Trade and decoupling of fossil fuel use embedded in EU consumption
Till Heydenreich
Abstract
The EU is frequently recognized as a frontrunner in tackling climate change; however, this assessment primarily relies on production-based evaluations, overlooking the significant role of imports. We conduct a detailed consumption-based analysis of how EU consumption drives global fossil fuel use, combining input–output with structural decomposition analysis and the subsystem approach. We find that the embedded EU fossil fuel footprint has experienced a notable decline between 2000 and 2014, but at rates incompatible with 1.5 °C. We identify trade patterns to be an important upward driver of the EU footprint through intermediate production, also thwarting the impact of the energy transition with effects from changes outside the EU lagging within EU developments. Addressing these outsourcing patterns to more fossil fuel intense production could reduce the EU footprint by almost 20%. We find that more than 50% of fossil fuels embedded in imports are linked to indirect imports. Thus, we argue for the EU Carbon Border Adjustment Mechanism to include indirect imports, particularly of electricity. Yet, given the problematic role of growth, even energy transition efforts along the global supply chain will likely need to be complemented by demand side measures, potentially entailing post-growth pathways.