Reassessing Emissions in the Lucky Country: Consumption, Production & Outsourcing in Australia (1995 – 2009)

Abstract: Despite a small population, Australia is globally relevant as the largest per capita emitter of greenhouse gases in the OECD and the world’s largest exporter of coal. Australia is also uniquely positioned amongst developed nations as being both acutely exposed to climate change impacts and being without coherent energy and emissions policies. This study reassesses Australia’s emissions profile utilising multi-region input-output analysis and the 2013 release of the World Input Output Database. The study asks how trade has influenced Australia’s emissions profile and whether Australia has outsourced emissions through foreign trade. The results show that Australia experienced a significant turning point during the study period, shifting from being a net-exporter to net-importer of emissions. This was driven by a 120 per cent increase in emissions embodied in Australian imports, most of which occurred after 2001. This increase was fueled by the increasing share of imports from China, and the greater carbon intensity of these imports. As a result, although Australia’s production emissions began to stagnate at the end of the study period, consumption emissions continued to rise and Australia’s carbon leakage markedly increased. A technology-adjusted balance of emissions embodied in trade analysis also revealed that 52 per cent of Australia’s negative emissions balance in 2009 was driven by trade-induced emissions outsourcing. This study demonstrates the importance of tracking consumption emissions as the true indicator of a country’s carbon footprint.