Consumption-based Accounting Research Articles

Erratum to: A justice and innovative way ahead of consumption-based emission accounting approach

Erratum to: A justice and innovative way ahead of consumption-based emission accounting approach

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

Ensuring equitable allocation of carbon emission responsibilities at the city level is crucial for effectively mitigating climate change. However, traditional allocation methods like production-based accounting (PBA) and consumption-based accounting (CBA) encounter double-counting problems at this scale. This study for the first time addressed the ignored externality of carbon emissions among bilateral trading partners at city scale, achieving equitable carbon emission responsibility reallocations using the economic welfare gain-based (EWG) method. Examining 313 cities in China using a multi-regional input-output model, the highest carbon emission responsibilities are identified in Baotou at 400.7 Mt., followed by Yunnan (189.9 Mt) and Dalian (166.7 Mt). In this case, the EWG method reallocates producer and consumer responsibilities in bilateral trades. Among the 313 cities, emission responsibilities from 198 are situated between PBA and CBA, avoiding one-sided assignment of emissions based solely on either principle. A comparative analysis of allocation methods in China further indicates a predominance of production responsibility, mirroring a similar trend between EWG and PBA; a significant portion of producer responsibilities are identified within EWG. The results of this work may offer a fairer and economically sound basis for allocating emission responsibilities among cities, thereby facilitating more effective emission reduction strategies.

Tracing Nitrogen Flows Associated with Beef Supply Chains: A Consumption-Based Assessment.

While highly connected food chains provide numerous benefits, they lack traceability and transparency. As such, understanding the spatial heterogeneity in their environmental burdens is critical for targeted interventions. This is especially important for nutrient-related impacts such as nitrogen since the release of reactive nitrogen has been linked to loss of biodiversity and decrease in water quality in different parts of the world. Animal feed production is heavily dependent on synthetic fertilizers, and the consumption of beef products, in particular, is associated with high nitrogen footprints. Although there is a rich body of work on nutrient footprints of beef production, there is a gap in understanding the spatial distribution of the nutrient releases throughout the beef supply chain in the U.S. We present an optimization-based framework to trace supply chain networks of beef products at the county level. Using publicly available data, we construct a weighted network of nutrient flows based on mass balance, including synthetic fertilizers, manure production, and crop uptake and residues. The results show that beef consumption in a county can be associated with nitrogen losses in hundreds of counties. One year worth of beef consumption in the United States released approximately 1.33 teragrams (Tg) of N to the environment, and most of it as diffuse pollution during the feed production phase. Analysis also revealed the huge disparity between consumption-based and production-based impacts of beef and the need for considering consumption-based accounting in discourse around the environmental sustainability of food systems.

A justice and innovative way ahead of consumption-based emission accounting approach

A justice and innovative way ahead of consumption-based emission accounting approach

Sustainable development goal 12 and its synergies with other SDGs: identification of key research contributions and policy insights

The relationships of SDG 12 (responsible consumption and production) with other sustainable development goals (SDGs), both direct and indirect, necessitate a systematic analysis to understand its pivotal role in achieving other SDGs. This work focuses on a threefold investigation through a scientometric framework. Initially, the study sought to map and analyze the naturally formed linkages between SDG 12 and other SDGs by examining the literature specifically devoted to SDG 12, thereby revealing the SDGs that are strongly linked to SDG 12. The subsequent phase of the investigation identified prominent topics related to SDG 12 that require detailed exploration. Finally, the selected topics are mined through a methodical approach termed flow vergence gradient analysis, allowing for the revelation of significant contributions within each topic. Through the analysis of the SDG linkage map, SDG 13 (climate action), SDG 7 (affordable and clean energy), SDG 11 (sustainable cities and communities), and SDG 15 (life on land), among others, were recognized as closely linked to SDG 12. Following this identification, five major topics—Industrial Symbiosis, Electronic waste, Carbon emissions, Life Cycle Assessment, and Green products—were deemed suitable for comprehensive mining to extract pivotal contributions. As policy recommendations, adopting a multifaceted approach to e-waste management and sustainable practices is imperative. Implementing consumption-based accounting (CBA) to achieve SDG 12 holistically will be useful. Businesses must align with circular economy principles, minimize hazardous materials, and adhere to low-emission, green supply chain practices. The emphasis is also on the need for proactive R&D collaboration with academia to meet SDG 12 targets, alongside engaging in community awareness through corporate social responsibility initiatives.

