Emissions Accounting in Global Supply Chains: An Environmentally Extended Input-Output Approach

This report provides a comprehensive framework for measuring greenhouse gas emissions across global supply chains using Environmentally Extended Input-Output (EEIO) models. It explains how economic and environmental data can be combined to capture direct and indirect emissions, including Scope 1, 2 and 3 equivalents at sector level. Applied globally, the approach highlights the central role of supply chains and trade in shaping carbon footprints, while discussing methodological strengths, limitations, and implications for policy and corporate reporting.

Author(s)

Dominic O'Kane

The need for accurate, affordable, and comprehensive methods of emissions accounting has never been greater. In this report, we present an accessible and self-contained introduction to the use of input–output models for emissions accounting in global supply chains.

We show that Environmentally-Extended Input–Output (EEIO) models provide an economics-based, data-driven and mathematically elegant framework for comprehensively estimating supply-chain greenhouse gas (GHG) emissions.

We begin by outlining the origins and foundations of input-output (IO) analysis, starting with the construction of input–output tables. We then introduce both the demand-side Leontief model and the supply-side Ghosh model, illustrating how each can be applied to emissions accounting. Next, we show how the EEIO approach enables the
quantification of a sector’s production-based emissions, meaning the GHGs released directly through its own operations, as well as its consumption-based emissions, meaning the emissions embodied in the goods and services it supplies to final consumers. We also demonstrate how the EEIO framework naturally extends to calculating sector-level analogues of the GHG Protocol’s Scope 1, Scope 2, and Scope 3 metrics for both upstream and downstream emissions.

We then broaden the analysis to a global, multi-regional context and present a case study based on the OECD’s 2023 ICIO dataset, comparing emissions results for the United States and China. We conclude with a discussion of the role of global EEIO models in informing and shaping effective climate policy.