Fossil-fuel CO<sub>2</sub> emissions, 1997–2007, allocated to each of the three accounting points: (a) extraction (highlighting emissions embodied in domestic consumption and those consumed elsewhere), (b) combustion (highlighting whether the fuel was extracted domestically or elsewhere), and (c) consumption (also highlighting whether the fuel was extracted domestically or elsewhere)

<p><strong>Figure 1.</strong> Fossil-fuel CO<sub>2</sub> emissions, 1997–2007, allocated to each of the three accounting points: (a) extraction (highlighting emissions embodied in domestic consumption and those consumed elsewhere), (b) combustion (highlighting whether the fuel was extracted domestically or elsewhere), and (c) consumption (also highlighting whether the fuel was extracted domestically or elsewhere). Countries in the EU27 are grouped.</p> <p><strong>Abstract</strong></p> <p>A growing number of countries regulate carbon dioxide (CO<sub>2</sub>) emissions occurring within their borders, but due to rapid growth in international trade, the products consumed in many of the same countries increasingly rely on coal, oil and gas extracted and burned in other countries where CO<sub>2</sub> is not regulated. As a consequence, existing national and regional climate policies may be growing less effective every year. Furthermore, countries that are dependent on imported products or fossil fuels are more exposed to energy and climate policies in other countries. We show that the combined international trade in carbon (as fossil fuels and also embodied in products) increased from 12.3 GtCO<sub>2</sub> (55% of global emissions) in 1997 to 17.6 GtCO<sub>2</sub> (60%) in 2007 (growing at 3.7% yr<sup>−1</sup>). Within this, trade in fossil fuels was larger (10.8 GtCO<sub>2</sub> in 2007) than trade in embodied carbon (6.9 GtCO<sub>2</sub>), but the latter grew faster (4.6% yr<sup>−1</sup> compared with 3.1% yr<sup>−1</sup> for fuels). Most major economies demonstrate increased dependence on traded carbon, either as exports or as imports. Because energy is increasingly embodied in internationally traded products, both as fossil fuels and as products, energy and climate policies in other countries may weaken domestic climate policy via carbon leakage and mask energy security issues.</p>