Consumption-based Accounting Research Articles

Tracking the carbon emissions of Denmark's five regions from a producer and consumer perspective

This paper presents a calculation of Denmark's production and consumption-based accounting CO2e emissions for five regions in 2011. We apply an environmentally extended economic model for Danish municipalities known as the Local “INterregional” Economic (LINE) model, together with a multi-regional input-output model for the world economy (EXIOBASE v3.4). We find that Denmark's Capital region accounts for 41% (28 MtCO2e) and 31% (27 MtCO2e) of Denmark's production and consumption-based emissions respectively. By disaggregating regional emissions into industry and product categories, we provide relevant information to producers and consumers in each region concerning areas where the most significant differences towards reducing their carbon footprint can be realised. Mobility, services, food and shelter were the main drivers of emissions in all Danish regions. The Central, North and South Denmark accounted for more than half (9.56 MtCO2e) of Denmark's food production emissions. The Capital region was the largest source of emissions (3.79 MtCO2e) related to food consumption. We suggest that dietary changes towards less red meat and dairy products can potentially reduce regional food-related emissions of Danish households. Our results indicate that modest changes in consumer lifestyles are pivotal for local climate mitigation policies, especially in Denmark's biggest cities, Copenhagen, Århus, Aalborg and Odense.

Implications of Low Carbon City Sustainability Strategies for 2050

Cities and urban areas are critical nodes of societal resource flows, responsible for both global and local sustainability implications. They are complex systems and understanding the implications of potential actions by cities is critical for progress towards sustainability. In this paper the future implications of sustainability strategies are assessed for 10 European cities by comparing two scenarios for 2050: a business-as-usual (BAU) and a post-carbon/sustainability scenario (PC2050) (generated by city stakeholders). The effects of the scenarios are assessed using a mixed methodology: a semi-quantitative sustainability indicator analysis, energy and greenhouse gas (GHG) emissions (both production-based and consumption-based accounting (PBA and CBA)), land-use spatial modelling, and cost–benefit analysis. The paper highlights the clear benefits of PC2050 with improved sustainability indicator results, reduced land sprawl (which averages 16% in BAU) and positive cost–benefit results. Nonetheless, inequality and segregation are a common concern. In addition, whilst PBA indicates a significant decrease (average decrease from 4.7 to 1.3 tCO2eq per capita) CBA demonstrates rising overall emissions from an average of 11 to 14.8 tCO2eq per capita. This is linked to rising affluence and consumption trends despite local improvements in GHG emissions, which highlights a need for cities to address consumption-based emissions.

Carbon metrics for cities: production and consumption implications for policies

The estimated cities’ contribution to climate change varies depending on the methods chosen by a given city for compiling its greenhouse gas (GHG) emission inventory. This study provides an interpretative synthesis of existing research to explore the differences of three emerging approaches to city-level GHG emissions accounting, based on methodological dimensions: boundary-setting, the categorisation of emissions and the type of emissions. The policy relevance and implications of selecting different system boundaries are explored: each approach can reveal important information which the others fail to identify. This suggests the value of using different and complementary approaches to address as many policy questions and relevant actors possible in climate action planning. Next, key methodological considerations that arise in target-setting approaches involving bringing the emissions balance to zero are presented. An analysis of actual ‘net-zero emission’ concepts used by eight cities reveals that their precise meaning and applicability remain ambiguous. Finally, to improve both the transparency about such metrics and their usability for policy and decision-making, this paper synthesises all key considerations occurring from the analysis of inventorying approaches and net-zero targets into a reporting and communication framework. Policy relevance Many cities are assuming responsibility for measures to mitigate climate change, but they need greater clarity on ‘climate neutral’ or ‘net-zero’ approaches. Each city’s intended purpose needs careful alignment with a choice of methods. The diverse accounting and target-setting landscape and the associated policy implications are elucidated. This can empower more cities to select appropriate methods and set ambitious targets. Calculation of a GHG emission balance is a means to an end and not the end itself. Its purpose is to show the options for action and measure success. Non-transparent methods involve reputational and ethical risks for city governments. A framework to improve transparency is presented. Dual-accounting approaches involving both production and consumption are now the new trend. Individual actors must be able to identify their influence and potential action scope for mitigating climate change. Agreement is needed on how to approach consumption-based accounting and create more city-specific data.

