House of Commons - Consumption-Based Emissions Reporting

Consumption-Based Emissions Reporting - Energy and Climate Change Contents

3 Policy applications

27. DECC stated that owing to the assumptions required to estimate consumption-based emissions, they have "only limited use in policy evaluation".[48] In order to explore the utility of consumption-based emissions reporting, we took evidence from three regional authorities and organisations which had assessed their emissions on a consumptions basis, and subsequently adopted consumption-based emission targets and policies: the Lake District National Park Authority, West Sussex County Council, and Manchester City Council. These three regional authorities commissioned Small World Consulting to undertake the assessment of their consumption emissions.

West Sussex County Council

28. West Sussex County Council believed that consumption-based emissions reporting was appropriate for "place-based approaches" to cutting emissions that focused on an individual's carbon impact, and so could enable communities to "understand and take responsibility" for reducing their emissions through changes to their lifestyles and consumption.[49] The Council believed that using consumption data provided a "clearer indication of the behaviour changes that will be required" to drive down emissions.[50]

29. Figure 4 shows the consumption-based carbon footprint for West Sussex residents broken down into sixteen specific segments. In comparison, information at the county-level provided by DECC was far coarser and less informative, being broken down into road transport (32%), domestic (34%), and industrial and commercial (34%).[51] West Sussex argued that the consumption-based approach was easier to understand because it provides a "much richer and more action-orientated breakdown [of emissions]" for local governments than territorial metrics can[52] West Sussex County Council added that a consumption approach provided a more "comprehensive representation of the source of emissions" and was therefore better for informing policies to limit climate change.[53]

30. By linking peoples' carbon footprint to their behaviours, the West Sussex County Council found consumption-based emissions reporting metrics "useful for policy assessment and evaluation".[54] The Council's Principal Adviser, Dr Wendy Benson, told us that people "really do find [a consumption-based carbon footprint] very simple and easy to understand".[55]

Figure 4—Breakdown of the carbon footprint of West Sussex residents by source[56]

Source: West Sussex County Council

Lake District

31. The Lake District National Park Authority (LDNPA) manages the Lake District in partnership with a mixture of public, private, and voluntary-sector groups (including district and borough councils, business associations, the Environment Agency, and Government Office Northwest).[57]

32. The LDNPA found that consumption-based emissions reporting led to a comprehensive "picture of emissions" as it included emissions from imports and the supply chain.[58] The LDNPA believed that a "carbon budget framework" based on consumption information could be explained in a similar way to a financial budget, as it could give an indication of how much carbon could be "spent" and what it could be spent on.[59] It added that such an approach was particularly useful for local government as they have more responsibility for—and opportunity to influence—"indirect emissions [from] behaviours and lifestyles" than they do large sources of direct emissions such as power plants and large industry.[60] However, the LDNPA acknowledged that consumption measures were more complex and had greater uncertainties.57

33. The LDNPA believed that the consumption-based information in Figure 5 provided better guidance for mitigation strategies than a territorial based analysis. For example:

the top two bars show that household energy use was not a major source of emissions (which, the LDNPA believed, would not be the case if measured using a territorial-based approach);
transport, particularly aviation (mainly visitors getting there and away), has a very significant impact. The LDNPA believed that this implied there should be more efforts to encourage UK holidaymakers to holiday at home; and
the significance of food and drink led to the promotion of locally sourced, seasonal food.[61]

Figure 5—the carbon footprint of the Lake District National Park measure on a consumption basis (tonnes of CO2)[62]

Source: Lake District National Park Authority

34. Richard Leafe, Chief Executive of the Lake District National Park Authority, told us that he was "surprised to find the proportion [of emissions on a consumption-basis] from foreign flights by visitors to the Lake District was […] a third of the total budget—yet of our 16 million visitors a year, only 10% come from abroad". [63] Mr Leafe observed that, with aviation taken out, "transport and accommodation of the visitors in the Lake District […] become very significant […] we have used those figures to support a bid that we made successfully to the Department for Transport's sustainable transport fund for £5 million of investment in sustainable transport".[64]

