Cross-border emissions in the service sector: A global analysis of environmental and economic linkages

Abstract

The global service industry, commonly perceived as low-carbon, is in fact a significant driver of emissions growth. Yet, traditional emission-accounting-based assessments have overlooked the transmission pathways of emissions in the service industry across regions, thereby making it difficult to uncover its dynamic and complex spatial and industrial interconnections. This study addresses this gap by using multi-regional input-output (MRIO) analysis and structural path decomposition (SPD) to examine consumption-based emissions (CBE) in the service sector across multiple countries from 1995 to 2021, offering new insights for targeted mitigation strategies. Results reveal a steady 63% increase in the global CBE of services, primarily driven by the expansion in public, health, and financial services. While developed countries are net importers of embodied emissions in services, developing nations largely serve as net exporters, with transportation—especially air and water transport—contributing significantly to carbon intensity. China, the United States, and Japan emerge as the top service-sector emitters, highlighting the critical role of both direct and complex intermediate inputs in driving emissions. The study underscores the need for efficiency improvements and green technological investments, particularly in transport and high-impact service sectors, to mitigate emissions while supporting service sector growth. These findings offer insights for policymakers on prioritizing sector-specific and cross-border strategies to achieve sustainable development in the global service industry.