Policy Brief 3: Consumption-based Accounting and Policies: The Future of Consumption-based Carbon Accounting Systems

  • Since the early 1990s global trade has doubled, with a corresponding increase in emissions embodied in trade. This has large implications for the accounting of carbon emissions. Standard accounting of emissions counts the “territorial” or “production based” emissions that occur within a country, whilst there has been discussion about the need for “consumption based” carbon accounting (CBCA) that counts the emissions required to produce the goods and services consumed in a country. In addition, the use of quality of life indicators as a measure of development implies that we need to decouple our emissions from the goods and services underpinning our consumption and lifestyles. If Europe and other developed nations are serious in decoupling their lifestyles from global emissions, there is a clear case for accounting emissions on the consumption basis.

    There are a number of databases suitable for calculating consumption based carbon. However, accounting practices are not uniform, thus leading to the inconsistency among databases, which then undermines trust in the use of results for policy formation. However, whilst consumption based accounts may be seen to be less robust than standard UNFCCC inventories of territorial emissions, at least at the national level a number of studies have shown that uncertainty is not an unsurmountable obstacle. Some level of disagreement between results is also common for production based accounts.

    In addition, CBCA can be seen to be policy relevant, whilst not policy prescriptive. It can give a key macro-level indication about the carbon intensity of an economy relative to baselines and targets. Such reporting of emission accounts can further underline the need for multi-lateral action, and for the increased responsibility needed to be shouldered by economies with growing net-import of emissions.

    Governments may want to establish a statistically acceptable method of arriving at CBCA that is consistent over a relevant temporal scale. The choice of model or approach will matter less than the need for consistent reporting. By establishing a statistically and politically acceptable CBCA at the national level, it is hoped that governments begin to set non-binding, or even binding, targets on emissions reduction for the consumption side at the same percentage level as those for current nationally determined contributions.

  • Last update: 27 February 2017
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