Decoupling with(out) outsourcing? Quantifying emissions embodied in BRI trade with implications for climate policy

We empirically examine the trade-related environmental impacts of the Belt and Road Initiative (BRI) using a novel technology-adjusted consumption-based accounting in addition to traditional accounting schemes and data from the Eora Global database from 1995 to 2015. We find that BRI trade accounted for 3-quarters (5.01 Gt) of global traded emissions in 2015. BRI countries account for 60%–75% of (non-BRI) developed-world consumption-based emissions. While developing (BRI) countries import 8%–42% of their consumption needs from China, they account for half of the China’s imported emissions. Our analysis reveals that technological adjustments in export sectors significantly alter the magnitude of outsourcing and emission responsibility assigned to both BRI and non-BRI countries. This leads to a notable shift in net trade balance emissions. We find that developed (BRI and non-BRI) countries have reduced emissions primarily through decoupling and outsourcing. Our findings demonstrate that BRI trade has diverse environmental effects; exports from more carbon-efficient (BRI and non-BRI) developed countries are likely to reduce (or avoid) emissions in developing (BRI) countries and vice versa. An important implication of these findings is that China’s BRI-led outsourcing and investments have the potential to yield significant environmental benefits by accelerating the transition to renewable energy in developing countries participating in the initiative.

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

Motivated by recent developments in global carbon policies, such as the carbon border adjustment mechanism (CBAM) in Europe and carbon pricing in Indonesia, this paper elaborates on CO2 emissions embodied in products entering and leaving Indonesia and identifies carbon-intensive sectors responsible for carbon leakage. This was performed by using global multi-regional input-output analysis and consumption-based accounting (CBA) - production-based accounting (PBA) ratio. In 2016, the annual CO2 emissions embodied in Indonesia's exports and imports were 114 and 95 Mt. CO2, respectively. Considering final demand only, these values reduce to 32 and 22 Mt. CO2 or 0.9 and 0.6 % of total CO2 emissions in global trade, respectively. The electrical and machinery sector makes up the most CO2 emissions in Indonesian exports. In terms of per USD, metal products and petroleum, chemical and non-metallic mineral products are among the most carbon-intensive sectors, thus likely to be affected by the CBAM policy. Furthermore, Indonesia's emissions under CBA were slightly lower than PBA, indicating that minor carbon leakage occurred in 2016, but this is subject to uncertainty. Assessing the relative CO2 emissions of various economic sectors is suitable for manufacturing goods whose processes are typically dominated by fossil combustion. However, this is not the case for the agriculture sector as its carbon footprint values are underestimated due to the exclusion of land use, land use change, and forestry emissions. Overall, our findings can serve as a baseline to further explore how a transition towards a low-carbon economy in Indonesia could improve global-trade carbon balances.

Tracing two decades of carbon emissions using a network approach

According to the guidelines of the Intergovernmental Panel on Climate Change, carbon emissions are attributed to the producers of goods and services. This approach has been challenged by recent literature, advocating an attribution criterion based on consumers, i.e. accounting for the carbon embedded into the goods imported by each country. Quantifying the effectiveness of such a consumption-based accounting requires understanding the complex structure of the graph induced by the flows of emissions between world countries. To this aim, we have considered a balanced panel of a hundred of countries and constructed the corresponding Carbon Trade Network for each of the past twenty years. Our analysis highlights the tendency of each country to behave either as a ‘net producer’—or ‘net exporter’—of emissions or as a ‘net consumer’—or ‘net importer’—of emissions; besides, it reveals the presence of an unexpected, positive feedback: despite individual exchanges having become less carbon-intensive, the increasing trade activity has ultimately risen the amount of emissions directed from ‘net exporters’ towards ‘net importers’. Adopting a consumption-aware accounting would re-distribute responsibility between these two groups, possibly reducing disparities.

