Following the adaptation of the Paris Agreement at COP21, it was noted that the traditional measures of carbon emissions have several limitations; and a reliable and relevant carbon emissions measurement is important to formulate a response to the challenge of climate change. This study, therefore, explores the relationship between international trade and consumption-based carbon emissions, which is a trade adjusted indicator; and measures the outflow and the inflow of emissions through exports and imports separately. We also include technological innovation in the model to understand its impact on consumption-based carbon emissions. The results show that exports and consumption-based carbon emissions are negatively associated, and technological innovation helps reducing the adverse effect of CO2 growth. In contrast, Imports and gross domestic product are positively linked with consumption-based carbon emissions. The findings also suggest the countries which embraced the Paris Climate Agreement must focus on consumption-based carbon emissions rather than the production-based carbon emissions.
Keywords: COP21; Consumption-based carbon emissions; International trade; Technological innovation; USA.
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