Bank for International Settlements publishes study mapping Chile’s firm-level CO2 emissions through production networks and carbon tax exposure

The Bank for International Settlements published a working paper using Chilean customs and firm-to-firm transaction data to quantify direct CO2 emissions and economy-wide carbon footprints, and to assess how input-output linkages can amplify the macroeconomic effects of green transition policies such as carbon taxes. Using administrative data covering the universe of Chilean firms, the paper constructs monthly fossil fuel consumption and direct CO2 emissions series for January 2005 to December 2022 at firm, sector and aggregate level, finding that in 2022 electricity generation accounted for 43% of direct emissions, followed by manufacturing (33%), transport (12%) and mining (6%). Carbon footprints are estimated both with input-output tables and a firm-level network built from electronic invoices, with the two approaches yielding consistent results; the network evidence places electricity generation (and transport) at the centre with potentially large downstream spillovers, while mining sits on the periphery as a seller but remains strongly connected through upstream input purchases. In a 2022 footprint decomposition by final demand, private consumption absorbs 47% of total emissions, exports almost 40%, investment 11% and government 2%, and an exposure exercise indicates copper mining is the most affected industry under both an economy-wide carbon tax and a scheme targeting only electricity generation.