top of page

World Trade and Carbon Emissions

The #parisagreement, adopted in 2015 at the 21st Conference of the Parties (#cop21) to the #unitednations Framework Convention on #climatechange (#unfccc), aims to address the #globalchallenges of climate change by limiting #globalwarming to well below 2 degrees Celsius above pre-industrial levels, with efforts to limit it to 1.5 degrees Celsius. The agreement also seeks to enhance the country's abilities, especially developing countries, to cope with the climate change impacts and to adopt climate-resilient and #lowcarboneconomy.

After eight years, the main objective of the Paris Agreement to reduce greenhouse gas emissions has been overshadowed by global economic instability, raising doubts about whether the Paris Agreement will be beneficial in the long term for the #worldeconomy and whether it can promote sustainable development.

Here we are trying to explore all the relevance and justify whether such initiatives are to be complied with by the world or initially by developed countries followed by others.

Cumulative carbon dioxide CO2 emissions by country
Source: RCraig09, CC BY-SA 4.0 <>, via Wikimedia Commons

Benefits for the World Economy:

1. Investments and Innovation

Transitioning to a low-carbon economy can stimulate job creation in #renewableenergy, #energyefficiency, and #sustainableinfrastructure sectors. Investment in #cleantechnologies can drive #innovation, new industries, and #economicgrowth. Further, the Paris Agreement encourages fund mobilization for #climateadaptation and mitigation efforts, opening opportunities for developing countries to access #greenfinance and promote #sustainabledevelopment. Moreover, countries that demonstrate commitment to addressing climate change are often perceived more favorably by international partners, enhancing trade relations and international cooperation.

2. Energy Independence

A shift towards renewable energy sources reduces dependence on volatile fossil fuels markets, enhancing energy security, stabilizing prices, and improving #economicstability for nations that are heavy importers of #fossilfuels. Further, addressing climate change helps mitigate the risks associated with extreme weather events, #sealevelrise, and other climate-related impacts. By minimizing these risks, the world economy can experience more stability in the long run.

Wealthy Nations Lead Per-Capita Emissions


World trade and carbon emissions are closely interconnected due to the global nature and the production of goods and services.

The #carbondioxide equivalent (CO2e) emissions associated with a USD 1.00 transaction can vary widely depending on the specific nature of the transaction, the industries involved, the location of the parties, and the energy sources used.

For example, considering a digital transaction such as a small online purchase, the associated CO2e emissions might be relatively low. These transactions generally consume very little energy and result in minimal emissions. On the other hand, thinking about a more complex transaction involving physical goods, transportation, or energy-intensive processes, the emissions can be much higher. #manufacturing, #shipping, and other #supplychain activities contribute to emissions, and the exact amount would depend on factors such as the type of goods, distance traveled, and the energy mix used for production and transportation.

To provide a rough estimate, one can measure the amount of CO2 emitted per unit of economic activity like Gross Domestic Product (#gdp). The #worldbank data of recent years shows that for every USD 1.00 of economic activity, around 0.3 to 0.4 kg of CO2e is emitted on average.

So the question is USD 1.0 of Economic Activity Emitting 0.4 kg of CO2e?

If yes, the following shortfalls can lead to more chaotic economic instabilities.

Annual CO₂ emissions by world region
Source: Hannah Ritchie, Max Roser and Pablo Rosado (2020) - "CO₂ and Greenhouse Gas Emissions". Published online at Retrieved from: '' [Online Resource]

1. Short-Term Costs

Transitioning to cleaner energy sources and reducing emissions can initially incur costs for industries heavily reliant on fossil fuels. Further, some industries heavily reliant on fossil fuels may face transition challenges, potentially leading to short-term job losses and economic disruptions. As said earlier, the immediate costs of transitioning to a low-carbon economy can outweigh the long-term benefits.

2. Competitiveness Concerns

If one country imposes stringent climate regulations while others do not, there could be concerns about competitiveness, as industries might move to regions with lenient #regulations, leading to potential job losses and more #environmental damages, leading to more carbon emissions.

3. Trade-offs with Development

As observed, it is difficult for some countries to adhere to emission reduction commitments. Industries in countries with stricter regulations face higher costs, potentially impacting international competitiveness. Further, these stringent climate policies constrain economic development, as they need to divert resources to comply with emission reduction targets.

4. Impact on Fossil Fuel Industry

The transition away from fossil fuels could negatively affect economies heavily dependent on these industries, potentially leading to job losses and economic disruption in these regions.

The 2023 Conference of the Parties to the UNFCCC (#cop28) will be in #dubai. Except for Dubai, most of the economy of the #unitedarabemirates (#uae) is highly dependent on fossil fuels.

Are the other developed and developing countries going to acknowledge and encourage the efforts made by UAE and be neutral on the first #globalstocktake (#gst), which will provide a comprehensive assessment of the progress of adopting the Paris Agreement?

Still, we have to believe in the long-term perspective when there are pitfalls in short-term goals like costs associated with such a transition, the potential for #jobcreation, innovation, #energysecurity, and improved #environment and #health, requiring countries to work collaboratively to strike a balance between #climategoals and #economic interests, ensuring a #sustainable and #prosperousfuture for all.

25 views0 comments

Recent Posts

See All
bottom of page