Astrid Kander and coauthors at Lund and the University of New South Wales have a paper in Nature Climate Change that proposes a new way to account for embodied carbon in trade that improves on existing measures of consumption based emissions. The collaboration with UNSW was sparked when Astrid gave a presentation at Crawford School in 2012 on the topic, which was attended by Tommy Wiedmann who was then at CSIRO but moved soon after to UNSW. Astrid was visiting ANU to work on our ARC project.
The most common way to compute carbon emissions is based simply on where the emissions are produced. These are called production based emissions (PBA). It is often argued though that this approach overly penalizes countries that export emissions intensive goods and makes countries that import these goods look like their emissions are low when they benefit from emissions intensive production elsewhere. Consumption based emissions (CBA) count all the emissions produced by a country's consumption wherever in the world the goods consumed were produced. Usually, developed countries look more carbon intensive and developing countries less carbon intensive on this basis than when using production based emissions. The following Figure from Kander et al. shows that in the European Union and the USA consumption based emissions exceed production based emissions and vice-versa in China:
But if developed countries tried to produce all their imported goods at home, it is likely that their production techniques would be less emissions intensive than those in the countries that they are importing from. So, consumption based emissions accounting gives a biased view of how much developed countries have managed to reduce emissions by offshoring production. Also, if consumption based emissions were used to apportion world responsibility for reducing emissions the only strategy an importer would have to reduce emissions accounted this way is to stop importing and produce domestically which might not be economically efficient, while the exporter has no incentive to cut these emissions.
However, accounting for emissions embodied in imports based on how much carbon would be emitted if they were produced in the importing country will underestimate total global emissions and so if we want a system of apportioning emissions fairly and usefully for global climate policy purposes it is not so useful.
Kander et al.'s approach deals with the incentive issue. They measure embodied emissions in imports in the same way as conventional CBA. However, they account for exports using the world average emissions intensity for the given good to deduct emissions from exporters instead of deducting the actual emissions produced. This reduces the emissions total for exporters who produce in a low emissions intensive way and increase the emissions of emissions intensive exporters compared to CBA. These technology adjusted consumption based (TCBA) emissions do sum to world total emissions. All exporters now have an incentive to reduce their exports emissions intensity if they were held responsible for their TCBA emissions. The resulting TCBA per capita emissions are shown in the map below and the graphs above.
On this basis emissions per capita in Europe are even less than production based emissions while in the USA they are similar to consumption based emissions. Australia also doesn't look too good on the map. On the other hand, in China TCBA emissions are intermediate between CBA and PBA emissions. The strong performance of Europe is because they have lower than average emissions intensity for the products they export. The latter means that world average emissions for those products is deducted from Europe's balance but their actual emissions for producing those products is lower than that.
The biggest "winners" are Austria, Ireland, and Belgium, which look much more emissions intensive under CBA than under PBA but much less emissions intensive under TCBA.
Astrid discusses the rationale for their approach further in this news article.
The most common way to compute carbon emissions is based simply on where the emissions are produced. These are called production based emissions (PBA). It is often argued though that this approach overly penalizes countries that export emissions intensive goods and makes countries that import these goods look like their emissions are low when they benefit from emissions intensive production elsewhere. Consumption based emissions (CBA) count all the emissions produced by a country's consumption wherever in the world the goods consumed were produced. Usually, developed countries look more carbon intensive and developing countries less carbon intensive on this basis than when using production based emissions. The following Figure from Kander et al. shows that in the European Union and the USA consumption based emissions exceed production based emissions and vice-versa in China:
But if developed countries tried to produce all their imported goods at home, it is likely that their production techniques would be less emissions intensive than those in the countries that they are importing from. So, consumption based emissions accounting gives a biased view of how much developed countries have managed to reduce emissions by offshoring production. Also, if consumption based emissions were used to apportion world responsibility for reducing emissions the only strategy an importer would have to reduce emissions accounted this way is to stop importing and produce domestically which might not be economically efficient, while the exporter has no incentive to cut these emissions.
However, accounting for emissions embodied in imports based on how much carbon would be emitted if they were produced in the importing country will underestimate total global emissions and so if we want a system of apportioning emissions fairly and usefully for global climate policy purposes it is not so useful.
Kander et al.'s approach deals with the incentive issue. They measure embodied emissions in imports in the same way as conventional CBA. However, they account for exports using the world average emissions intensity for the given good to deduct emissions from exporters instead of deducting the actual emissions produced. This reduces the emissions total for exporters who produce in a low emissions intensive way and increase the emissions of emissions intensive exporters compared to CBA. These technology adjusted consumption based (TCBA) emissions do sum to world total emissions. All exporters now have an incentive to reduce their exports emissions intensity if they were held responsible for their TCBA emissions. The resulting TCBA per capita emissions are shown in the map below and the graphs above.
The biggest "winners" are Austria, Ireland, and Belgium, which look much more emissions intensive under CBA than under PBA but much less emissions intensive under TCBA.
Astrid discusses the rationale for their approach further in this news article.
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