Fighting carbon leakage through consumption-based carbon emissions policies: Empirical analysis based on the World Trade Model with Bilateral Trades

Policy initiatives towards reduction of CO2 emissions implemented so far are grounded on the so-called Production-Based paradigm: this approach allocates responsibility of emissions to countries that directly caused such emissions, without taking into account all the indirect contributions to CO2 emissions caused outside country’s borders, eventually leading to the so-called carbon leakage phenomenon. In this paper, the alternative Consumption-Based approach is proposed, and its effectiveness assessed: according to this approach, policy initiatives allocates responsibility for CO2 emissions proportionally to the CO2 emissions embedded in goods and services required by industries as inputs for production. Global environmental and economic consequences of carbon emissions reduction policies, applied at the European level based on both Production- and Consumption-Based paradigms, are comparatively assessed based on the World Trade Model with Bilateral Trades. Results of this study suggest that defining CO2 emissions policies based on a Consumption-Based paradigm seems to be the most effective way to reduce the global carbon emissions, avoiding the carbon leakage phenomenon which may occur in economies regulated by Production-Based policies. Indeed, an imposed reduction in CO2 emissions embedded in EU final demand through a Consumption-Based Accounting policy would result in a global CO2 emissions reduction up to almost 1.2 Gton. On the other hand, an imposed reduction in direct EU CO2 emissions according to a PBA approach would result in an overall increase in global carbon emissions up to almost 0.8 Gton.

Production Globalization Makes China’s Exports Cleaner

Summary Production globalization, which is when firms expand their supply chains across national boundaries, creates an opportunity for developing countries to engage in international production networks via trade. Described as the world's factory, China specializes in assembly manufacturing mainly through processing exports. Firms use imported intermediate inputs for production and, after processing or assembly, re-export the finished products to international markets. Here, we show that the carbon efficiency of China’s processing exports is greater than that of its ordinary exports. If the impact of trade heterogeneity is ignored, then the domestic emissions embodied in China’s exports will be overestimated by 23.4%, and the foreign emissions embodied in China’s exports will be underestimated by 29.3%. If the degree of global value chain participation, which ranges from 0 to 1, increases by 0.1, although foreign emissions embodied in China’s exports would increase, the gross carbon intensity of China’s exports will decrease by 11.7%.

Decoupling or Upstream Dispersion of CO2 Emissions? A Subsystem Analysis of Global High-Skilled Service Sectors for the Years 1995 to 2009

I study global CO2 emissions of the service sector with a high share of college-educated workers within an Input-Output Subsystem Analysis for the years 1995-2009. While the share of production-based emissions of high-skilled service sectors is rather small, a footprint analysis reveals that the emission share of those sectors is considerably higher by using consumption-based accounting (about 17.7% of total emissions). The subsystem analysis offers a closer look on the origins of carbon intensive goods, necessary to meet consumption in high-skilled service sectors, by disentangling the supply chain in various channels. I find that the emissions embodied in intermediate inputs from the electricity sector are the most important component of the CO2 footprint in those branches. A structural decomposition analysis (SDA) is conducted in order to obtain major drivers of changes in emissions of input factors. The increasing global demand of such services is the main driver of emission growth in those sectors. Interestingly, also the structure of intermediate inputs plays an important role for an increasing footprint.

Towards a more effective climate policy on international trade

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.

The influence of the global electric power system on terrestrial biodiversity

Given its total contribution to greenhouse gas emissions, the global electric power sector will be required to undergo a fundamental transformation over the next decades to limit anthropogenic climate change to below 2 °C. Implications for biodiversity of projected structural changes in the global electric power sector are rarely considered beyond those explicitly linked to climate change. This study uses a spatially explicit consumption-based accounting framework to examine the impact of demand for electric power on terrestrial vertebrate biodiversity globally. We demonstrate that the biodiversity footprint of the electric power sector is primarily within the territory where final demand for electric power resides, although there are substantial regional differences, with Europe displacing its biodiversity threat along international supply chains. The relationship between size of individual components of the electric power sector and threat to biodiversity indicates that a shift to nonfossil sources, such as solar and wind, could reduce pressures on biodiversity both within the territory where demand for power resides and along international supply chains. However, given the current levels of deployment of nonfossil sources of power, there is considerable uncertainty as to how the impacts of structural changes in the global electric power system will scale. Given the strong territorial link between demand and associated biodiversity impacts, development of strong national governance around the electric power sector represents a clear route to mitigate threats to biodiversity associated with efforts to decarbonize society over the coming century.

