Trade protectionism jeopardizes carbon neutrality-Decoupling and breakpoints roles of trade openness

This study aims to investigate the decoupling impact of trade on carbon emissions and under what circumstances trade would contribute to decoupling carbon emissions. A combination of Tapio decoupling model and structural threshold model is developed to study and quantify the impact. The empirical study uses panel data for 124 coun-tries around the world from 2000 to 2018. The results show that the main state of the relationship between trade openness, economic growth and carbon emissions was weak decoupling. Moreover, there are two breakpoints in the impact of trade openness on carbon emissions; once the structural breakpoints are exceeded, trade openness inhibits carbon emissions and contributes to global carbon neutrality, which opposes the claims of trade protec-tionists. At the sub-regional level, trade openness favors carbon neutrality in rich countries, but not in poor coun-tries. Thus, achieving carbon neutrality requires free trade, and fairer free trade needs to benefit countries of different income groups.(c) 2022 Published by Elsevier Ltd on behalf of Institution of Chemical Engineers.

Automated summary

This study investigates the decoupling impact of trade on carbon emissions and explores the circumstances under which trade can contribute to decoupling carbon emissions. A combination of the Tapio decoupling model and structural threshold model is used to analyze and quantify the impact. The empirical study utilizes panel data from 124 countries worldwide from 2000 to 2018. The results indicate that the relationship between trade openness, economic growth, and carbon emissions primarily exhibits weak decoupling. Additionally, there are two breakpoints in the impact of trade openness on carbon emissions; once these structural breakpoints are exceeded, trade openness inhibits carbon emissions and contributes to global carbon neutrality, contradicting the claims of trade protectionists. At the sub-regional level, trade openness favors carbon neutrality in affluent countries but not in impoverished countries. Therefore, achieving carbon neutrality necessitates free trade, and fairer free trade should benefit countries of different income groups.