Towards accepted procedures for calculating international consumption-based carbon accounts

Abstract

Since the early 1990s, global trade has doubled, with a corresponding increase in emissions embodied in trade. Standard accounting of emissions counts the ‘territorial’ emissions that occur within a country, but there has also been discussion about the need for ‘consumption-based’ carbon accounting (CBCA) that counts the carbon emissions required to produce the goods and services consumed in a country (in short: the Country Carbon Footprint (CCF)). Global multi-regional input-output (GMRIO) databases form the method of choice to calculate carbon footprints. Due to the need to combine different data sources to construct GMRIOs, and incompleteness and inconsistencies in data sources, estimations and balancing procedures have to be applied. Such construction procedures are not uniform. This leads to hesitation over using CCF results in policy formulation. The empirical analysis reviewed in this paper synthesizes the few simple measures that can already lead to robust CCF results, even with different GMRIO models. The single most important point is to use harmonized territorial carbon emissions in different GMRIO models. Then, differences between databases for most countries are less than 10% between GMRIOs, and considerably lower than 10% for large countries with a high GDP compared to imports. When investigating the trends in CCF as opposed to the absolute value, the differences become even smaller. Hence, harmonizing data already used in classical production-based accounts and related policy making appears to be the most relevant factor also for CBCA and calculating CCFs. Key policy insights Country Carbon Footprints (CCFs) are best calculated with Global Multi Regional Input Output (GMRIO) databases. Compared to territorial carbon accounting, the additional use of GMRIOs for calculating CCFs in principle leads to higher uncertainties. However, trends in CCFs–that is, relative change over time–calculated with different GMRIOs are already very robust. Harmonizing territorial emissions across GMRIOs is the single most important factor that reduces uncertainty in CCFs, followed by the use of an official national Environmentally Extended Input-Output model for the country for which a CCF is calculated. Working towards an internationally accepted GMRIO, such as the OECD’s inter-country input-output (ICIO) table, is recommended.