Urban carbon footprints: a consumption-based approach for Swiss households

Greenhouse gas (GHG) emission inventories form the basis of evidence-based climate change planning across the local, regional, national, and international levels. In this letter, we present a consumption-based GHG accounting approach for estimating the carbon footprint (CF) comprising direct and indirect emissions of households in Switzerland for 2008, 2011, and 2014 and examine the impact of urbanity and socioeconomic variables on these estimates. The CF model used herein couples regionalized household budget surveys (HBS) with environmentally-extended input-output analysis (EEIOA). We provide greater insight into the obscure process of combining bottom-up consumption data (i.e., HBS) and top-down input-output tables (IOT) in a CF model. The findings show that urban households tend to have lower direct emissions than rural households whereas indirect emissions are higher. Therefore, the nature of both direct and indirect emissions should be considered when evaluating the role of urbanization, as each has a different focus. Overall, our results indicate that income is the most important driver of household total cf Some local features specific to Switzerland have also been found to be important in shaping the relationship between the household CF and its drivers. We argue that household composition should be the focal point for future study of CF mitigation in Switzerland, and that policies should prioritise measures that target consumer behaviour and lifestyles, rather than solely focus on improving physical infrastructure and adopting new technologies.

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

The role of cities and their stakeholders in creating a sustainable low carbon society is becoming increasingly critical. Cities and their supply chains are responsible for almost 80% of the global energy consumption and over 60% of greenhouse gas emissions (GHG). It is expected that 70% of the global population will be living in urban areas by 2050. However, in general cities still quantify and report only their production-based GHG emissions and fail to account for their supply chains. There has been much less focus on the GHG emissions associated with consumption in cities, including household and government consumption.This paper compares the production-based GHG accounting method with the consumption-based method for ten European cities. This is performed for a base year (2010) and two divergent future scenarios for 2050, a business-as-usual (BAU) scenario and a post carbon (PC 2050) scenario. The PC2050 scenario was created by city stakeholders in the framework of the European research project POCACITO in (2014–2016). Consumption-based emissions are calculated using the EXIOBASE multi-regional input-output model.Compared to 2010, both BAU and PC2050 scenarios show significant decreases for production-based emissions, falling 31% and 68% respectively. However, during this period consumption-based emissions increase for eight cities, rising 33% and 35% respectively. This occurs despite the modelled improvements in global production efficiency for 2050 and the significant production-based reductions under the PC2050 scenarios. The increase in consumption-based emissions is primarily linked to rising GDP and a corresponding increase in spending and consumption, which override the local and global efficiency improvements.Hence the results highlight a notable disparity between the traditional focus on production-based accounting and consumption-based accounting. This suggests that future city actions should extend their focus on addressing the impact of consumption in addition to local energy production and emissions. It also suggests that city stakeholders are generally underestimating the impact of consumption and the responses required.

Primary Suppliers Driving Atmospheric Mercury Emissions through Global Supply Chains

Summary The Minamata Convention on Mercury, which came into force in 2017, aims to control mercury-related risks to human beings and ecosystems by reducing anthropogenic mercury (Hg) emissions. Existing studies have identified direct atmospheric Hg emitters and final consumers causing atmospheric Hg emissions but overlooked primary suppliers driving atmospheric Hg emissions through global supply chains. Here, we identify critical primary suppliers and supply-chain paths for global atmospheric Hg emissions in 2015. Results show that China, Indonesia, and India are major primary suppliers causing global atmospheric Hg emissions. Major sectors and critical supply-chain paths from the supply viewpoint are related to resource extraction and power generation. Findings of this study can support supply-side measures to implement the Minamata Convention on Mercury, such as the optimization of labor and capital input structures and the optimization of product-allocation behaviors to downstream producers.

Inequality of household consumption and air pollution-related deaths in China

Substantial quantities of air pollution and related health impacts are ultimately attributable to household consumption. However, how consumption pattern affects air pollution impacts remains unclear. Here we show, of the 1.08 (0.74–1.42) million premature deaths due to anthropogenic PM2.5 exposure in China in 2012, 20% are related to household direct emissions through fuel use and 24% are related to household indirect emissions embodied in consumption of goods and services. Income is strongly associated with air pollution-related deaths for urban residents in which health impacts are dominated by indirect emissions. Despite a larger and wealthier urban population, the number of deaths related to rural consumption is higher than that related to urban consumption, largely due to direct emissions from solid fuel combustion in rural China. Our results provide quantitative insight to consumption-based accounting of air pollution and related deaths and may inform more effective and equitable clean air policies in China.

