Energy and CO2 emission relationships in the NAFTA trading bloc: a multi-regional multi-factor energy input–output approach

Zeus Guevara, Edmundo Molina-Pérez, Edith X. M. García and Vanessa Pérez-Cirera

Economic Systems Research, 2019, vol. 31, issue 2, 178-205

Abstract: The North-America Free Trade Agreement (NAFTA) has brought together the economies of Canada, Mexico, and the US into forming one of the largest trading blocs worldwide (within the top CO2 emitters). However, the current global protectionist discourse threatens the agreement. This paper analyzes the energy and energy-related CO2 emission relationships between NAFTA countries in 2014 to gain insights into the climate change implications of current integration and the possible cancelation of the agreement. The analysis is performed with a multi-regional version of the multi-factor energy input–output model. The results show that NAFTA has not built a single integrated energy system, though it has helped reduce energy-related CO2 emissions. Moreover, if NAFTA is not revoked, further integration would depend on the capacity of the Mexican energy sector to converge to the performance of its trade partners’ energy sectors. Conversely, a broken deal would induce negative environmental externalities.

Date: 2019
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DOI: 10.1080/09535314.2018.1528212

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