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The CO2 Content of Consumption Across U.S. Regions: A Multi-Regional Input-Output (MRIO) Approach

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Abstract:
Using a multi-regional input-output (MRIO) framework, we estimate the direct and indirect carbon dioxide (CO2) content of consumption across regions of the United States. We improve on existing estimates by accounting for emissions attributable to domestically and internationally imported goods using data describing bilateral trade between U.S. states and with international countries and regions. This paper presents two major findings. First, attributing emissions to states on a consumption basis leads to very different state-level emissions responsibilities than when attributed on a production basis; for example, California's emissions are over 25 percent higher. Second, heterogeneity of emissions across trading partners significantly affects the indirect emissions intensity of consumption (kg of carbon per $ of consumption), so regional differences in intensity across the U.S. go well beyond direct energy consumption. These findings have implications for evaluating the distributional impacts of national climate policies and for understanding differing incentives to implement state-level policies.

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Energy Specializations: Petroleum – Policy and Regulation; Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy and the Economy; Energy and the Environment – Policy and Regulation; Energy and the Environment – Environmental Market Design; Energy and the Environment – Climate Change and Greenhouse Gases

JEL Codes:
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
Q43 - Energy and the Macroeconomy
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Q54 - Climate; Natural Disasters and Their Management; Global Warming

Keywords: CO2 emissions, Emissions accounting, CO2 content of consumption, Carbon tax incidence, Indirect emissions, Embodied emissions, United States

DOI: 10.5547/01956574.38.1.jcar

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Published in Volume 38, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.