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

Abstract China’s administrative regions distribute their carbon dioxide emissions mitigation burdens differently. As a result of closer interregional economic connections, embodied carbon emissions are transferred among provinces via inter-provincial trade, resulting in carbon leakage. China usually adopts a production-based principle to evaluate the realization of carbon intensity reduction targets for disparate provinces. The carbon dioxide emission reduction targets from a consumption-based accounting were re-examined, and compared two methods that have been applied. From 2002 to 2007, the rankings of carbon dioxide emission intensity variation rates from production-based and consumption-based accounting resulted in different province rankings and, although the gaps in the rankings between both methods changed between 2007 and 2012, particularly in Guizhou and Yunnan. Because the production-based calculation ignores carbon leakage and is ineffective in accurately assessing reduction targets, these targets were re-examined from a consumption-based accounting. These findings are very significant for China’s policies on carbon dioxide emissions reduction: the provinces’ targets on reducing carbon dioxide emissions may be evaluated rationally with regard to inter-provincial carbon leakage in China; kinds of support for the reduction of carbon dioxide emissions can favor less developed regions; and encouraging economic mechanics for technological innovations assist in managing carbon dioxide emissions at the national scale.

The global cropland footprint of Denmark's food supply 2000–2013

The global use of and pressure on land resources will continue to rise in tandem with the predicted rise in global population and food demand. Addressing unavoidable trade-offs between satisfying human needs and biodiversity conservation for future generations is of paramount importance when tackling the global environmental challenges of land use. Food consumption patterns are inextricably linked to land-use and land-use changes. The domestic supply and final use of food by humans and feed by animals within the borders of a country have environmental impacts overseas. Countries like Denmark, with considerably high livestock production, import “virtual” land needed to produce cereals and other fodder crops. Denmark's high meat and dairy consumption and trade levels make it a compelling case for this study. The overarching question is: how much land is required to support food and feed consumption in Denmark? This paper assesses the global cropland footprint of Danish food and feed supply from 2000 to 2013 using a consumption-based physical accounting approach. In addition to domestic croplands for local food and supply, we estimate the hectares of cropland displaced in other countries to satisfy Danish demand for food and feed in this period. Secondly, we calculate Denmark's global cropland requirements for the supply of specific livestock products, namely; pork, eggs, beef, milk, and mutton. Globally, animals provide a third of the protein in human diets and agricultural GDP. The total global cropland footprint of Danish food and feed supply decreased by 18% from 1568 kha in 2000 to 1282 kha in 2013 because of a reduction in the consumption of ruminant livestock products. A high share of this reduction can be attributed to increased local self-sufficiency in feed supply as opposed to rising food imports. The share of cropland used for feed in total cropland declined by 5% whereas the share of cropland used for food increased from 28% in 2000 to 32% by 2013. Our findings suggest that reducing domestic meat consumption coupled with local self-sufficiency policies for both food and feed supply could be a means of lowering ecological degradation in exporting countries.

Kazakhstan's CO2 emissions in the post-Kyoto Protocol era: Production- and consumption-based analysis

The first commitment period of the Kyoto Protocol came to an end in 2012 and more developing countries began to participate in the new phase of world carbon emission reduction. Kazakhstan is an important energy export country and a pivot of the "Belt and Road Initiative" (BRI). Despite its emissions are relatively small compared with huge emitters such as China and the US, Kazakhstan also faces great pressure in terms of CO2 emission reduction and green development. Accurately accounting CO2 emissions in Kazakhstan from both production and consumption perspectives is the first step for further emissions control actions. This paper constructs production-based CO2 emission inventories for Kazakhstan from 2012 to 2016, and then further analyses the demand-driven emissions within the domestic market and international trade (exports and imports) using environmentally extended input-output analysis. The production-based inventory includes 43 energy products and 30 sectors to provide detailed data for CO2 emissions in Kazakhstan. The consumption-based accounting results showed that certain sectors like construction drive more emissions and that the fuel consumption in different sectors varies. Furthermore, Russia and China are major consumers of Kazakhstan's energy and associated emissions, with the construction sector playing the most important role in it. The results suggested that both technology and policy actions should be taken into account to reduce CO2 emissions and that the BRI is also a good chance for Kazakhstan to develop a "Green Economy".

