Reply to the Comment by Zhang and Fang (2019) on Consumption-Based versus Production-Based Accounting of CO2 Emissions

Abstract

Zhang and Fang (2019) criticize our finding (Franzen and Mader, 2018) that there is (on average) no carbon leakage from developed to developing countries. In the paper we show that countries’ GDP per capita is statistically not related to the ratio of consumptionbased (CBA) to production-based (PBA) accounting of CO2 emissions. Hence, the ratio of the two accounting schemes does not differ between richer and poorer countries or, put differently, does not depend on a country’s GDP per capita. Zhang and Fang (2019) have two concerns with our paper: First, they believe that we should have used the Global Carbon Atlas (GCA) for both CBA and PBA and should not have mixed the data with the Emissions Database for Global Atmospheric Research (EDGAR); we used the EDGAR to obtain countries’ PBA and the GCA to obtain their CBA. Second, the authors argue that we should not have used the ratio of CBA to PBA but the difference of CBA – PBA for our analyses. In what follows, we respond to both concerns.