Carving up the global carbon pie in a new way
When negotiators come to Paris this December to discuss a binding and universal agreement on controlling climate change, they have to know how much each country contributes to the greenhouse gas emissions problem. A new method offers the best hope yet for accurately accounting for these emissions by providing the right incentives and assigning fair responsibilities.
Deciding which country is responsible for how much of the globe’s carbon emissions may be one of the most difficult – and important – bookkeeping problems facing humankind.
But come December, when the nations of the world sit down in Paris to find a way to collectively cut greenhouse gas emissions, negotiators must know how to assign responsibility fairly, so that every country does what it needs to do to prevent dangerous global warming.
In fact, the difficulty of assigning responsibility in a way that all countries think is fair has been one of the key reasons why previous climate talks have fallen short.
A new carbon accounting method that addresses some of the shortfalls of previous systems has now been proposed by a team of researchers from Lund University in Sweden, NTNU and the University of New South Wales in Australia. Their proposal was published Monday, 9 March in Nature Climate Change.
Who is responsible: producers or consumers?
Consider this: when a consumer good is produced in one country but used in another country, someone has to take responsibility for that product’s carbon footprint.
One way that policymakers can assign responsibility is to say that whichever country produced the item should take responsibility for the greenhouse gas emissions. Under this type of production-based accounting, all of the greenhouse gas emissions caused by producing your smart electronics in China are assigned to China, even though you bought the phone and live in Norway.
That would mean that as the world moves to cut greenhouse gas emissions, China would be forced to cut emissions that actually benefit you, the owner of the phone, in Norway.
Not surprisingly, some countries feel that this production-based accounting system is unfair. This is the system that was used for measuring progress against the Kyoto targets.
A second approach, called the carbon footprint system, says that whichever country uses the product that causes greenhouse gas emissions should be responsible for those emissions in the global accounting system. In many respects, it is fairer than the first accounting system.
But it is not perfect, either, because it doesn’t give countries incentives for cleaning up their exports. China can use dirty coal-based electricity to produce smartphones sold in Norway and that will become a Norwegian responsibility, although there is little that Norway can do to influence China’s production technologies.
A modified footprint system
The team of researchers, led by Astrid Kander from Lund University and with co-author Daniel Moran from NTNU, realized that any accounting system needs to “get the incentives correct,” Moran explained.
“You need to design the accounting system so that people get credits and penalties to do the right thing, in terms of reaching the outcomes you want – which is to cut emissions.”
Given that understanding, the researchers took the carbon footprint accounting system and proposed modifications to achieve this goal.
Kander said the goal was to provide policy makers with information that would be more useful than current approaches. The new scheme can be used by countries “to set national targets and evaluate their climate policies,” she said.
However, the proposed changes would prevent countries from “gaming the system,” Moran said. “Countries should not be able to do anything that benefits themselves but hurts the global commons.”
Allowing credits for clean exports
The researchers took their approach, which they call “technology adjusted carbon footprints” and calculated carbon accounts for 40 countries, which together represent 97 per cent of global GDP.
The result for some European countries was that their new carbon footprint was lower than their standard carbon footprint. An example of this is Sweden, which produces steel – but with clean hydropower as the energy source, Moran said.
“Under the two conventional accounting systems, countries don’t get credits for any clean exports they produce,” Moran explained. “So if Sweden produces and exports clean steel, they get no credits for supplying the global markets with clean steel.”
The upshot of this is that Chinese steel, mainly produced with high carbon emissions from coal, and Swedish steel, produced with low carbon emissions from hydropower, are valued the same under the old accounting systems, even though in terms of greenhouse gas emissions, they are very different products, he said.
With the proposed technology adjusted footprint, “we explicitly give credits to clean exports,” Moran said. “With this simple fix to the accounting systems the incentives get changed, so that trade becomes a force to improve our carbon efficiency for the planet as a whole.”
How the big economies measure up
The US, UK and Australia all have larger carbon footprints than just their territorial emissions belie.
The researchers said that indicates that these countries do not have carbon efficient export industries and that outsourcing of dirty production is an important factor.
China’s technology adjusted footprint is larger than its standard carbon footprints, but substantially smaller than its production-based, territorial emissions, the analysis showed.
This shows that China is acting as the workshop for the world, the researchers said, by providing rich, developed countries with many consumption goods, but based on dirty, carbon-based technology.
Harnessing trade as a force for good
Moran said one way that the researchers’ new accounting system could help in the quest to cut greenhouse gas emissions was by identifying the cleanest places to produce goods that potentially have the worst greenhouse gas emissions.
That might mean that Scandinavia, for example, with its ample hydropower sources, ought to focus on producing things such as steel or aluminium, instead of other goods or services that have a smaller carbon footprint and could be done anywhere.
“We should make sure that each country is given an incentive to produce the things that it is cleanest in producing,” Moran said, “If every country responds to this kind of incentive, then global production will be optimized, and will be cleaner overall.”
Reference: ‘National greenhouse-gas accounting for effective climate policy on international trade’ Astrid Kander, Magnus Jiborn, Daniel D. Moran and Thomas O.Wiedmann. Nature Climate Change. AOP 9 March 2015