Counting carbon or cooking the books?

9th December 2011


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Figures showing the UK's greenhouse-gas emissions have been falling since 1990 don't tell the whole story, argues John Barwise

Greenhouse-gas (GHG) emissions in the UK are falling and the country is on track to meet its Kyoto protocol commitment target to reduce emissions by 12% by 2012 against 1990 base levels. Emissions from most other signatories to the protocol – Annex B or developed countries – are also falling.

Despite these “achievements” there is growing evidence that global emissions generated by goods consumed in the UK and elsewhere are rising and could cancel out all the gains achieved under the protocol.

The significance of embedded carbon in traded consumer goods is well documented but there are no binding agreements to tackle the problem. In the UK, the Energy and Climate Change Committee (ECCC) has now launched an inquiry to investigate the case for including consumption-based emissions in the reporting of GHG emissions (see panel below).

It’s consumption, stupid

Total GHG emissions across the EU were 17.4% below the 1990 base level under the protocol in 2009, representing a net reduction of 974 million tonnes of CO2 equivalent (mtCO2e).

The generally warmer winters over the past decade have played a part in recent years, but credit must also go to the implementation of the EU emissions trading scheme (ETS) improvements in energy efficiency and the continued growth in renewable energy, which has doubled in recent years. Perhaps unsurprisingly, the biggest fall over the past few years was the 355 mtCO2e reduction that occurred during the 2008–09 recession, when the demand for goods, services and energy fell dramatically.

But despite the fall in GHG emissions in EU countries and other Annex B countries signed up to legally binding emission-reduction commitments, global emissions hit record levels in 2010 and are rising faster than the worst-case scenarios outlined by the Intergovernmental Panel on Climate Change in 2007.

Data released by the US Department of Energy show that the increased rate of CO2 releases in 2010 was the highest ever recorded, with global emissions rising by 6% in one year.

One reason for the apparent anomaly is that Annex B signatories to the protocol are required to account only for territorial production-based emissions.

Imported goods and services are not included in these inventories and it is the shift of production from developed countries to developing ones not covered by international agreements, coupled with the growth in consumer goods, that is responsible for a large proportion of the continued rise in global GHG emissions.

Emissions from China, now regarded as the factory of the world, increased by 10.4% in 2010 and are forecast to exceed one billion tonnes by 2020. Brazil, another fast-developing country, reported a 12% rise in GHG emissions, while emissions from South Korea went up by 9%.

By contrast, US emissions increased by 1.4% and UK emissions by 2.8%. The share of emissions from the developing world has increased from 29% in 1990 to 43% in 2010.

Data from the International Energy Agency reveal that CO2 emissions were 5.3% higher in 2010 than 2009, reaching a record 30.4 gigatonne (Gt), fuelled by rising demand for coal in China and India.

Recent studies published in the Proceedings of the National Academy of Sciences (PNAS) trace the GHG pathways between developed and developing countries.

According to Glen Peters and his colleagues, emissions from traded goods and services have increased from 4.3Gt of CO2 in 1990 (20% of global emissions) to 7.8Gt CO2 in 2008 (26%). Net transfers of trade emissions from developing to developed countries have quadrupled from 0.4Gt CO2 to 1.6Gt CO2 over the same period (see panel below).

In a further PNAS report looking specifically at the comparison between production- and consumption-based CO2 emissions, Steven Davis and Ken Caldeira estimate that in 2004, about 23% (6.2Gt) of global CO2 emissions from burning fossil fuel were traded, primarily as embedded CO2, in exports from China and other emerging markets to consumers in developed countries (see top panel). In some countries, including the UK, more than 30% of consumption-based emissions were imported.

The net result of these territorial shifts is that while GHG emissions in Annex B countries have largely stabilised, emissions in developing countries (non-Annex B countries) have doubled.

Developed countries are effectively externalising a high proportion of their GHG emissions by importing more products from developing countries. When taken together, Peters and his colleagues conclude that most developed countries have increased their consumption-based emissions faster than their territorial emissions.

The UK position

The situation in the UK reflects the global trend. A recent briefing paper published by the UK Energy Research Centre (UKERC) points out that, although the UK has met its obligations under the Kyoto protocol, averaging around a 1% fall in GHG emissions each year between 1990 and 2009, it has achieved this largely by outsourcing production, with additional reductions achieved through energy efficiency and emissions trading.

The UK is a net importer of goods and increasingly relies on imported consumer products to meet growing consumer demand. The proportion of territorial- or production-based emissions compared with imported emissions has changed dramatically in recent years. In 1992, 64% of the GHG emissions associated with goods and services were produced in the UK. By 2001, GHG emissions embedded in imports exceeded those from domestic production.

Imports now dominate most product categories, with the exception of direct household emissions. Research carried out by UKERC at the University of Leeds shows that GHG emissions embedded in imported goods doubled between 1990 and 2009 (see panel below).

The research further reveals that international shipping and aviation, which are excluded from the protocol, also add to the total embedded GHG emissions in imported goods of all the Annex B countries.

The UK’s entire carbon budget programme to 2050, established under the Climate Change Act 2008, is centred on production-based emissions in the UK. The budgets work in much the same way as the Kyoto protocol: emissions embedded in imported goods are not included in the figures.

According to the Carbon Trust, around 25% of GHG emissions are embedded in goods and services that flow between the country of production and the country of consumption. It reports that in 2004, nearly 130mtCO2e of emissions associated with imports into the UK occurred in countries with no binding emissions reduction targets.

A 2007 study, reported that the GHG emissions trade deficit had increased six-fold from 110mtCO2e in 1990 to 620mtCO2e in 2006. Overall, it suggested a 19% increase in UK GHG emissions between 1990 and 2003.

Most major developed countries are net importers of embodied carbon emissions, but the UK is one of the worst, as John Barrett, a leading GHG academic and professor of sustainability research at the University of Leeds, explains: “Out of the 10 largest GHG global emitters, the UK has the largest gap between its consumption and territorial emissions, meaning urgent attention is required to explore the policy options available to the UK government to reduce emissions embedded in imports.”

UK consumption emissions are typically 34% higher than production emissions. Even if the UK does meet all its GHG emission-reduction targets for each of the carbon budgets, which would see carbon emissions fall by 80% by 2050, its net contribution to global GHG is likely to continue rising.

Parliamentary investigation

The House of Commons Energy and Climate Change Committee (ECCC) has launched its investigation into whether there is a case for consumption-based greenhouse-gas (GHG) emissions reporting in the UK.

Introducing the inquiry, the committee explained that, while UK emissions have decreased since 1990, the production-based approach only accounts for emissions produced physically in a particular territory and fails to take account of imported goods. It will consider whether it is feasible to adopt a consumption-based reporting regime with reduction targets.

In its response to the ECCC request for evidence, the UK Energy Research Centre proposed three steps the UK government could consider in pursuing a move towards consumption-based emissions reporting.

These are: establishing standards for the harmonisation of consumption-based emission-reporting methods to ensure robustness and consistency between country estimates; commission a report to assess all the UK demand-side strategies that aim to influence quantities or patterns of consumption contributing to emission reduction, both in and outside the country; and an assessment of the cost-effectiveness of demand-side strategies to understand whether they are revenue-generating or a cost.

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