Manchester

35. Manchester City Council commissioned a consumption-based assessment of the emissions in the ten local authority areas of Great Manchester. Emissions associated with aviation can be challenging to categorise, as they could be assigned to the departure or destination country, an airline's home country, or the passenger. If emissions were attributed to a UK departure airport, that would lead to an increase in the UK's territorial emissions. If the emissions were attributed to a destination airport outside of the UK, that would not affect the UK's territorial emissions, but would increase the territorial emissions of the destination country. If the aviation emissions were attributed to the passenger, that would increase the consumption-emissions of the passenger's native country. Manchester City Council explained that their consumption-based assessment enabled emissions from aviation to be assigned to consumers purchasing that activity, instead of the emissions associated with airports being assigned to local authorities in which they reside.[65] They believed that this was a "fairer" way of assigning aviation emissions that serve a much larger region than that in which they are situated.[66]

36. Greater Manchester's consumption-based emissions study found that a large proportion of its carbon footprint comes from food and waste, with "up to a third of food purchased by households being sent to landfill".[67] The City Council believed that through "policy intervention and education" they could help reduce waste (and hence emissions) as well as "help the poorest in society".[68] Richard Sharland, the Council's Head of Environment Strategy, told us that emissions associated with food were virtually negligible in a territorial assessment, but "Consumption figures turn that on its head. So we are setting up a panel, and they are going to look at how we—that is not just local authorities, but also the NHS, universities and others—start to take that forward".[69]

Regional to national

37. West Sussex County Council thought that consumption-based metrics highlighted the need for changes in consumption patterns and lifestyle, and argued that the case would be more powerful still if it were part of a "nation-wide approach".[70] The LDNPA also suggested that it would be useful to have "national-level consumption-based emissions accounting" as well as "clear protocols" that would enable comparisons.[71] Manchester City Council believed that it was feasible to create consumption-based emissions targets on a national level, adding that it could "help focus policy intervention in a number of areas" and that it could "give a much clearer indication of the UK's impact on world-wide emissions".[72] Professor Barrett suggested "if organisations are starting to think in [consumption] terms [at the regional level], then we need to be thinking about that at a national level as well".[73]

38. We asked the Minister whether he thought that the experiences of the local authorities showed that consumption-based emission reporting was capable of generating new policy options at the national level that would not have been evident if only territorial emissions were considered. He responded: "Yes, I am sure […] the more information you have and the more localised and more specific it is to the people who are affected, the more helpful it is."[74]

39. It is evident that the consideration of consumption-based emissions encourages the development of new policy options, as revealed by the experiences of regional authorities that have adopted a consumption-based approach to emissions accounting. We recommend that DECC explore the options for incorporating consumption-based emissions data into the policy making process, and set out the steps it will take when responding to the Committee's report.

Defra's latest consumption emissions data

40. On 8 March 2012 Defra published a statistical release on the "UK's Carbon Footprint 1990-2009".[75] These figures showed that while the UK's carbon dioxide footprint (consumption emissions) fell 9 % between 2008 and 2009, this was against the backdrop of a steady rise of 35% between 1995 and 2005, leaving the footprint in 2009 "some 20 per cent higher than it was in 1990".[76] Defra's analysis revealed that between 1990 and 2009:

[...]carbon dioxide emissions relating to imports doubled and emissions relating to the consumption of goods and services produced in the UK decreased by 10 per cent.[77]

41. Defra's findings also indicated that the UK's "total carbon footprint", which included greenhouse gases other than carbon dioxide, had increased by 12% between 1990 and 2009.[78]

42. We asked Defra's Parliamentary Under-Secretary of State, Lord Taylor of Holbeach CBE, about these latest figures prior to their publication. Although he had not seen them, he expected the new data to show a reduction in the UK's consumption-based emissions over the period 2008-09.[79] We inquired whether this fall in consumption-based emissions was more likely to be a result of the recession rather than the UK's climate policies. Lord Taylor did not dissent from this assertion.[80]

43. The 9% fall in the UK's consumption-based emissions between 2008 and 2009 was primarily a result of the economic downturn, rather than of the UK's policies to reduce greenhouse gas emissions. Discounting the effects of the recession, the UK's consumption-based emissions have been on an upward trend since 1990.

