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Response to the Energy and Climate Change Committee Inquiry On Energy and Climate Change Committee Consumption‐Based Emissions Reporting Ref Organisation Page CON 01 Defra, DECC and BIS 3 CON 02 Food Ethics Council 14 CON 03 Professor C.N. Hewitt 18 CON 04 Small World Consulting Ltd 19 CON 05 West Sussex Environment and Climate Change Board 23 CON 06 Lake District National Park Authority 25 CON 07 The Packaging Federation 30 CON 08 Tata Steel 33 CON 09 Dr Rupert Read 38 CON 10 West Sussex Environment and Climate Change Board 40 CON 11 Mineral Products Association 44 CON 12 E.H.Booth & Co Ltd 50 CON 13 Green House Think Tank 53 CON 14 British Ceramics Confederation 60 University of Surrey, Centre for Environmental CON 15 63 Strategy CON 16 Stirling Management school 70 CON 17 WWF‐UK 76 CON 18 EEF/UK Steel 83 CON 19 The Carbon Trust 88 CON 20 UK Energy Research Centre 92 CON 21 Centre for Alternative Technology (CAT) 110 CON 22 Manchester City Council 115 CON 23 Best Foot Forward 117 CON 24 Construction Products Association 133 CON 25 Public Interest Research Centre (PIRC) 135 Ref Organisation Page CON 26 EDF Energy 145 CON 27 Grantham Research Institute 150 Tyndall Manchester, Sustainable Consumption CON 28 157 Institute and Stockholm Environment Institute CON 29 InterfaceFLOR 178 CON 30 Aldersgate Group 180 Memorandum submitted by Defra, DECC and BIS (CON 01) Summary • The UK’s consumption emissions rose by nearly 20% between 1990 and 2008, in contrast to the downward trend in our territorial emissions. • 55% of the total emissions associated with goods and services purchased by UK households in 2004 occurred overseas. • Estimates of consumption emissions are useful to indicate their scale and how they are split between sectors and countries, but are not robust enough for target setting. • Evidence on consumption emissions has significant value in helping to target policies to change UK consumption patterns and may also help target overseas sources of imported emissions. • Consumption-based emissions reporting cannot replace the territorial approach to reporting, which is fundamental to global governance of climate change, but provides a useful complementary viewpoint. Response to ECC Questions 1. How do assessments of the UK’s greenhouse gas emissions differ when measured on a consumption rather than a production basis? 1.1 The UK uses three different approaches to measure greenhouse gas emissions, and the Government publishes figures based on each approach: • Territorial basis: Emissions based on the UK greenhouse gas inventory, published by DECC – this is used as the basis for our reporting to the EC and UNFCCC, and forms the basis for reporting on progress towards our domestic and international emissions reduction targets. The inventory measures emissions on a territorial basis, so only includes emissions which occur within the UK’s borders. We have used ‘territorial’ throughout this report to make comparisons between the existing reporting regime and the consumption approach referred to in the Committee’s questions. • Production or Residents basis: Emissions as measured by the UK Environmental Accounts, published by the Office for National Statistics (ONS) - these measure greenhouse gas emissions on what is referred to as a “residents” basis, which means that the figures represent emissions produced by UK residents and industry whether in the UK or abroad, but exclude emissions within the UK which can be attributed to overseas residents and businesses. • Consumption basis: Defra publishes research data that measures the emissions associated with goods and services the UK consumes and thus takes account of the emissions embedded within the manufactured goods and services which the UK imports and exports. 1.2 International emissions data, targets and action to mitigate climate change have focussed on territorial greenhouse gas emissions. However, it is now possible to make an estimate of consumption emissions as more evidence is now becoming available. The Government is monitoring total carbon dioxide emissions associated with UK consumption on an annual basis. Page 3 1.3 Estimated total greenhouse gas emissions: In 2008, UK territorial greenhouse gas emissions were 620 Mt CO2e but from a consumption approach they were significantly larger – 1,071Mt. Total consumer emissions were therefore 75% higher than total territorial emissions.1 1.4 Trends: UK territorial emissions have declined steadily since 1990, at around 1% per year (21% in total between 1990 and 2008). At the same time, emissions associated with UK consumption have been increasing as we consume more products from overseas. Taking a consumption emissions approach the UK's greenhouse gas emissions have risen by nearly 1% a year (almost 20% in total between 1990 and 2008). If these trends continue, greenhouse gas emissions embedded in imports to the 2 UK could be greater than UK territorial emissions by 2018. Figure 1: 1.5 Geographical distribution of consumption impacts: According to an analysis of consumption emissions, 55% of the total emissions associated with goods and services purchased by UK households in 2004 occurred overseas.3 Over three quarters of overseas emissions occurred outside the European Union, 36% came from Asia and 12% from North America. The country with the highest level of emissions to satisfy UK consumption was China, by a significant margin. The next three were USA, Russia and South Africa (see Figure 2 below). Page 4 Figure 2: Top 15 overseas contributors to 2004 UK consumption emissions total 3 NB: Due to the nature of the modelling and the international trade data available, all figures should be treated as estimates and used with caution. 