Energy and Climate Change CommitteeMemorandum submitted by the Centre for Alternative Technology

This submission answers questions 1, 2, 3 and 7. This submission draws attention to three key issues in the discussion of the UK’s consumption emissions:

1.The government’s lack of transparency and openness in dealing with the issue to date.

2.The current state of evidence on how to measure and reduce the UK’s consumption emissions.

3.The need to swiftly improve on this by publicly publishing UK emissions on a consumption basis and starting to take measures to address these.

How do assessments of the UK’s greenhouse gas emissions differ when measured on a consumption rather than a production basis?

When measured under a consumption rather than production basis the UK’s greenhouse gas emissions are higher. Research by the Stockholm Environment Institute commissioned by DEFRA shows that while production emissions have dropped, consumption emissions have risen.1 The increase in consumption emissions more than outstrips the emissions reductions made in the UK.

As well as understanding the size of the UK’s consumption emissions we also have a good understanding of where emissions flow from and to, with China a major source, as the UK is heavily dependent on it for carbon-intensive manufacturing.2 The Government has also carried out research estimating the future scale of Britain’s emissions when measured on a consumption basis. These projections, produced by the Carbon Trust, show that by 2025 the UK’s production emissions could have dropped to 463 MtCO2, but consumption emissions could be at 444 MtCO2. 49% of the UK’s emissions would be imported.3

In documents obtained under the Freedom of Information Act (referenced further in this submission) various departments have indicated that measuring and reducing the UK’s consumption emissions would be impossible because: consumption emissions are too difficult to measure; they’ll be dealt with by the international climate change negotiations; the Committee on Climate Change are too busy to investigate the issue. However, evidence contained in this submission will make it clear that none of these points are valid.

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?

Research already exists detailing how to calculate and predict emissions on a consumption basis. A small selection of recent research is detailed here:

PBL Netherlands Environmental Assessment Agency have produced a methodology for calculating and reducing emissions on a consumption basis.4 This research is sector and country specific. For example the model can show for any part of the Dutch economy where in the world the carbon emissions are being produced.

Other methodologies use country Supply and Use Tables (SUT) and Input Output Tables (IOT) to calculate emissions on a consumption basis. Two such models are already in use. EXIOPOL is a framework using externality data and input/output tools to calculate emissions on a consumption basis.5 CREEA is a project compiling and refining environmental and economic accounts.6 TNO in the Netherlands have combined both data sets to produce consumption based emissions estimates.7 , 8

The Carbon Trust already use a model for calculating consumption emissions developed by the Center for International Climate and Environmental Research (CICERO).9 The CICERO model uses two methods: Emissions embodied in bilateral trade (EEBT) and the Multi-Region Input-Output (MRIO) model. CICERO have successfully combined both methods to produce embodied consumption estimates in their paper Growth in emission transfers via international trade from 1990 to 2008. The methodology behind both MRIO and EEBT is explained in the appendix of this paper.10

Given the advanced state of the research it is surprising that the government has consistently claimed that it would be to difficult to measure emissions on a consumption basis. Documents obtained under the Freedom of Information Act show that DEFRA, DECC and BIS have been regularly briefing Ministers and Parliament that measuring embedded emissions is too complicated. For example: “To measure and report on a consumption basis would be extremely complex and increase uncertainty.” And in the same briefing “measuring and reporting emissions on a consumption basis would clearly be an extremely complex, time consuming thing to do, with scope for major inaccuracies”.11 In a different briefing produced by DEFRA, one of the “key messages” was “Alternative reporting approaches based on consumption of goods and services would be extremely difficult for countries to measure and report on reliably.”12 Yet despite telling Ministers this, such apparent reasons have not stopped DEFRA from continuing to monitor and research consumption emissions, and display them on their website.13

What are the benefits and disadvantages associated with taking a consumption-based rather than production-based approach to greenhouse gas emissions accounting?

Answers in this section aim to point the committee to useful research. Economic modelling indicates that measuring and controlling emissions on a consumption basis could lead to a boost in exports.14 There is also some evidence that it could boost labour productivity.15 Both these topics are explored by Karen Turner at the University of Stirling.16 Measuring emissions on a consumptions basis would also help address carbon leakage. In 2004 130 million tonnes greenhouse gases associated with UK imports originated from countries with no binding climate change targets.17

Are there any other issues relating to consumption-based emissions reporting that you think the Committee should be aware of?

