China and Russia, and Chinese Chemical and Other non-metallic products. Regarding CRI, the sectors most at risk by carbon dependencies and trade disruptions are Computer, electronic and optical equipment; Pharmaceutical; and Electrical equipment, all identified as critical by EU’s Open Strategic Autonomy. Core-EU economies and large Southern countries show the highest levels of CRI, mainly due to their dependence on critical foreign sectors rather than a high imported emissions risk index. These findings highlight the need to consider sectoral-level carbon exposure in policy-making. Specific measures aimed at increasing the UE production in sectors and countries with high CRI would be beneficial both in terms of resilience and climate-change fight.

Source: Structural Change and Economic Dynamics

DOI: 10.1016/j.strueco.2025.05.016

Authors: María-Ángeles Tobarra, Luis A. López, Ángela García-Alaminos, María-Ángeles Cadarso

Institution: University of Castilla-La Mancha

Language: English

Topic: Environmental Impact and Sustainability

Subfield: Environmental Engineering

Field: Environmental Science

Domain: Physical Sciences

SDGs: Climate action, Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,880