Trade-Embedded GHG Emission Transfer between South Korea and the EU

Purpose - The purpose of this study is to examine the implications of the Carbon Border Adjustment Mechanism (CBAM) for the transfer of greenhouse gas emissions (GHGs) through bilateral trade between Korea and the EU. Therefore, this study points out CBAM’s observable adverse effects from a consumption-based accounting perspective and suggests the proportion of the CBAM levy that should be refunded to Korea’s carbon reduction technology development fund as a way to address this. Design/Methodology – This study uses a multi-regional input-output (MRIO) model to analyze the extent to which industry-specific GHGs are transferred to each other due to bilateral trade between Korea and the EU. Then, using the emissions embodied in the bilateral trade (EEBT) model, we calculate the CBAM levy in Korea and the amount of funds that should be returned to carbon reduction technology development as an example. Findings – Our results show that Korea is a net exporter of GHGs to the EU’s final demand, and that the EU’s consumption-based GHGs are about twice as large as Korea’s when calculating each other’s consumption-based GHGs based on the industries covered by CBAM. In addition, we calculate the intensity-based shared responsibility of Korea and the EU for emissions exported from Korea to the EU to calculate the proportion of the CBAM levy that Korea should refund, and show an example. Originality/value – This study, unlike the existing literature on consumption-based emissions, calculates the transfer of GHGs from bilateral trade between Korea and the EU from the perspective of consumption-based accounting and provides implications for CBAM. It also argues that using the EU’s CBAM revenues to develop carbon reduction technologies in countries exporting to the EU could be more effective in reducing GHGs. Additionally, it emphasizes the need for the international monitoring of the EU’s CBAM revenues to ensure fairness and transparency.

An interregional environmental assessment framework: revisiting environmental Kuznets curve in China.

Achieving the national emission reduction targets requires joint efforts of all jurisdictions, whose sustainable development is affected by complex economic and environmental interactions among regions. An interregional environmental assessment (IREA) framework is constructed for China using multiregional input-output techniques to unravel the carbon emission connections behind interregional economic activities. Then, consumption-based emission accounting is applied in sustainability assessment, in comparison with production-based environmental Kuznets curve (EKC) tests to examine the role of regional connections in shaping EKC. Empirical results expose significant asymmetric CO2 transfer among regions in China, where the Central and Western regions have become CO2 haven for the Eastern region. EKC is valid at the national level and manifests marked regional differences between production- and consumption-based curves. The pollution haven effect alters the EKC curve by expediting the emission peak in the developed Eastern region while delaying it in the developing Western region. Thus, revisiting EKCs in the IREA framework reveals that ignoring interregional connections would lead to misleading results. Only when both production- and consumption-based EKCs transcend their turning points can we claim that environmental governance has ushered in a new era of sustainable development.

Redefining virtual water allocation in China based on economic welfare gains from environmental externalities

As water scarcity intensifies worldwide, the equitable allocation of water resources has emerged as a critical challenge. This research investigates the intricate issue of allocating responsibility for virtual water, a concept that quantifies the water embedded in traded commodities. In pursuit of an effective allocation mechanism, we refine an innovative accounting scheme grounded in economic welfare gains arising from externalities. The results show that water-stressed areas in China, such as Xinjiang, significantly contribute to exporting virtual water and is responsible for 70%–85% of the virtual water outflow. Furthermore, more than 50% of virtual water imported from water-rich regions is attributed to these water-stressed areas while their trade partners bear the rest water responsibility. In contrast, southern China's abundant water resources reduce dependence on virtual water trade, leading to fewer responsibilities. Globally, the allocated responsibility for the new accounting mechanism reaches up to 7.5 times higher than for production-based accounting (PBA) and consumption-based accounting (CBA). Our study also reveals that the degree of dependency (price elasticities) plays a pivotal role in shaping the allocation outcomes. The implications of this research are significant for establishing a transparent and accountable framework for sustainable water resource management and facilitating seamless transitions toward sustainability. As global water scarcity intensifies, the redefined responsibility accounting according to the economic welfare is indispensable in addressing immediate and long-term water-related challenges.

