Indonesia's contribution to global carbon flows: Which sectors are most responsible for the emissions embodied in trade?

Comment on “Consumption-based versus production-based accounting of CO2 emissions: Is there evidence for carbon leakage?”

A series of studies has recently used emissions embodied in net imports (EENI) to argue for the consumption‐based accounting (CBA) approach. These publications have been generating much attention from the media and academia for ‘providing an opportunity to inform effective climate policy’. However, policymakers must be cautious when considering if CBA can be used to replace or just to supplement current practice of production‐based accounting (PBA). Terms such as ‘carbon leakage’, ‘emissions transfers’, and ‘CO2 outsourcing’ have been uncritically overused as there is little evidence that EENI is the result of climate policy. Furthermore, CBA overlooks ‘insourcing’ of polluting industries by producing regions when blaming consumers for emissions. To avoid misinformation, EENI should be called just that. CBA's practicality is limited as it involves more data‐intensive calculations and higher transaction costs than PBA. The success of CBA will rely on consumers to put pressure on producers. Eventually, it is still producers that need to reduce emissions. PBA is more practical by directly placing pressure on producers along with environmental laws and regulations. CBA will be counter‐productive to global emissions control if producers increase emissions due to reduced responsibility over the emissions incurred by the production of their exports. However, CBA could be used to persuade consumers to choose low‐emissions products, support producers' sustainability efforts, and reduce nonbasic consumption. WIREs Clim Change 2015, 6:1–8. doi: 10.1002/wcc.325This article is categorized under: Climate Economics > Economics of Mitigation The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior

Analysis of provincial CO2 emission peaking in China: Insights from production and consumption

Consumption-based versus production-based accounting of CO2 emissions: Is there evidence for carbon leakage?

Low carbon cities in 2050? GHG emissions of European cities using production-based and consumption-based emission accounting methods

Implications of the consumption-based accounting for future national emissions budgets

To achieve carbon neutrality (i.e., net zero carbon emissions) by 2060, China must make significant changes in its socioeconomic systems, including appropriately allocating emissions responsibility. Traditional methods of delineating responsibilities (such as production-based and consumption-based accounting) can lead to double counting when applied simultaneously and therefore difficulty in determining responsibilities of different agents. An alternative approach based on economic welfare gains from environmental externalities has been refined, ensuring that the responsibilities of consumers and producers add up to the total emissions. The application of this approach to 48 countries and 31 Chinese provinces reveals that regions with less elastic supply and demand, such as Hebei in China and Russia, have higher responsibilities. Furthermore, larger externalities associated with unitary product value shift the burden of obligations from producers to consumers. Regions with high levels of wealth and carbon-intensive imports, such as Zhejiang and Guangdong in China, as well as the United States, typically have higher consumer-based accounting (CBA) emissions than production-based accounting (PBA) emissions and, as a result, redistributed responsibilities between PBA and CBA emissions. The new distribution results vary significantly from PBA or CBA emissions, indicating opportunities for more comprehensive and accessible policy goals.

In the literature on the attribution of responsibilities for greenhouse gas emissions, two accounting methods have been widely discussed: production-based accounting (PBA) and consumption-based accounting (CBA). It has been argued that an accounting framework for attributing responsibilities should credit actions contributing to reduce global emissions and should penalize actions increasing them. Neither PBA nor CBA satisfy this principle. Adapting classical Ricardian trade theory, we consider ex post measurement and propose a scheme for assigning credits and penalties. Their size is determined by how much CO2 emissions are saved globally due to trade. This leads to the emission responsibility allotment (ERA) for assigning responsibilities. We illustrate the differences between ERA and PBA and CBA by comparing their results for 41 countries and regions between 1995–2009. The Paris Agreement (COP21) proposed new market mechanisms; we argue that ERA is well suited to measure and evaluate their overall mitigation impact.

Searching appropriate system boundary for accounting India's emission inventory for the responsibility to reduce carbon emissions

Critical transmission sectors for CO2 emission mitigation in supply chains

Re-examining the realization of provincial carbon dioxide emission intensity reduction targets in China from a consumption-based accounting

This paper presents an integrated approach combining the optimization‐based frontier model with a global multiregional input–output (MRIO) analysis for food consumption in Europe. The weighted and conventional data envelopment analysis models are coupled with production and consumption‐based environmental and economic footprint data obtained from the environmental footprint explorer database. Eco‐efficiency assessment is carried out using multiple undesirable environmental outputs such as carbon emission, total energy consumption, land use, material use, water use, and one desirable economic output, which is the gross value‐added (GVA). This assessment indicates an efficiency level of each economic activity associated with its environmental impacts and policies are made as a result of the efficiency level to propose an equilibrium between economic development and environmental impacts. Finally, a sensitivity analysis of each parameter, variability analysis between weighted and non‐weighted models, and performance improvement projections are presented. Based on the results, four countries become efficient when moving from production‐based accounting (PBA) to consumption‐based accounting (CBA). France, United Kingdom, Italy, and Sweden are efficient countries in both findings. Denmark caused the highest carbon emission from the production point of view. Germany is the largest importer in all environmental categories such as carbon emission, energy usage, material use, land use, and water use. Additionally, the weight‐restricted model indicated a noticeable difference concerning the eco‐efficiency scores under the PBA and CBA approach, where land use and material footprint categories were found to be the most sensitive parameters for eco‐efficiency scores. The authors believe that this integrated approach will aid in decision‐making and help build a composite eco‐efficiency score when comparing the performance of food consumption with multiple environmental and economic metrics.

ABSTRACTExisting studies focus on either direct emissions of each province in China using production-based accounting (i.e. direct emitters) or emissions caused by the final consumption of each province using consumption-based accounting (i.e. final consumers), but overlook provinces whose final sales drive large amounts of upstream emissions (i.e. final producers). Improving the production efficiency of the latter can help to reduce national emissions. Here we use a final production-based accounting framework to identify critical final producers. Results show that the major final producers leading to China’s emissions are Hebei, Shandong, Jiangsu, Zhejiang, and Guangdong, which are the major manufacturing centers in China. China should encourage the production efficiency improvement of dominant firms in industries of these provinces. The final production-based accounting framework can also help to define and allocate emission responsibilities of Chinese provinces. It can complement production-based and consumption-based accounting frameworks to guide environmental policy-making in China.

Conjugation of border and domestic carbon adjustment and implications under production and consumption-based accounting of India's National Emission Inventory: A recursive dynamic CGE analysis

Allocation of carbon emission responsibility among Chinese cities guided by economic welfare gains: Case study based on multi-regional input-output analysis