Is there a waterbed effect generated by carbon reduction policies? A parallel EU-27 – China

Year: 2024 | Issue: 81 | pg. 9 - pg. 18

Authors:

Published on: 30/04/2024
Is there a waterbed effect generated by carbon reduction policies? A parallel EU-27 – China

Abstract:

This study explores the phenomenon known as the waterbed effect in the context of carbon emission reduction policies, focusing on a comparison between the EU-27 and China. This is an economic metaphor used to describe the migration of phenomena from one place to another following the implementation of restrictive policies, especially between regions with differing regulatory standards. Global trade dynamics play a crucial role, with trade relationships between the EU-27 and China influencing carbon emissions. Despite EU-27 efforts, the trade deficit with China has widened, leading to a disproportionate increase in emissions. Analysed data indicate the existence of a waterbed effect concerning carbon emissions between the two regions, potentiated by the redistribution of emissions due to disparities in environmental regulations and production outsourcing. Thus, the study reveals a correlation between trade imbalances and carbon emissions, with China's emissions surpassing those of the EU-27 in recent years. Efforts to curb emissions within the EU-27 are undermined by the waterbed effect, exacerbating global climate challenges. Moreover, the waterbed effect evolves into a "move the goalposts" phenomenon, emphasizing the need for comprehensive and collaborative climate policies. This analysis contributes to a deeper understanding of the complex dynamics between climate policy and the global distribution of carbon emissions, with notable implications for the development and future implementation of environmental policies worldwide. Addressing climate change requires a multifaceted approach, with EU-27 climate policies playing a crucial role. To effectively mitigate climate change, EU-27 policies must advocate for international agreements, contribute to global conservation efforts, and implement domestic policies with minimal economic impact. Additionally, recognizing the interconnectedness of global emissions and trade dynamics is essential to developing sustainable solutions. Ultimately, a collective effort is needed to combat climate change, emphasizing the importance of comprehensive and equitable climate policies on a global scale.

Keywords:

waterbed effect, CO2 emission, environmental policies, trade balance, greenhouse gas

Climate change is a complicated and tender subject (Olimid et al. 2022). The term “carbon footprint” denotes the comprehensive quantity of diverse emissions of greenhouse gases (GHG), predominantly encompassing carbon dioxide, discharged as a consequence of the decisions and activities undertaken by an individual, entity, or nation/state. Typically, the carbon footprint is quantified in units of carbon dioxide (CO2) or its equivalent (CO2e or million metric tonnes of carbon dioxide equivalent - MMTCDE). Even though the focus is usually on CO2, there are other gases that contribute to this greenhouse effect such as methane (CH4), nitrous oxide (N2O) and Fluorinated gases (hydrofluorocarbons - HFCs, perfluorocarbons - PFCs, sulphur hexafluoride – SF6, and nitrogen trifluoride – NF3). For example, one ton of methane (CH4) is equivalent to 25 tons of CO2 (Stein, 2024). The bulk of these greenhouse gases, emanate from practices such as deforestation, the combustion of fossil fuels, and the manufacture and utilisation of various commodities and amenities. In grasping the significance of the carbon footprint, one can analogize it to the imprint left by traversing through wet cement. This imprint ensnares and preserves one’s impact, enduring for an extensive duration. Although often imperceptible, each decision made contributes either to the augmentation or mitigation of one’s carbon footprint. Evidently, the carbon footprint serves as an indelible testament to human activity on the planet, hence elucidating the imperative nature of endeavours aimed at its reduction. Worldwide, more and more measures have been adopted to reduce carbon emissions. But it is an approach that has several speeds. The European Union, along with many other countries, have committed to carbon neutrality by 2050, but China says it will do so before 2060 (United Nations, 2020; Wu et al., 2022). Given the different approaches of the EU27 countries and China (a two-speed strategy), this study aims to identify whether there is a real effect, at the global level, of the efforts made by EU-27 member states regarding the drastic reduction of carbon emissions with the aim of slowing down climate change.