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

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.

Allocating carbon responsibility: The role of spatial production fragmentation

• We evaluate border-crossing frequency associated with embodied and enabled emissions. • We use both demand-driven and supply-push input-output models. • About 25% of embodied emissions crossed national borders more than once in 2009. • About 20% of enabled emissions crossed national borders more than once in 2009. • Spatial production fragmentation complicates the allocation of carbon responsibility. A number of studies have compared national carbon abatement responsibility under different carbon accounting schemes. However, the difficulty of the shift among different national carbon accounting schemes has rarely been quantitatively evaluated in the literature. Spatial production fragmentation over the recent decades has led to geographical separation among the primary inputs supplying regions, carbon emitting regions, and final consuming regions. The purpose of this paper is to reveal the effects of spatial production fragmentation on the shift from production-based to consumption-based and income-based national carbon accounting. Based on both demand- and supply-driven input-output analytical frameworks, this paper analyses the allocation of carbon responsibility for embodied and enabled emissions along production chains over the period 1995–2009. It was found that as much as 25% of embodied emissions and 20% of enabled emissions crossed national borders more than once in 2009. The shift among different carbon accounting schemes is not only related to the magnitude of trade related emissions but also related to border-crossing frequency associated with emissions embodied in or enabled by international trade. The increasingly fragmented production networks complicate the shift from production-based to consumption-based or income-based accounting and weaken the effectiveness of consumption-based or income-based accounting.

Thailand’s energy-related carbon dioxide emissions from production-based and consumption-based perspectives

Over the past few decades, Thailand has been one of the highly open economies and one of the most successful countries in applying the export-led growth model. At the same time, carbon dioxide (CO2) emissions released in Thailand tripled between 1990 and 2015. To examine how international trade plays a role in shaping Thailand’s CO2 emissions inventory, we compare emissions under both production-based and consumption-based accounting over 1990–2015 and disaggregate total CO2 emissions into traded and non-traded parts. We also use a multi-regional input-output database for performing a structural decomposition analysis (SDA) to investigate the factors contributing to changes in CO2 emissions. We find that Thailand continually stood out as a net carbon exporting country. CO2 embodied in exports accounted, on average, for 40% of domestically produced emissions. Our SDA results suggest that traded and non-traded emissions grew mainly due to increasing per-capita consumption in Thailand and abroad. The retarding effect from energy efficiency improvement was significant but not sufficient to reduce emissions.

Revisiting environmental kuznets curve for carbon dioxide emissions: The role of trade

In the three decades since the environmental Kuznets curve (EKC) hypothesis was proposed, there have been a massive amount of empirical studies on the relationship between per capita income and carbon dioxide (CO2) emissions based on the production accounting approach. International trade has played a critical role in effectively and efficiently allocating resources in the process of economic globalization. Through international trade, part of the responsibilities for CO2 emission mitigation which should have been taken by consumers have been transferred to the producers of traded goods and resources. The focus of this research is on the re-examination of the EKC hypothesis, taking the role of international trade into account. The findings are as follows. In the first stage, we calculated the CO2 emissions of 39 countries using the input-output analysis approach based on production accounting and consumption accounting. Currently, China is the largest CO2 emitter, surpassing the U.S. However, the per capita CO2 emissions of China lag behind those of the U.S. In the second stage, although both an inverted U-shaped curve and an N-shaped curve were obtained, the cubic functional form model is better fitted. In addition, the turning point occurs earlier if adopting the production-based accounting rather than adopting the consumption-based accounting, implying that international trade postpones the peak time of global CO2 emissions. From the above analysis, it follows that when testing for the validity of the EKC for global CO2 emissions, the role of trade cannot be overstated.

Real-time carbon accounting method for the European electricity markets

Electricity accounts for 25% of global greenhouse gas emissions. Reducing emissions related to electricity consumption requires accurate measurements readily available to consumers, regulators and investors. In this case study, we propose a new real-time consumption-based accounting approach based on flow tracing. This method traces power flows from producer to consumer thereby representing the underlying physics of the electricity system, in contrast to the traditional input-output models of carbon accounting. With this method we explore the hourly structure of electricity trade across Europe in 2017, and find substantial differences between production and consumption intensities. This emphasizes the importance of considering cross-border flows for increased transparency regarding carbon emission accounting of electricity.