The CO2 Content of Consumption Across US Regions: A Multi-Regional Input-Output (MRIO) Approach

Using a multi-regional input-output (MRIO) framework, we estimate the direct and indirect carbon dioxide (CO2) content of consumption across regions of the United States. We improve on existing estimates by accounting for emissions attributable to domestically and internationally imported goods using data describing bilateral trade between U.S. states and with international countries and regions. This paper presents two major findings. First, attributing emissions to states on a consumption basis leads to very different state-level emissions responsibilities than when attributed on a production basis; for example, California's emissions are over 25 percent higher. Second, heterogeneity of emissions across trading partners significantly affects the indirect emissions intensity of consumption (kg of carbon per $ of consumption), so regional differences in intensity across the U.S. go well beyond direct energy consumption. These findings have implications for evaluating the distributional impacts of national climate policies and for understanding differing incentives to implement state-level policies.