Identifying critical sectors in the restructuring of low-carbon global supply chains

Based on recent events in the world, global supply chain (GSC) restructuring has become an important issue for industries worldwide. To develop an effective CO2 reduction strategy through GSC restructuring, this study investigated the impacts of GSC restructuring in a specific sector on the industrial global carbon footprint. Through this process, this study developed a scenario-based hypothetical extraction method (HEM) into a practical and flexible framework with a focus on the reasonable scale of relevant GSC restructuring. As a case study, this study applied the practical HEM framework to a global multi-regional input output database in 2014 and estimated the impacts of restructuring major automotive GSCs on CO2 emissions. Based on the results, this study identified the Chinese electrical equipment sector and the Russian basic metals sector, both included in the automotive GSCs as key sectors (i.e., key suppliers) for low-carbon GSC restructuring. These sectors exhibited the largest CO2 reduction effects when targeted for relevant GSC restructuring. Additionally, this study highlighted the practical potential for CO2 reduction based on a reasonable scale of relevant GSC restructuring. Finally, based on the findings, this study discusses how policymakers should formulate trade policies that prioritize intermediate products to promote GSC restructuring toward low-carbon practices and proposes an effective approach to utilize the results as benchmarks for setting CO2 reduction targets or incentives in the context of GSC restructuring.