The booming non-food bioeconomy drives large share of global land-use emissions

The non-food bioeconomy is widely recognized as a crucial strategy to address climate change. However, the growing non-food demand for biomass, such as bioenergy and bio-based products, is leading to global land use changes and consequent greenhouse gas emissions. In this study, a global region- and biomass-specific land-use emissions (LUE) inventory and the Food and Agricultural Biomass Input-Output Model (FABIO) were used to quantify the LUE embodied in global non-food biomass supply chains. The results revealed that in 2013, the LUE induced by non-food biomass demand accounted for over one-quarter of the global LUE, with wood as the dominant contributor (47%), followed by live animals (17%) and oil crops (13%). Additionally, over 876 million tons (Mt) of LUE were associated with international biomass trade for non-food use, mainly from tropical countries/regions (e.g., Brazil, Indonesia and Thailand) to large developing ones (Mainland China and India) and major developed ones (the USA, the EU27 and Japan). This underscores the need for consumption-based accounting of non-food biomass uses, including emissions from land use changes. Furthermore, demand-side measures such as enhancing transparency in international biomass supply chains, establishing monitoring and certification systems for certain bio-based commodities to track LUE, and fostering multi-stakeholder collaboration are crucial for effectively reducing LUE.

How robust are current narratives to deal with the urban energy-water-land nexus?

Current energy, water, and land (EWL) nexus research treats all resources equally, causing bias in complicated nexus studies. To make the analysis robust, we consider resource endowment and significance. Here, we provide a methodological framework where the urban industrial resource nexus strength is constructed and assign weights to resources according to policies, describing resource efficiency and representing it in ternary diagrams to assess the urban industrial nexus innovatively. Results showed that energy drives urban development under all weights, with energy resource efficiency exceeding 60%. From consumption-based accounting, energy continues to dominate most industries under physical weightings but emphasizes the significance of water and land. While, under economic weightings, land supplants energy's dominance in specific sectors. Setting weights helps understand resource interaction, establish synergy based on urban development objectives, and minimize robustness. Our findings provide quantitative evidence for assessing urban resource efficiency to highlight priority sectors for intervention in urban decision-making.

Territorial and Consumption-Based Greenhouse Gas Emissions Assessments: Implications for Spatial Planning Policies

The quantification of greenhouse gas (GHG) emissions is increasingly important in spatial planning for regions, cities, and areas. The combination of territorial and consumption-based accounting (CBA) approaches can currently be considered best practice for calculating GHG emissions at sub-national levels, in terms of informing local decision-making about the different climate impacts of spatial planning policies, both within the boundaries of a given region and for the inhabitants of that region. This study introduces four European case studies that were conducted using the two quantification approaches to assess the climate impacts of locally relevant planning policies. The case studies represent different scales of spatial planning, different European planning systems, and different situations in terms of data availability. Territorial results are not suitable for inter-regional comparison, but rather for internal monitoring, while CBA allows for comparison and provides a comprehensive picture of the global carbon footprint of residents, however, with indications that are more difficult to link to spatial planning decisions. Assessing impacts, and in particular interpreting results, requires both methodological understanding and knowledge of the local context. The results of the case studies show that setting climate targets and monitoring the success of climate action through a single net emissions figure can give false indications. The study shows that the two approaches to quantifying GHG emissions provide complementary perspectives on GHG emissions at the sub-national level and thus provide a more thorough understanding of the GHG emission patterns associated with spatial planning policies. The identification of the regional differences in GHG emission sources and mitigation potentials are the main functions of sub-national GHG inventories and the impact assessment for spatial planning. Harmonization of the data collection for sub-national GHG inventories and the transparency of underlying assumptions would greatly support the coherence of climate action and the implications to spatial planning.

Allocating China's CO2 Emissions Based on Economic Welfare Gains from Environmental Externalities.

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.

