Environmentally Extended Input–Output (EEIO) analysis has become a cornerstone of climate research and policy design. Rooted in national accounting traditions and originally developed to quantify intersectoral dependencies, input–output analysis was paired with environmental data as early as the late 1960s. EEIO gained momentum with the adoption of greenhouse gas reporting obligations under the United Nations Framework Convention on Climate Change (UNFCCC). While this framework represented a major advance in climate governance, its territorial nature neglects emissions embedded in trade. This raised concerns about fairness between countries that “export” and “import” emissions, and about the risk of offshoring undermining global mitigation efforts. EEIO provides insights into producer value chains while also allowing upstream emissions to be collapsed into final demand. This consumption-based perspective, which EEIO uniquely enables, complements the production-based view of territorial accounting and supports more balanced debates on fairness and mitigation in a globalised economy
This note reviews the intellectual and methodological evolution of EEIO models, with particular attention to their application to final demand.
The first part introduces territorial, production-based, and consumption-based emissions accounting and their respective responsibility frames. It situates EEIO in the national accounting tradition and explains how it operationalises consumption-based accounting while enriching production-based perspectives. Early applications extended single-country input–output tables with environmental data, followed by the emergence of domestic EEIO databases and, later, multi-regional and global tables built by harmonising national accounts. Over time, scholars, private initiatives, and national and international statistical bodies refined these databases to cover more countries, sectors, and products, expanding the scope of analysis. Against this methodological background, the note also reviews global territorial inventories, which show that greenhouse gas emissions in 2019 arose primarily from energy supply (34%), industry (24%), Agriculture, Forestry and Other Land Use (22%), transport (15%), and buildings (c. 6%). While emissions from developed countries have markedly declined since 1990, these reductions have been more than offset by rising emissions in developing countries, most notably China.
The second part focuses on the emissions footprint of final demand under standard consumption-based accounting, identifying the relative importance of household consumption, capital formation, and government consumption. It highlights how empirical insights have depended on advances in EEIO datasets, with the demand for more precise policy-relevant evidence in turn spurring refinements in database coverage, granularity, and consistency. This co-evolution of research and data has been central to the field. Although considerable progress has been made, the review notes that database development remains an area for continued investment to support robust research and policy applications, and also acknowledges the methodological limits of mainstream EEIO models. Nevertheless, the section explains that consumption-based accounting has allowed fairness and equity to be reframed in climate negotiations by showing that the most developed countries are net importers of emissions. The section also reviews research on the three main components of final demand in detail, highlighting disparities across contexts and the mitigation potential of each, as well as the opportunities that arise when these levers are considered together.
