An introduction to the concept of consumption based emissions accounting and related policies Prof. Arnold Tukker, Project Coordinator, TNO and Leiden University - CML Addressing consumption-based emissions: the Chinese perspective Event co-organised by Carbon CAP and the Climate Group, Beijing, 10 November 2015

Welcome!

Introduction Short overview of Carbon-CAP Some examples of analyses Conclusions

Basics Contract Management From 1 October 2013 to 31 December 2016 3.6 Mio Euro of which 3 Mio EU FP7 funded Management Scientific Coordinator, Arnold Tukker, TNO Project manager, Ming Chen, TNO EU contact: DG Research (and DG CLIMA)

Consortium Project Partners   The Netherlands Organisation for Applied Scientific Research (TNO, co-ordinator) (NL) Cambridge University Centre for Climate Change Mitigation Research (4CMR) (UK) Wirtschaftsuniversität Wien (WU) (AU) Cambridge Econometrics (CE) (UK) EC DG JRC Institute for Prospective Technical Studies (IPTS) (BE) Climate Strategies (CS) (UK) Institute of Environmental Sciences, Leiden University (LU-CML) (NL) Deutsches Institut für Wirtschaftsforschung (DIW) (DE) Norges Teknisk-Naturvitenskapelige Universitet NTNU (NO) International Centre for Trade and Sustainable Development (ICTDS) (CH)

Concept Territorial emissions versus consumption based emissions Sales of products between industries in a country Trade flows between countries Final demand by house-holds, and government by country Carbon emissions by industry sector & country

Potential Currently: territorial emission reduction targets Global economy: growing share of GHG emissions Consumption is the main driver GHG emissions We hence need consumption oriented mitigation approaches as a complement to territorial efforts Address consumption as a driver Address carbon leakage By probably more efficient policies

Method: input output analysis Relates production to consumption Example: 5 Euro coffee at Starbucks 3 Euro for Starbucks = Restaurant 1 Euro for roaster = Food industry 0.5 Euro for transport = Transport 0.25 Euro for farmer = Agriculture 0.25 Euro for fertiliser, etc. Impacts per sector/country per Euro known Multiply -> you see how impacts of production relate to consumption In essence you re-distribute global territorial emissions to consumption

Challenge Consumption – based accounts and policies are new and unknown Uncertainty in accounting is unknown Hence not (yet) fit for use in official contexts (UNFCCC, COP) Indeed: fear that new research on this issue to overcome challenges will block negotiations

Main gaps Gap 1: Can we make consumption-based carbon accounts? With what (un)certainty? Gap 2: What demand-side carbon options and policies can we identify? Gap 3: How effective and acceptable are they? Gap 4: How do we come to a shared view of added value of consumption – based accounts and policies?

Work Breakdown

Main gaps Gap 1 (WP4, Multi-regional input output analysis): Can we make consumption-based carbon accounts? With what (un)certainty? [ Gap 2 (WP5, 6: Options and policies): What demand-side carbon options and policies can we identify? Gap 3 (WP7: environmental & economic modelling of traditional and consumption oriented policy scenarios): How effective and acceptable are they? Gap 4 (WP2, 8: stakeholder discussions & integrated conclusions): How do we come to a shared view of added value of consumption – based accounts and policies?

Multi-regional EE IO database (EXIOBASE) used Work flow Multi-regional EE IO database (EXIOBASE) used Models used: E3ME (Cambridge) FIDELIO (DG JRC IPTS) EXIOMOD (TNO) We are here…

Examples Territorial and consumption based carbon emissions by continent

Examples Carbon footprint rankings by countr

Examples Carbon embodied in trade

Conclusions Carbon CAP sets consumption central Wants to overcome 4 main gaps Uncertainty Understanding of possible policies Understanding of effectiveness of policies Creating a common view on usefulness Via Analysis with MRIO time series Identification of policy options Identification of technical and behavioral options Assessment of the economic and environmental implications of traditional and consumption oriented policy scenarios via 3 models Intensive stakeholder interaction

Questions so far?

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