Understanding New Zealand’s consumption-based greenhouse gas emissions: an application of multi-regional input-output analysis

Abstract

Consumption- and production-based accounting approaches for national greenhouse gas (GHG) emissions provide different insights to support climate policymaking. However, no study has yet comprehensively assessed the consumption-based GHG emissions of the entire New Zealand’s economy. This research, for the first time, quantified New Zealand’s GHG emissions using both consumption- and production-based accounting approaches and considered the policy implications for adopting a consumption-based approach over a production-based approach. A global multi-regional input-output (MRIO) analysis was undertaken to calculate the consumption- and production-based GHG emissions of New Zealand for the year 2012. The MRIO analysis was based on the Eora database, which accounts for 14,839 industry sectors from 189 countries. Given the sectoral classification of each country is quite different and in order to ease interpretation of the results, the industry sectors of each country were classified and aggregated into 16 key sectors, and GHG emissions were calculated for those key sectors. The MRIO analysis showed that New Zealand’s consumption- and production-based GHG emissions in 2012 were 61,850 and 81,667 ktCO2eq, respectively, indicating that the country was a net exporter of GHG emissions in 2012. The dominant contributors to the consumption-based GHG emissions were the other services and construction key sectors (each representing 16% of consumption-based emissions), followed by food and beverages (14%), transport and equipment (12%) and financial and trade services (11%), whereas the dominant contributor to the production-based GHG emissions was the agriculture key sector (representing 52% of production-based GHG emissions). The results of the study provided two key insights to support climate mitigation activities and policymaking. First, the consumption- and production-based accounting approaches results have different rankings for the most dominant sectors contributing to New Zealand’s GHG emissions. Second, only the consumption-based accounting approach enables the quantification of the embodied emissions in New Zealand’s trade activities, and it indicated that a large proportion of GHG emissions are embodied in New Zealand’s trade activities. These insights, therefore, have important implications for future policies that could positively influence the consumption patterns of New Zealand citizens and the production structure and efficiency of New Zealand’s trade partners. This research quantified New Zealand’s GHG emissions using both consumption- and production-based accounting approaches. Given the two accounting approaches provided different insights, both approaches should be used in a complementary way when developing climate policies. However, implementation of a consumption-based accounting approach to support development and implementation of climate policies and instruments requires further consideration.