The climate economic effect of technology spillover

Abstract There is increasing interest in the global CO2 emissions transfer caused by international trade. However, the reduction potential of technology spillover is rarely considered. More importantly, the effect of technology spillover on climate change and the social cost of carbon (SCC) should be further investigated to inform climate policy-makers. In this study, we investigate the climate economic impact of technology spillover through unidirectional coupling of the emissions embodied in bilateral trade (EEBT) method and the dynamic integrated model of climate and economy (DICE). The results indicate that technological progress in the electricity sector could contribute to climate change mitigation and SCC lowering. The trade-related CO2 emissions of key CO2 exporters could be substantially reduced, such as China, India, Russia, and resource- and labor-intensive countries. High-tech countries outsourced large amounts of CO2 emissions to labor- and resource-intensive countries. However, a large income gap remains between high-tech and labor/resource-intensive countries. These results indicate the great importance of technological progress and sustainable management throughout the global supply chain.