Abstract
Internationally, allocation of responsibility for reducing greenhouse gas emissions is currently based on the production‐based (PB) accounting method, which measures emissions generated in the place where goods and services are produced. However, the growth of emissions embodied in trade has raised the question whether we should switch to, or amalgamate PB accounting, with other accounting approaches. Consumption‐based (CB) accounting has so far emerged as the most prominent alternative. This approach accounts for emissions at the point of consumption, attributing all the emissions that occurred in the course of production and distribution to the final consumers of goods and services. This review has a fourfold objective. First, it provides an account of the logic behind attributing responsibility for emissions on the basis of consumption instead of production. Issues of equity and justice, increased emissions coverage, encouragement of cleaner production practices, and political benefits are considered. Second, it discusses the counterarguments, focusing in particular on issues of technical complexity, mitigation effectiveness, and political acceptability. Third, it presents the spectrum of implementation possibilities—ranging from the status quo to more transformative options—and considers the implications for international climate policy that would accrue under various scenarios of adopting CB accounting in practice. Fourth, it looks at how CB accounting may be adjusted to fit with current political realities and it identifies policy mechanisms that could potentially be utilized to directly or indirectly address CB emissions. Such an approach could unlock new opportunities for climate policy innovation and for climate mitigation. WIREs Clim Change 2017, 8:e438. doi: 10.1002/wcc.438This article is categorized under: Climate Economics > Economics of Mitigation
Highlights
For nearly two decades, the international community has been struggling to find a strategy to allocate responsibility for reducing greenhouse gas (GHG) emissions
Using the United Kingdom (UK) as a case study, Barrett et al.[10] note that an equivalent volume of GHG emissions associated with goods and services to satisfy UK consumption were emitted outside the UK as those emitted inside its borders
The Kyoto Protocol’s Clean Development Mechanism (CDM) concept is totally compatible with a CB approach, given it was designed from the outset with the intention of developed countries assuming more responsibility than that defined by their territorial emissions.[11,31]
Summary
The international community has been struggling to find a strategy to allocate responsibility for reducing greenhouse gas (GHG) emissions. Under the 1997 Kyoto Protocol, developed countries agreed to take on legally binding emissions reduction targets for 2012, recognizing The main difference, between the PB and CB accounting approaches is that application of the latter would entail a state with an abatement policy to cede responsibility for emissions associated with its export production and accept responsibility for the ‘embodied’ or ‘virtual’ emissions of its imported goods and services.[6] To address these attributed emissions, net importers could strengthen emissions reductions within their territories, reduce the consumption levels of their residents, or contribute to mitigation efforts in foreign countries.
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