Policy Resource:

The Carbon Loophole in Climate Policy

The Carbon Loophole in Climate Policy assesses the embodied carbon associated with the production of goods that are ultimately traded across borders and therefore excluded from domestic climate policy. The report finds that approximately 25% of global CO2 emissions are embodied in imported goods that are excluded from accounting. This report is one of a series from Global Efficiency Intelligence providing data analysis and recommendations related to the need for policy and holistic greenhouse gas emissions accounting to lower global manufacturing emissions. The report was published in collaboration with the ClimateWorks Foundation and KGM & Associate Ltd.

Country-level greenhouse gas inventories, such as those reported to the Intergovernmental Panel on Climate Change (IPCC), typically account for domestic manufacturing emissions but exclude the emissions associated with manufacturing imported goods. The greenhouse gas emissions arising from the manufacturing of building materials, referred to as embodied carbon, is therefore excluded from accounting for materials purchased from outside the country. The United States is an example of a country that is a net importer of embodied carbon, meaning that more embodied carbon is imported in the form of materials and goods than is exported from American manufacturers.