90,000 80,000 70,000 60,000 (kt) 50,000 40,000 CO2e 30,000 20,000 10,000 ‐ 1.6 Distribution by sector: The latest research data also indicates which products and sectors had the highest proportion of embedded carbon emissions in 2004. For products such as electronic equipment and clothing, which are mainly produced overseas, over 80% of the associated greenhouse gas emissions occurred outside the UK. Figure 3 Total UK Greenhouse Gas Consumption Emissions (2004 data in kilotons 3 CO2e), split by sector and by UK / Rest of World (RoW) NB: Due to the nature of the modelling and the international trade data available, all figures should be treated as estimates and used with caution. Page 5 2. Is it possible to develop a robust methodology for measuring emissions on a consumption rather than production basis and what are the challenges that need to be overcome to deliver this? 2.1 This is a relatively new research area with a limited number of active researchers and little international experience. Recent work has focussed on development of a multi- regional input-output model and use of Global Trade Analysis Project (GTAP) data.4,5,6, As the accuracy and timeliness of research outputs in this area depends heavily on the raw data that is available, a wider acceptance within the international community will be needed in order to improve future data sources and methodologies. 2.2 A 2008 Defra research report ‘Development of an Embedded Carbon Emissions Indicator’ developed an initial model for the assessment of greenhouse gas impacts associated with UK trade flows.7 This provides an indication of the scale of the impact and the growth trend. The resulting estimates have been published as part of the UK Government Sustainable Development indicators, as a contextual indicator alongside the reported territorial emissions. 8 Ongoing research work will provide a high level analysis of the UK national carbon dioxide footprint, covering 131 product groups and all final demand categories on annual basis from 2011 – 2016. 9 A 2009 total is expected to be available in late 2011. 2.3 The current modelling methodology has been developed and scrutinised by leading academics. It reflects the state-of-the-art in the field, but currently cannot be considered to be sufficiently reliable for setting targets, and has only limited use in policy evaluation. This is due to the assumptions required to estimate the emissions, and to data availability constraints which mean that the latest detailed estimates of consumption emissions by country of origin are for 2004 and by product are for 2008. The limitations are described below: 2.4 Constraints on data availability and timeliness: • Ideally, up-to-date data for all trading partners covering more detailed information on emissions by sector as well as up-to-date consistent and detailed annual input-output analytical tables for all those countries would be required. Although the UN is making progress in setting standards for greenhouse gas emissions accounts, availability of this data will always be limited by the capacity and will of trading partners to provide it. 2.5 Methodological assumptions: • Emissions are attributed pro rata to spend. For example, a cheap flight is allocated a fraction of the emissions of a costly business class flight. Analysis of physical data in key sectors could improve this but would require laborious, sector specific analysis. • It is assumed that products within a product group, or sub-sectors within a sector, are homogeneous i.e. that all dairy products, or all electronic goods, have the same emissions intensity. The only way round this would be to have ever more detailed input-output tables. Page 6 2.6 In comparison, territorial emissions are easier to measure robustly, allowing statistics to be published for more recent years. The UK’s international reporting requirements for territorial emissions require more recent data (the UK’s last annual report to the UNFCCC was in April 2011 with data up to 2009). DECC published provisional 2010 territorial emissions in March 2011. 3. What are the benefits and disadvantages associated with taking a consumption- based rather than production-based approach to greenhouse gas emissions accounting? 3.1 There are merits to both consumption and territorial based accounting and the two should be seen as complementary approaches rather than alternatives.
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