Data availability and robustness

44. DECC noted that due to the lack of robustness and transparency in data on international trade, all consumption figures should be "treated as estimates and used with caution".[81]This was because of the difficulty in accounting for all the emissions embedded in the supply chain of a particular product, including its manufacture and the emissions embedded in its constituent components. UKERC explained that consumption-based estimates of emissions will have a larger degree of uncertainty due to the incorporation of more input data compared to territorial estimates.[82] However, the Sustainable Consumption Institute (SCI) believed that these uncertainties were "inherent" to the consumption-based emissions approach, and should not be thought of as a "challenge to overcome".[83] Professor Barrett of the University of Leeds argued that while manufacturing sectors can "show considerable uncertainty […] we have considerable certainty with the overall [consumption-based emissions] figures".[84] The uncertainties inherent in consumption emissions data are not as severe as claimed; they do not undermine the usefulness of this approach when making policy.

45. Lord Taylor described consumption-based emissions reporting as "better than nothing but [...] not perfect".[85] However, Michael Berners-Lee—of Small World Consulting, who developed consumption-based emission reports for regional authorities around the UK— thought that although "there is a lot [of uncertainty] you can still create a good enough model that allows you […] to get a much better handle on the impacts and issues you should be managing". [86]

46. The University of Surrey believed the UK should be "ambitious" in helping to develop international datasets for use in consumption accounting.[87]UKERC believed that a "process of harmonisation" in emissions reporting practices could greatly reduce the need for data manipulation and, therefore, uncertainties.[88] We put this to the Minister, and he told us that he "would very much welcome an improvement in the reporting of consumption-based emissions and greater transparency and greater up to date [data]".[89]Tata Steel suggested that one solution to the lack of data may be to start with a default, possibly worst-case, assumption, which could be improved at a later point.[90] This would encourage companies to develop more robust and transparent datasets. UK Steel's Director Ian Rodgers told us that:

47. […] the sort of data that is [currently] going down the supply chain […] is not really driving purchasing decisions as to which source of steel to buy [based on its embedded emissions] but might be driving purchasing decisions or design decisions in terms of which material to use in a product […] You would need a lot more data on an individual company's carbon efficiency to identify carbon hotspots in the supply chain [than is currently available].[91]

48. DECC's argument that there is insufficient, robust data on embedded emissions to make policy, overlooks the extent to which consumption-based emissions can be used to connect an individual's consumption to their impact on the climate. We are not convinced that consumption based emissions data are too complex or time consuming to gather, as Defra's work in this area shows. The experiences of regional authorities has demonstrated that there is sufficiently robust data available to encourage the development of new policy options and identify carbon-intensive behaviours that are overlooked by concentrating on territorial emissions alone. We recommend that in this case, the Government does not make the perfect the enemy of the good. In its response to the Committee's report, the Government should avoid using the uncertainties inherent to consumption-based emissions data as an excuse for inaction.

