Brown Bag Seminar Industrial Economics

International trade separates the location where emissions occur (production) and where they are ultimately consumed. Thus, a substantial share of emissions is embodied in international trade. Moreover, firms within narrowly defined industries differ in their emission intensity. However, most firm-level studies only consider the direct emissions released during the production process. In this paper, we combine these two stylized facts and employ a more comprehensive carbon accounting approach at the firm-level, that also includes the emissions embedded in intermediate inputs. For this purpose, we construct a unique data set combining an administrative panel of German manufacturing firms with firm-level customs data as well as measures of the emission intensity of intermediate inputs from Input-Output tables. We show that embodied emissions account for more than 50% of the overall emissions of an average firm. Moreover, we re-investigate if the established fact that exporters produce less emission intensively still holds, when emissions embedded in intermediate inputs are taken into account.