Carbon (Ac)counting and Division: The Need for a More Balanced and Complete Framework

In the increasingly vernacular anthropocene we have altered our climate and ecosystems to the unprecedented point the changes induced predominantly stem from human activity. As modelling and forecasting is often based on the past (of which, in this case, there is none), it is a virtually insurmountable task to forecast their evolution with solid accuracy. Regardless of the important and extensive attempts to better understand these dynamics, it is clear-cut from abundant research that our goal should be to reduce our greenhouse gas emissions to minimise further disturbance of these systems. Fortunately, this is also reflected qualitatively and quantitatively in the policies of an increasing number of countries and governmental bodies. However, as it turns out, the quantitative objectives set out in these policies will probably fail to be realised correspondingly on a global scale if we maintain current standards of emissions accounting. Given such objectives, this deficiency urges us to adopt a more complete and effective model of emissions accounting as a basis for policy making.

The purpose of Greenhouse Gases (GHG) emissions accounting is to calculate the GHG emissions of a certain region within a given timeframe. Current models of GHG accounting are predominantly so-called production-based models; that is to say only the gases emitted in all production and transformation processes of a region count towards that region’s ‘registered’ GHG emissions. The diametrically opposed model would be consumption-based: all GHG emissions in the pathway to a product are assigned to the region which consumes that product. In short, the former includes export-based but excludes import-based emissions, and the reverse is true for the latter. Not surprisingly, these two ‘classical’ models both have their perks and drawbacks. However, it is the flaws of the production model that deserve closer attention.

One significant problem with production-based accounting is that it completely neglects certain emissions. It is unequivocal from the above definition that emissions which take place in a region without ‘ownership’ are simply not included. This most notably excludes all international bunker fuel burning, i.e. all emissions resulting from international aviation and marine transport. This amounts to roughly 1.2 Gton of CO2 emissions per year, about 3.5% of the global 2014 total of anthropogenic emissions of 35.7 Gton – emissions literally gone up in the air, according to this type of accounting.

The picture changes quite a bit more once one also realises that these emissions, of international trade and many other sources, are in service of consumption somewhere – typically in developed countries. Most of the goods transported over international routes (not just limited to aviation and shipping) ultimately meet some demand in the Western world. This applies to goods as diverse as technological devices manufactured in China (assembled from rare metals gathered from typically dozens of different countries, (in-terminal or on-site refined) crude oil imported from the Middle East, as well as rice from India and Taiwan. As a result, the emissions of all processes (e.g. product manufacturing, extraction, fertilizers, to name a few) are assigned to these respective countries.

One can question the justness of this assignment – responsibility for emissions is ascribed fully to the producer, and not even partially to the consumer. Interestingly, this results in a strong overall asymmetry: developed countries typically have larger consumption-based than production-based emissions, and vice versa for less developed countries. The differences are substantial: China is the largest emitter of CO2 worldwide from a production-based approach; the United States would however vastly surpass it in a consumption-based model.

These observations become all the more thought-provoking when connected to current policy making. By the now expired United Nations Framework Convention on Climate Change (UNFCC) 1997 Kyoto protocol, all UN members have committed to reducing GHG emissions. In recent years many governments of European countries (as well as the EU itself) have set additional, quantitative CO2 emission reduction objectives; 2050 goals typically being a cutback of 80% or more with respect to 1990 levels. These are important, concrete goals towards addressing climate change. Yet the catch is that these goals have been set with production-based accounting in mind, according to the UNFCC standard. This means that emissions policy in these regions has been defined in a framework that in practice presupposes a lower, production-based bound of emissions. The result of this, as will be illustrated shortly, is that such policy would most likely more than fall short in realising a similar impact on a global scale.

The following thought experiment is a very elementary attempt to examine the consequences of such policy making:

  1. Let us first make the assumption all OECD countries (consisting of, most notably for our purposes, the United States and most of Europe) will have achieved an 80% emission reduction with respect to their 1990 levels of 15.1 Gton.
  2. Next, we postulate that the non-OECD countries have reached 40% reduction on their 2014 levels of 18.9 Gton of CO2 emissions. International trade CO2 emissions remain constant at 1.2 Gton.
  3. The overall reduction in yearly worldwide CO2 emissions in this case amount to a mere 55%.

The scenario, while simple and naïve, shows that even serious OECD efforts based on current production-based accounting are far from enabling to realise similar ambitions on a world scale. Moreover, the assumptions made are already generous from today’s perspective. Non-OECD countries have, in general, yet to define quantitative objectives at all, while a significant number of OECD members have not stated 80% emissions reduction as an objective. Furthermore, this is a very simple projection of the past and present onto the future, which does not take into account any extra efforts which might be required (due to non-linear climate dynamics) to mitigate global warming.

If the aim is to truly minimise GHG emissions and halt global warming, the UNFCC and individual countries should abandon production-based GHG accounting as a basis for policy making.

The commitment to mitigate global warming should be an motive that is stronger than the definitions of a model which assigns smaller responsibilities to those with greater action potential. By ratifying the UNFCC 1997 Kyoto protocol, all countries adhere to the same goal of reducing emissions; yet by the very definitions of the framework of the governing body (UNFCC), it is the producer who is solely responsible and accountable.

This all is not to say that consumption-based accounting should constitute the replacement for policy-based accounting – that amounts to simply assigning full responsibility to the other end of the spectrum, which does not do justice to the dialectical nature of this interaction. A fairer, and perhaps more effective method would be to construct a hybrid and cooperative model; a shared responsibility for a shared effort and interaction.

This hybrid model should constitute a well-defined balance between consumption- and production-based emission levels. A simple yet significant step could be made by defining this balance as the average of these two levels. In this way, no emissions need to be lost in statistics and accountability is shared more evenly. This average could perhaps be fine-tuned or weighted by several indicators which are deemed relevant, such as economic potential, infrastructure and geographic factors . Either way, it need not be complicated to construct a model which is vastly better.

The next convention of the UNFCC, the Conference of the Parties (COP) 23, will take place in Asia, at a location to be announced. It would be an excellent opportunity to, perhaps in Kyoto, revisit the eponymous protocol and provide a fairer framework to more effectively and collaboratively tackle a threat that affects all of us – producer and consumer, individually and collectively.


Emissions data from OECD and EC JRC

Rob Terwel is the editor/researcher at the Energy & Environment Policy Centre of the King’s Think Tank. 


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