One way of attributing greenhouse gas (GHG) emissions is to measure the embedded emissions of goods that are being consumed (also referred to as "embodied emissions"). This is different from the question of to what extent the policies of one country to reduce emissions affect emissions in other countries (the "spillover effect" and "carbon leakage" of an emissions reduction policy). The UNFCCC measures emissions according to production, rather than consumption (UK Parliament, 2010). Consequently, embedded emissions on imported goods are attributed to the exporting, rather than the importing, country. The question of whether to measure emissions on production instead of consumption is partly an issue of equity, i.e., who is responsible for emissions (Toth et al., 2001, p. 670).
The 37 Kyoto Protocol Parties, listed in Annex B of the treaty, have agreed to legally binding emission reduction commitments. Under the UNFCCC accounting of emissions, their emission reduction commitments do not include emissions attributable to their imports. In a briefing note, Wang and Watson (2007) asked the question, "who owns China's carbon emissions?" In their study, they suggested that nearly a quarter of China's CO2 emissions might be a result of its production of goods for export, primarily to the USA but also to Europe. Based on this, they suggested that international negotiations based on within country emissions (i.e., emissions measured by production) may be "[missing] the point."
Recent research confirms that, in 2004, 23% of global emissions were embedded in goods traded internationally, mostly flowing from China and other developing countries to the U.S., Europe and Japan. Research by the Carbon Trust in 2011 revealed that approximately 25% of all CO2 emissions from human activities 'flow' (i.e. are imported or exported) from one country to another. The flow of carbon was found to be roughly 50% emissions associated with trade in commodities such as steel, cement, and chemicals, and 50% in semi-finished/finished products such as motor vehicles, clothing or industrial machinery and equipment.
- UK Parliament (March 10, 2010). "House of Commons, minutes of evidence, taken before the Environmental Audit Committee, International Climate Change Negotiations, Rt Hon Edward Miliband MP, Mr Peter Betts and Ms Jan Thompson. Reply to Q39". UK Parliament website. Retrieved 2010-04-05.
- Toth, F.L. et al. (2001). "Decision-making Frameworks. In: Climate Change 2001: Mitigation. Contribution of Working Group III to the Third Assessment Report of the Intergovernmental Panel on Climate Change (B. Metz et al. Eds.)". Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A. Retrieved 2010-01-10.
- Black, R. (December 19, 2005). "Trade can 'export' CO2 emissions". BBC News. Retrieved 2010-04-05.
- Wang, T. and J. Watson (October 2007). "Who Owns China's Carbon Emissions? Tyndall Centre Briefing Note No. 23". Tyndall Centre website. Retrieved 2010-04-05.
- Davis, S.K. and K. Caldeira (March 2010). "Consumption-based Accounting of CO2 Emissions". Proceedings of the National Academy of Sciences. Retrieved 2-11-01-31.
- "International Carbon Flows". Carbon Trust. May 2011. Retrieved 12 Nov 2012.