1. Consumption-based approaches in
climate policy
FORES
October 21, 2014
Glen Peters
Center for International Climate and Environmental Research – Oslo (CICERO)
Email: glen.peters@cicero.oslo.no Twitter: @Peters_Glen

2. FORES
THE MITIGATION CHALLENGE
21/10/2014

3. Observed Emissions and Emissions Scenarios
Data: CDIAC/GCP/IPCC/Fuss et al 2014
Over 1000 scenarios from the IPCC Fifth Assessment Report are shown
Source: Fuss et al 2014; CDIAC; Global Carbon Budget 2014

4. FORES
21/10/2014
A “typical” 2°C scenario?
• Rationale behaviour by all decision
makers, consumers and producers
• Immediate implementation of a global
carbon price in all countries (from 2010)
• Full availability of all technologies

5. FORES
21/10/2014
The Reality...
• Sunk costs by decision makers,
consumers, and producers
• Fragmented carbon pricing/policies
• Lack of availability of technologies

6. FORES
21/10/2014
The Reality...
• Sunk costs by decision makers,
consumers, and producers
• Fragmented carbon pricing/policies
• Can consumption-based accounting help?
• Lack of availability of technologies

7. FORES
21/10/2014
FRAGMENTED POLICIES

8. FORES
21/10/2014
Fragmented policy
• “Common but differentiated” leads to
fragmented policies
• Strong, weak, none
• Relevant in a global economy
• Carbon leakage
• Competiveness concerns

9. Top Fossil Fuel Emitters (Absolute)
The top four emitters in 2013 covered 58% of global emissions
China (28%), United States (14%), EU28 (10%), India (7%)
Bunkers fuel used for international transport is 3% of global emissions
Statistical differences between the global estimates and sum of national totals is 3% of global emissions
Source: CDIAC; Le Quéré et al 2014; Global Carbon Budget 2014

10. Consumption-based emissions (carbon
footprint)
Allocating emissions to the consumption of goods and services provides an
alternative perspective on emission drivers
Consumption-based emissions are calculated by adjusting the standard
production-based emissions to account for international trade
Source: Le Quéré et al 2014; Peters et al 2011;Global Carbon Project 2014

11. FORES
21/10/2014
CONSUMPTION-BASED
EMISSIONS

12. FORES
21/10/2014
Swedish emissions
100
50
0
-50
1990 1995 2000 2005 2010 2015
)
2
Emissions (MtCO
Consumption =
Production
– Exports
+ Imports
“Net transfer” =
Exports – Imports

13. FORES
21/10/2014
Swedish emissions
100
50
0
-50
1990 1995 2000 2005 2010 2015
)
2
Emissions (MtCO
Consumption:
New policy lever?
Imports:
“Carbon Leakage”
Production:
Sovereign control
Exports:
“Competitiveness
concerns”

14. FORES
21/10/2014
Consumption as a “driver”
1
10
2
10
10
3
10
4
10
1
10
2
10
3
10
4
=0.35
Food
10
1
10
2
10
3
10
4
10
1
10
2
10
3
10
4
=0.77
Clothing
Manufacturing and Industry
1
10
2
10
10
3
10
4
10
1
10
2
10
3
10
4
=0.79
1
10
Mobility services
2
10
10
3
10
4
10
1
10
2
10
3
10
4
=0.85
10
1
10
2
10
3
10
4
10
1
10
2
10
3
10
4
=0.23
Housing
1
10
2
10
10
3
10
4
10
1
10
2
10
3
10
4
=0.85
Infrastucture
1
10
Electricity, gas, water
2
10
10
3
10
4
10
1
10
2
10
3
10
4
=0.88
10
1
Services and retailing
10
2
10
3
10
4
10
1
10
2
10
3
10
4
=0.61
East Asia
South-East Asia and Oceania
South Asia
North America
South America
Europe
Russian Federation and former Soviet
Middle East and North Africa
Africa
Consumption (USD/capita)
-eq/capita)
2
Emissions (CO

15. FORES
21/10/2014
CONSUMPTION AS A
POLICY LEVER

16. Example consumption policies
FORES
21/10/2014
• Country level consumption cap, border
carbon adjustment
• Labelling (e.g., amount of CO2)
• Information (less meat, less flights, ...)
• Regulations (e.g., ban products)

17. FORES
21/10/2014
Assessing policies
• Top-down: Border Carbon Adjustment
• Remove exports
• Add imports
• Bottom-up: Behavioural economics
• Surveys
• Focus groups
• Laboratory experiments
• ...

18. FORES
21/10/2014
Effectiveness vs Fairness
• Consumption-based policies in a fragmented
regime are:
• More cost effective
• More environmentally effective
• But unfair
• Unfair:
• Developing countries have to reduce emissions
• Can be offset with financial transfers

19. FORES
21/10/2014
Implementation issues
• Uncertainty (country and sector level)
• Legal (WTO)
• Institutional (UNFCCC reporting)
• Feasibility (winners vs losers)

20. FORES
21/10/2014
Uncertainty

21. FORES
21/10/2014
POLICY IMPLICATIONS

22. FORES
21/10/2014
“Complementary” Policies
• Key lever: Territorial-based emissions
• Complementary policy levers
• (in a fragmented policy regime)
• Consumption accounting to track leakage
• Consumption analysis to identify drivers
• Consumption policies to respond
• Not only consumption...

23. FORES
21/10/2014
Alternate carbon policies
Extraction
Extractors collect tax revenue
In principle easy
Production/Territorial
Easy and status quo
Fragmentation, free riders,
carbon leakage
Consumption
Puts focus on key drivers
Complex (and uncertain)

24. FORES
21/10/2014
Thank you
folk.uio.no/glen
Twitter: @Peters_Glen

25. Top Fossil Fuel Emitters (Per Capita)
China’s per capita emissions have passed the EU28 and are 45% above the
global average
Per capita
emissions
in 2013
Source: CDIAC; Le Quéré et al 2014; Global Carbon Budget 2014

26. Consumption Emissions per the Kyoto Protocol
The net emissions transfers into Annex B countries more than offsets the Annex
B emission reductions achieved within the Kyoto Protocol
In Annex B, production-based emissions have had a slight decrease while consumption-based
emissions have grown at 0.5% per year, and emission transfers have grown at 11% per year
Source: CDIAC; Peters et al 2011; Le Quéré et al 2014; Global Carbon Budget 2014