Embodied Energy Use Through Global Value Chains: Channel Decomposition and Analysis of Determinants

Abstract

In the era characterized by global value chains, it is critical to measure the energy use redistributed across the world through global trade. This study quantifies world’s energy use of each country , decomposes the energy flows according to global value chains, and characterizes its patterns. The main findings of this study are as follows. First, the energy use through world trade accounts for over 20% of world total energy use, in which energy embodied in simple GVCs and complex GVCs has increased rapidly. Second, the distribution of production-based and consumption-based energy use is considerably differ ent. Developed economies have positive net energy transfer while developing economies are opposite . Third, the gravity model reveals that the energy flow between the home and host countries increases with economic scale of both countries, with a common border/ language/ similar law system, and decreases with geographical distance. The patterns of energy flow are different across different global value chains and the distance is less important in complex GVCs. As the global value chains have reshaped the distribution of world energy use, any policies targeting at sustainable development, equality, energy saving need to take into account the role of global value chains.

Keywords: Energy Use, Global Value Chains, Multi-regional Input-Output Analysis, Gravity Model