Recent global value chain reconfiguration: drivers and consequences on EU carbon footprint

The vulnerability of global value chains is in the spotlight due to recent geopolitical tensions and shocks with a worldwide impact. Vulnerability in trade terms is often linked to distance from the suppliers, high concentration of imports, or not-shared values, implying several logistic risks. As a result, economies seeking higher resilience in their value chains are considering new sourcing strategies, like backshoring or nearshoring. Such trade-restructuring schemes need to consider sustainability to be effectively resilient, but, at the same time, they are drivers of changes in global carbon emissions.

This paper aims to measure the magnitude of those relocation patterns and their impact on carbon emissions, focusing on the European Union (EU). For this purpose, we use an environmentally extended multiregional input-output model to calculate global emissions' trends from 1995 to 2018 and to identify different trade-relocation patterns, quantifying their carbon content. We also perform a structural decomposition analysis to divide the changes in the EU's carbon footprint according to different drivers.

Our results show a change in global emissions evolution from 2008 onwards, with emerging trends of global value chains reconfiguration showing a more vital role of environmental concerns. We also find that reshoring and reoffshoring are less emission-intensive than offshoring. In the EU's context, its footprint has been reduced since the 2008 crisis, mainly due to lower emissions intensities and technical changes towards cleaner ways of production. In contrast, the geographical shift of suppliers contributes to the growth of emissions in the whole period.