Emissions intensity comparisons and consumption-based CO2 accounting of transportation services

Emissions intensity comparisons and consumption-based CO2 accounting of transportation services

Low-Carbon Lifestyles beyond Decarbonisation: Toward a More Creative Use of the Carbon Footprinting Method

There is a growing recognition of the urgent need to change citizens’ lifestyles to realise decarbonised societies. Consumption-based accounting (carbon footprinting) is a helpful indicator for measuring the impacts of peoples’ consumption on climate change by capturing both direct and embedded carbon emissions. However, while carbon footprinting can propose impactful behaviour changes to reduce carbon footprints immediately, it may deflect people’s attention from the much needed but time-consuming efforts to reshape the “systems of provisions” to enable decarbonised living. To propose a more constructive application of carbon footprinting, the paper examines the three cases of using carbon footprinting derived from the 1.5-degree lifestyles project, including citizens’ discussions and experiments in six cities in 2020 and 2021, citizens’ workshops contributing to the local policy development in 2022, and lectures and mini-workshops since 2020. Based on the examination of the cases, the article argues the broader purposes of using scientific data in citizens’ engagement in climate actions, namely to help deepen understanding of the systemic causes of the incumbent carbon-intensive society, to guide discussions on the desired conditional changes to support lifestyles shifts, and to help identify possible risks or negative consequences of changes to specific groups in society. These benefits contribute to developing relevant stakeholders’ essential capacities to promote changes at the individual, collective and public levels toward decarbonised societies.

Beyond production and consumption: using throughflows to untangle the virtual trade of externalities

Understanding how countries contribute to the generation of externalities globally is important for designing sustainable policies aimed at reducing negative externalities such as carbon emissions. Commonly used approaches focus on either producers or consumers, thereby neglecting the role of intermediates. We here introduce the concept of throughflow to comprehensively quantify upstream externalities generated by the supply chains originating from, passing through or ending in a given country. We define the Throughflow Based Accounting (TBA) framework as the decomposition of the throughflow into local, imported, exported and traversing externalities. We illustrate the strength of the TBA by identifying the CO2 emissions caused by supply chains involving the German economy. We show that Germany could use its position in global value chains to help reduce two times more CO2 emissions than measured with usual production- or consumption-based accounting frameworks.

Worsening Carbon Inequality Embodied in Trade within China.

The mismatch between trade-embodied economic benefits and CO2 emissions causes carbon inequality, which is seldom analyzed from the intracountry level, especially across a long-term period. This study applied an environmentally extended multiregional input-output model to trace this mismatch and measure the carbon inequality quantitatively within China during 2007-2017. The results show that during the past decade, China's national carbon inequality was continuously worsening with carbon Gini coefficients rising regardless of production- (0.21-0.30) or consumption-based (0.12-0.18) accounting. The regional carbon inequality was deteriorating, where less developed provinces with 20% of total value-added emitted 32.9% of total CO2 emissions in 2007, while this figure rose to 42.6% in 2017. The eastern provinces (Jiangsu and Shanghai) had entered into net economic and carbon beneficiaries keeping high trade advantages, by contrast the northwest provinces (Ningxia and Xinjiang) were trapped in a lose-lose situation with trade benefits declining by 68%. The southwest provinces (Yunnan and Guangxi) shifted from being net carbon and value-added exporters to net importers, stepping into the earlier development mode of eastern provinces. This hidden and exacerbated carbon inequality calls for regional-specific measures to avoid the dilemma of economic development and CO2 mitigation, which also gives a good reminder for the rising economies, like India.

From Geospatial to Temporal Separation: A Review on Carbon Accounting Endogenizing Fixed Capital

A scientific and systematic approach that provides accurate carbon accounting is a fundamental prerequisite for responding to the climate crisis. The carbon accounting system has evolved from production-based accounting measuring territorial emissions to consumption-based accounting, gradually covering spatial and temporal separation. Its scientificity is thus enhanced. The temporal separation (between past production and current consumption) from fixed capital has become of recent interest, but a panoramic overview still rarely exists because of longstanding neglect. Combining quantitative analysis with a literature review, this study systematically analyzed the historical development and current state of carbon accounting, especially on studies endogenizing fixed capital, to locate hotspots and predict future trends. The current studies with fixed capital endogenization mainly use a flow matrix and augmented method to analyze the total and structure and the difference with traditional results, which are still in the initial rise stage; however, the process analysis and influence factor identification are insufficient. Therefore, this study proposes future avenues for analyzing the entire process of spatial and temporal carbon transfer based on a metabolic perspective and considering the initial input factors to identify the key drivers, which will provide new ideas and perspectives for policy formulation.