John Barrett | The Role of Governments in Dealing with Consumption-Based Accounting

The Role of Governments in Dealing withConsumption-Based AccountingProf. John BarrettUniversity of LeedsNovember 25th ,2011

Question 1 – How do assessments of the UK’sGreenhouse Gas Emissions differ when measuredon a consumption rather than production basis? Source: ECC Consultation Document

Territorial and Consumption-based Emissions 1,300 1,200 1,100 1,000 CO2e (mt) Kyoto greenhouse gas basket 900 Full Territorial 800 Consumer 700 600 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: Wiedmann and Barrett (2011), Wiedmann et al (2010)

Question 2 - Is it possible to develop a robustmethodology for measuring emissions on aconsumption- rather than production-basedapproach to greenhouse gas emission accounting? Source: ECC Consultation Document

Robust Measurements ONS Environmental Accounts ("producer emissions") 850 UK Carbon Footprint ("consumer emissions") Emissions reported to UNFCCC (UK territorial emissions) 800 CO2 emissions (Mt CO2) 750 700 650 600 550 500 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year Total UK CO2 emissions from 1992 to 2004 according to different accounting principles et al (2010) Source: Lenzen (in megatonnes of CO2)

Robust Measurements Source: Lenzen et al, 2010

Question 3 - What are the benefits anddisadvantages associated with taking aconsumption-based rather than production basedapproach to greenhouse gas emissions accounting? Source: ECC Consultation Document

Drivers of CO2e Emissions 300000 200000 100000 Carbon Intensity Consumption Basket CO2e (000 tonnes) Final Demand 0 Production Structure 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Household Sizes Population -100000 Total -200000 -300000 Source: Baicohhi and Minx (2009)

Measure of Progress 1.20 1.00 0.80 Index where 1990 = 1 0.60 Territorial Emissions Consumption-Based Emissions 0.40 0.20 - 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: University of Leeds (unpublished)

Understanding Key Products 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% UK "Rest of World" Emissions UK Production Emissions Source: Barrett. Sakai and Owen, 2011

Policy Impact Source: Defra, 2009

Question 4 - Is there any evidence of industryrelocating from the UK to other countries as aresult of UK Climate Change policy? Source: ECC Consultation Document

Carbon LeakageStrong carbon leakage refers to an increase in global emissions due specifically toclimate policy (e.g., UK Climate Change policy).Weak carbon leakage refers to an increase in global emissions due to increasedconsumption (that is, no specific government policy is isolated as the causing factor). Source: Barrett et al, 2011

Scale of Traded Emissions - Steel UK China Japan Germany United Kingdom RussianUSA China USA FederationChina China 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share of domestic consumption by country of origin of steel Source: University of Leeds

Understanding Border Taxes Source: University of Leeds

Question 5 - Would it a) desirable and b) practicalfor the UK to adopt emissions reduction targets ona consumption rather than production basis? Source: ECC Consultation Document

Question 6 - What are the potential implications atthe international level of the UK adopting aconsumption-based rather than production basedapproach to greenhouse gas emissions accounting? Source: ECC Consultation Document

Question 7 - Are there any other issues relating toconsumption-based emissions reporting that youthink the Committee should be aware of? Source: ECC Consultation Document

Understanding the Future 1,400,000 1,200,000 1,000,000 Direct Households 800,000 Primary Sectors kt CO2e Energy 600,000 Transport Services 400,000 Goods 200,000 - 2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: Barrett and Scott, 2011

Understanding Policy Options595000575000 Continuing Trends Scenario EU ETS CCL and REO555000 Boiler - CERT Cavity Wall - CERT Glazing - CERT535000 Loft Insulation - CERT Cold appliances (with HRF) - CERT Lighting (with HRF) - CERT Raising product standards515000 Consumer electronics495000475000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Understanding Policy Options Source: McKinsey

John Barrett | The Role of Governments in Dealing with Consumption-Based Accounting

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