ON MARCH 4th The Economist ran a story about the challenges facing scientists who are trying to find out which greenhouse gases come from where. On March 8th a paper published in the Proceedings of the National Academy of Sciences by Steve Davis and Ken Caldeira of the Carnegie Institution's campus at Stanford University brought to the fore a further problem in trying to figure out who emits what—one that turns not on how carbon flows through the atmosphere and biosphere, but on how it flows through the world economy. Who should be held responsible for the greenhouse-gas emissions involved in making, say, a flat-screen television? The country where the television is made? Or the country where it ends up being used?

Looking at the carbon emissions associated with a country's consumption, rather than its production, does not change the general outline of what is going on in the world: rich people still emit more carbon dioxide than poor people do. But it does heighten the contrast. Rich countries which import manufactured goods from poorer ones end up with even higher emissions; poor countries that export a lot of manufactured goods with lower ones. Using figures from 2004, the most up to date that have the sort of industry-specific data they need, Dr Davis and Dr Caldeira reveal the striking scale of this effect. They find that roughly a quarter of the world's emissions end up being consumed somewhere other than where they are produced. For a few small and reasonably post-industrial countries, such as Switzerland, the emissions associated with total consumption (emissions produced in Switzerland minus those associated with goods produced there and subsequently exported plus those associated with goods imported) are more than twice the emissions actually produced on Swiss territory.

More generally, emissions made on their citizens' behalf elsewhere in the world add a third or more to most European countries' emissions. For America the effect is smaller, but still significant—about 12%. For China the situation is, obviously, reversed. Taking its exports into account reduces emissions by a quarter. In terms of emissions as usually counted, China overtook America a few years after these figures were collected, and thus became the planet's largest source of industrial carbon dioxide; if one drops China's total and bumps up America's to reflect the patterns of consumption, though, America will surely remain number one for a while.

Trying to understand the scale of these flows in absolute terms is hard, but here is an illustration. It is as though more than 500 large (1,000 megawatt) power plants in China were sending all their electricity to other countries, but all their emissions still counted as Chinese.

The authors write, and many will agree, that this form of accounting “provides grounding for ethical arguments that the most developed countries—as the primary beneficiaries of emissions and with greater ability to pay—should lead the global mitigation effort.” But, though the ability to pay is not much in doubt, the idea that the benefits from this process all accrue to the developed world is a little simplistic. This is, after all, trade: benefits flow the other way, too, in the form of a great deal of money. The big emerging economies were not duped into taking on the developed world's carbon emissions. They knew what they were doing and have profited from it.

That said, looking at carbon emissions this way does make the world seem a grimmer place, for three reasons. The first is that the Carnegie analysis, and similar work elsewhere, show that much of what has seemed like progress on the climate is anything but. As Dieter Helm of Oxford University and his colleagues pointed out a few years ago, Britain may be proud of cutting its greenhouse gas emissions by some 15% from 1990 to 2005, but the consumption that produced many of those emissions is still going on, and so are the emissions—they are just going on elsewhere. Indeed, according to the Carnegie analysis, Britain's balance of trade in carbon dioxide (its imports less its exports) in 2004 was greater than that of any other big European country: 253m tonnes, almost half as much as the emissions from the country's own territory.

The second reason for gloom is that the trade involved is not a zero-sum game. Moving emissions away from de-industrialising developed countries does not just shift them unchanged from one column to another in some great climatic spreadsheet. It makes the emissions bigger, because the energy infrastructure of developing countries is more carbon intensive. According to the Carnegie analysis the amount of carbon dioxide produced per unit of industrial energy used to make exports is 50% greater in China than in America. This is one of the reasons why assumptions made in the 1990s about the likelihood of the world economy becoming ever less carbon intensive have not come to pass. Trade is moving production from less carbon-intensive economies to more carbon-intensive ones.

The third reason for gloom is that seeing things this way makes dealing with the emissions problem even harder. The only international agreement on the matter, the Kyoto Protocol, limits emissions only from the developed countries that are party to it. Although there is little evidence that such limits have in and of themselves driven carbon-intensive industries out of the countries concerned—a phenomenon known as carbon leakage—they do make the natural movement of industry to the developing world, where emissions are unconstrained, harder to deal with. If the world were uniform with respect to the price of carbon, it would not matter where the carbon was emitted. Someone, somewhere would be paying, and the costs could be passed on, or not, according to the circumstances and what the market would bear. But in a world where only some countries have carbon prices, emissions moving elsewhere move from regulated to unregulatable.

One can imagine schemes that might tackle this issue. In February, at the launch of an analysis of carbon leakage by the Carbon Trust, a British investor and policy shop, Adair Turner, the chairman of the British government's Committee on Climate Change, sketched out a possibilty. In some cases it might make sense to impose a border tariff on imports from a country with no cost to its carbon. The tariff would be set at the cost, on the importer's carbon markets, of the emissions that would have been given off if the goods in question had been made in the importing country. The money raised through such a tariff would then, as a matter of equity, be invested in mitigation or adaptation strategies in the country doing the exporting. Such a scheme might be seen as one of the sources of “innovative financing” that the Copenhagen accord wants to look for. One benefit of this would be that the system would provide incentives for the exporting country to start pricing carbon at the point of production, since it would then capture the proceeds itself and be able to control their use, rather than having them spent according to priorities set, at least in part, by the developed importing country.

But such elegant solutions remain at present entirely theoretical. The challenges of a world in which those who have believed they have been cutting emissions find that they have not, and where the market is moving industrial production to places where its emissions are unlikely to be capped and also higher than they would be elsewhere, are already there to be seen.