Analysis of changes in Dutch emission trade balance(s) between 1996 and 2007

In this paper we construct bilateral emission trade balances (ETB) for The Netherlands with 17 regions and compare results for 1996 and 2007 for three different greenhouse gasses. We establish a cross-sectional analysis of bilateral ETBs into a volume of trade, composition and technology effect. In order to analyze the driving forces of changes over time we perform a structural decomposition analysis of embodied import and export emissions. The main findings are that the embodied import emissions have increased by 37% whereas export emissions increased by only 3%, which is primarily driven by CO 2. The 2007 bilateral balances are positive with OECD countries but negative with economies such as Russia, Africa and China. The analyses demonstrate that the worsening of the ETB is to a large extent caused by the changing composition of trade: the Dutch economy increasingly exports clean products and imports dirty products. ► We construct bilateral emission trade balances for The Netherlands for 1996 and 2007. ► The balance is positive with OECD countries and negative with China and Russia. ► The macro balance worsened due to an increase in import emissions of primarily CO 2. ► Structural decomposition analysis shows that this is due to changing composition of trade. ► The Netherlands increasingly exports clean products and imports dirty products.