Supply chain decoupling in green products: A granular input-output analysis

M.-G. Attinasi, L. Boeckelmann, B. de Castro Martins, B. Meunier, A. Borin, Francesco Conteduca and M. Mancini

Energy Economics, 2025, vol. 149, issue C

Abstract: This paper develops a novel methodology to enhance the granularity of Inter-Country Input-Output (ICIO) tables, addressing well-known distortions caused by sectoral aggregation –distortions that are particularly pronounced for products with low substitutability, such as those essential to the green transition. Using this framework, we construct a disaggregated ICIO table that single out 129 products essential to the energy transition into eight green sectors, including electric batteries, vehicles, rare earths, and renewable energy equipment. We simulate East-West supply chain decoupling in green products through a multi-country, multi-sector trade model calibrated with such disaggregated ICIO table. Results reveal substantial economic costs: welfare losses reach 3 % and trade between blocs contracts by 20 %, even when accounting for trade diversion through neutral countries. We also quantify how green supply chain fragmentation increases greenhouse gas emissions intensities, showing that trade barriers on clean-energy sectors create dual risks, undermining both economic efficiency and climate objectives.

Keywords: Input-output tables; Sectoral granularity; Global value chains; Green transition; Geopolitical fragmentation (search for similar items in EconPapers)
JEL-codes: C67 F13 F18 Q48 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:149:y:2025:i:c:s0140988325006000

DOI: 10.1016/j.eneco.2025.108773

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