Carbon offshoring - Decomposition of Finnish manufacturing sector emissions
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School of Business |
Master's thesis
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en
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52
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Abstract
Between 2010 and 2021, emissions in Finland’s manufacturing sector declined by 37%, while sector's output increased. Similar trend of manufacturing decarbonisation alongside rising output has been observed in other developed countries, raising concerns about potential carbon offshoring. Carbon offshoring refers to relocation of emission-intensive production processes overseas, typically from developed to developing countries. Despite this pollution haven hypothesis, multiple studies suggest that the reduction in manufacturing emissions is primarily driven by technological advancements. Building on the existing literature, this paper examines the decarbonisation of Finland’s manufacturing sector using index decomposition analysis and industry-level data from 2008 to 2021. My findings suggest that in Finland, technological advancements have also been the main factor behind the decline in emissions. To minimise the impact of the financial crisis, I analyse an additional, shorter study period from 2010 to 2021. Despite the shorter study period, technique effect remains as the most significant driver of emission reductions. However, I find that the most polluting industries in the sector were hardest hit by the financial crisis, leading to a shift in which cleaner industries gained a larger market share in the manufacturing sector between 2008 and 2010, and sector’s composition never reverted to its old, more emission-intensive, state after the crisis.Description
Supervisor
Liski, MattiThesis advisor
Liski, MattiOther note
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Thesis_EteläahoSiiri_appendix1.zip