Challenges and perverse consequences

49. The Minister told us that: "There are a whole number of challenges that don't lend themselves to simplistic analysis by one single data set".[92] Many witnesses agreed, and thought that DECC should consider consumption and territorial approaches in parallel when making policy on energy and climate change. The University of Surrey explained that consumption accounting enabled an assessment of the emissions attributable to UK lifestyles and that by considering the consumption data in parallel with territorial emissions the UK would be adopting "a more equitable form of sharing responsibility for GHG emissions".[93] Manchester City Council believed that this parallel approach would also "give a much clearer indication of the UK's impact on world-wide emissions".[94] UKERC thought that consideration of consumption alongside territorial emissions data could lead to policies that encouraged the reduction of emissions at least cost.[95] The Sustainable Consumption Institute thought that an increased focus by DECC on consumption-based emissions could "increase the share of global emissions over which the UK has influence, and therefore broaden its reach".[96] Dr Alice Bows of the University of Manchester noted, "if you take a systems view then one indicator is only going to give you half the picture".[97]

50. The Minister told us that while he thought "consumption-based carbon emissions are interesting […] they are also potentially a huge distraction […] they could have perverse consequences" such as undermining the international climate negotiations, which are based on territorial emissions.[98] In contrast, many witnesses highlighted the perverse consequences caused by a lack of emphasis on consumption-based emissions. Small World Consulting, developers of consumption-based greenhouse gas metrics, argued under-emphasis on consumption emissions led to a "seriously distorted perspective" and was a "perverse incentive for harmful policy measures".[99] They added that—used solely—territorial-based metrics could lead to policies that provided "an increasingly perverse" incentive to off-shore our emissions".[100] The Construction Products Association also believed that the UK's current emphasis on territorial-based emissions reporting could "perversely result in efficient low carbon manufacturing in the UK being forced overseas".[101]

51. The Universities of Stirling, Strathclyde, and Cardiff stressed that a focus solely on either territorial or consumption-based accounting could result in perverse incentives.[102] For example, while territorial-based measures may encourage "importing of 'dirty' goods and services", consumption-based accounting may "reduce incentives to 'clean up' domestic technology" where manufacture primarily serves export demands.102

52. We drew the Ministers' attention to the evidence presented to us. DECC's Minister told us that "if there was a big counter-story emerging from [what territorial emissions reveal] we would worry about it, but [consumption-based emissions are] not the primary driver of policy at DECC, which remains territorial emissions".[103] He added that, overall, he believed territorial emissions were a better indicator of the UK's performance on reducing global emissions.[104]

53. We conclude that that the UK's energy and climate change policy challenges do not lend themselves to simplistic analysis by a single data set. The growth in the UK's consumption-emissions does provide a counter-story to the one suggested by territorial emissions and we recommend that the Minister give more detailed consideration to the evidence gathered in our inquiry and presented here. We recommend that DECC no longer rely exclusively on territorial emissions as their primary policy driver. DECC's belief that territorial emissions are a better indicator of the UK's impact on the global climate is shortsighted and neglects the global impact of our consumption. Basing policy decisions on a single method of accounting for emissions is likely to have unintended consequences. In order to avoid perverse incentives, we recommend that DECC increase the extent to which they consider consumption-based emissions when making policy.

Committee on Climate Change

54. The Committee on Climate Change (CCC) was established as an independent body under the Climate Change Act 2008 to advise the Government and devolved administrations on emissions targets, and to report to Parliament on progress made in reducing greenhouse gas emissions. Lord Adair Turner, Chair of the Committee, wrote to us that calculating emissions solely on a territorial basis "carries the risk that emissions for which a country is responsible are underestimated".[105] Lord Turner said that it was important for the CCC to:

[…] establish through evidence and analysis any implications that a consumption based approach to emissions accounting […] might have for the design of carbon budgets and supporting policies.[106]

55. The Committee on Climate Change stated that it would therefore "welcome a commission from the Government to undertake a review of consumption emissions" and indicated that this was a project they could undertake after publishing their fourth progress report on the carbon budget in June this year.[107]

56. The Committee on Climate Change has stated that it would welcome the opportunity to explore the implications that consumption-based emissions accounting may have for the UK's carbon budgets, and that they could undertake such work after they publish their fourth progress report on the carbon budget in June 2012. We recommend that the Government commission the Committee on Climate Change to undertake this work.

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