Climate regulations should count imports, exports, and investments

Those of us who care about climate must be impressed when we hear about developments like those of Germany in recent years where nuclear power and fossil fuels are being phased out and replaced with solar, wind, and other renewables; but do climate-regulating policies such as the Paris agreement take into account the full range of a national economy's global reach in terms of imports, exports, and investments?

If a progressive economy such as Germany exports industrial equipment to some other country, such as China, the US, or Mexico, for example, its export income becomes dependent on the energy requirements of the machines it produces, yet the emissions from the fuel burnt by them would be attributed to the country where the machine is used, not where it was produced.

Imports can also shift the burden of emissions to an area outside of national accountability. If the US imports goods from China, for example, the greenhouse gases emitted producing those goods would be attributed to China, even though businesses and consumers in the US are using and making money using those goods.

Now consider the role of investments. Let's say a small but wealthy country is able to reduce its greenhouse gas emissions with transportation reforms, reforestation projects, and other energy and land-use reforms. Let's say they also import green products and export products/services that are climate-friendly. It would appear that such a country is not contributing to climate problems at all.

But what about investments? If she small, wealth country makes money by investing in global commerce between countries whose economic activities are dependent on less sustainable fuels, land-use, and economic practices, then the economic interdependence between their economic need for income and those other countries' need for investment from their banks would create a barrier to climate reforms, which would be attributed to the emitting country and not to the country or countries investing in the emitting country or countries.

So, unfortunately, by attributing greenhouse gas emissions at the national level, climate regulatory schemes such as the Paris agreement are fundamentally doomed to reward countries that externalize their industrial/climate sins to other countries by means of import/export and foreign investment. Until all transnational economic activities are accounted for in such climate accountability schemes, they will only create an incentive for countries to utilize trade to shift unsustainable economic activities away from themselves and then profit as the 'slave' countries are held accountable for emissions that benefit the 'master' countries in terms of either imports/exports, investment income, or a combination of both.