Protectionism's impact on embodied energy flows among 43 countries: An assessment based on input-output structural decomposition model

Abstract

Free trade has made developed economies transfer a great deal of energy-intensive industries to developing economies, which induces more energy consumption in developing economies. The global spread of COVID-19 has led to trade protectionism that directly undermine the international free trade system. This paper is aimed to explore how trade protectionist measures affect global embodied energy flows, taking the case for 43 typical economies. Firstly, we combine the multi-regional input-output analysis and scenario analysis to construct an accounting framework of embodied energy consumption under free trade and restricted trade scenarios. The impact of trade protection on 43 economies' energy flows is discussed from the perspective of industrial sectors and disaggregated value chain links. Secondly, the role of technology, structure and scale factors in the protection's impact on embodied energy consumption is discussed based on structural decomposition analysis. The results indicate that under the scenario of trade-free, global energy consumption is 3880.91 million tons of oil equivalent. Under the scenario of trade-restricted, global energy consumption is 4435.56 million tons of oil equivalent, and global trade protection measures would increase global energy consumption by 554.65 million tons of oil equivalent. Trade of final products, trade of last-stage intermediate products and trade of other-stage intermediate products of the value chain contributed 42.7%, 40.5% and 16.8%, respectively, with the manufacturing industry facing the biggest impact. For emerging developing economies, such as China and Russia, their domestic energy consumption would decrease by 193.52 and 163.74 million tons of oil equivalent due to export tightening, respectively, while for developed economies, trade protection would result in an increase of 343.31 million tons of oil equivalent in EU countries. In addition, structural change and scale growth are the main factors that promote energy consumption growth under the trade restriction scenario, making it increase by 66% and 21% respectively.