Greenhouse gas emissions accounting

Greenhouse gas emissions accounting is a method of calculating the amount of greenhouse gases (GHG) emitted by a region in a given time-scale. A National Emissions Inventory (NEI) measuring a country’s GHG emissions in a year is required by the UNFCCC to provide a benchmark for the country’s emission reductions, and subsequently to evaluate international climate policies such as the (although the original has now expired, extensions have been agreed) as well as regional climate policies such as the EU Emissions Trading Scheme (ETS).

There are two conflicting ways of measuring GHG emissions: production-based (sometimes referred to as territorial-based) or consumption-based. Production-based emissions take place “within national territory and offshore areas over which the country has jurisdiction”. Consumption-based emissions encompass those emissions from domestic final consumption and those caused by the production of its imports. This means the importing country takes responsibility for emissions related to production of the exporting country’s exports. By these definitions production-based emissions include exports but exclude imports and emissions embodied in international trade, whereas consumption-based emissions refer to the reverse (Table 1).

Which technique is applied by policymakers is fundamental as each can generate a very different NEI. Different NEIs would result in a country’s choosing different optimal mitigation activities, the wrong choice based on wrong information being potentially damaging. The application of production-based emissions accounting is currently favoured in policy terms, although much of the literature favours consumption-based accounting. The former method is criticised in the literature principally for its inability to allocate emissions embodied in international trade/transportation and the potential for carbon leakage.

It is now overwhelmingly accepted that the release of GHG, predominantly from the anthropogenic burning of fossil fuels, is accelerating the growth of these gases in the atmosphere resulting in climate change. Over the last few decades emissions have grown at an increasing rate from 1.0% yr⁻¹ throughout the 1990s to 3.4% yr⁻¹ between 2000 and 2008. These increases have been driven not only by a growing global population and per-capita GDP, but also by global increases in the energy intensity of GDP (energy per unit GDP) and the carbon intensity of energy (emissions per unit energy). These drivers are most apparent in developing markets (Kyoto non-Annex B countries), but what is less apparent is that a substantial fraction of the growth in these countries is to satisfy the demand of consumers in developed countries (Kyoto Annex B countries). This is exaggerated by a process known as Carbon Leakage whereby Annex B countries decrease domestic production in place of increased importation of products from non-Annex B countries where emission policies are less strict. Although this may seem the rational choice for consumers when considering local pollutants, consumers are inescapably affected by global pollutants such as GHG, irrespective of where production occurs. Although emissions have slowed since 2007 as a result of the global financial crisis, the longer term trend of increased emissions is likely to resume.

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