The main issue raised here is the government’s lack of transparency to date. The research by SEI and the Carbon Trust clearly shows the UK’s outsourced emissions have outstripped the carbon savings made in the UK. Civil servants have been consistently briefing ministers to this effect. For example as DEFRA state in one briefing prepared by civil servants for ministers “While technological efficiency has improved the CO2 impacts of our products since 1992, the rise in UK consumption has outstripped the improvements achieved”18 and “the Government needs to be cautious about over-claiming on its achievements in decoupling economic growth from environmental degradation”.19 It is therefore vital that we address this issue rather than trying to avoid it.

However, several documents also reveal that the government has been reluctant to allow the Committee on Climate Change (CCC) to investigate. Further, that careful messaging was developed to deal with the embarrassing questions raised by the UK’s outsourced emissions. As already stated the government has consistently been briefing that measuring emissions on a consumption basis is too difficult, when research indicates this is not the case.

Various documents released under FOI, and public statements by government officials reveal that the government did not want to ask the Committee on Climate Change to investigate the topic of outsourced emissions. For example a “handling note” produced by DECC on the topic included a ready made answer should a DECC official be asked whether the CCC should investigate our sourced emissions. “While it would be possible to ask the Committee to look at embedded emissions, they have more than enough work to do in the next year to keep them very busy.”20 Which is word for word what Lord Faulkner said when speaking on behalf of DECC in the Lords.21 However, the CCC have repeatedly asked to be given the mandate to investigate, and have let other departments know this. For example, a DEFRA Ministerial briefing from December 2010 on the 4th carbon budget stated: “The Government should commission the CCC to look into the implications of considering UK emissions on a consumption rather than a production basis.”22

Several departments produced briefings on how to respond to DEFRA/ SEI report including how to answer difficult questions they expected would be result from its publication. For example: “Do UK embedded emissions undermine the international negotiating position?” and “The UK has simply exported its emissions over seas”.23 DEFRA recommended releasing the report so it would coincide with “… a series of communication milestones on climate change” and “In adopting this timing we look to get on the front foot and place the report in the context of the range of government action on climate change”24 As the BBC pointed out when the report was published “The government sat on the Defra SEI report since February, tested its calculations, then published it in an obscure press release on 2 July.”25

October 2011

1 Embedded Carbon Emissions Indicator, DEFRA (2008)
http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&Completed=0&ProjectID=14606

2 Steinberger, J K, J T Roberts and G P Peters (2011) Forthcoming.

3 International Carbon Flows—Global flows (CTC795), Carbon Trust (2011)
http://www.carbontrust.co.uk/publications/pages/publicationdetail.aspx?id=CTC795

4 Consumption-Based Accounting, A Tool for Policy. Harry Wilting. PBL Netherlands Environmental Assessment Agency. Presentation delivered 5 July, 2011. Slides PDF
http://www.cccep.ac.uk/Events/Past/2011/July/HarryWilting-consumption-based-accounting.pdf

5 EXIOPOL http://www.feem-project.net/exiopol/index.php

6 CREEA http://www.creea.eu/index.php/about

7 Policy Relevance of Consumption Based Accounting, Prof. Arnold Tukker, TNO. PDF slides
http://www.cccep.ac.uk/Events/Past/2011/July/ArnoldTukker-policy-relevance-consumption-based-accounting.pdf

8 Tukker et al, 2011, Ecological Economics (in press).

9 Center for International Climate and Environmental Research,
http://www.cicero.uio.no/

10 Supporting Information Appendix. “Growth in emission transfers via international trade from 1990 to 2008”. The Proceedings of the National Academy of Sciences USA (PNAS), 2011.
http://www.pnas.org/content/suppl/2011/04/20/1006388108.DCSupplemental/sapp.pdf

11 “Briefing pack—Consumer Emissions (Climate Change) Bill Second Reading Debate, Friday 15 January 2010”. Obtained under FOI, April 2011. http://www.scribd.com/doc/69298520/Upload-1-Annex-a-Request-10-2638

12 Embedded emissions report, DEFRA 2008. Obtained under FOI February 2011.
http://www.scribd.com/doc/69601459

13 See 51.

14 K Turner, M Gilmartin, P G McGregor and J K Swales, in press with Papers in Regional Science, doi:10.1111/j.1435-5957.2011.00365.x.

15 “Productivity growth, decoupling and pollution leakage”, Nick Hanley et al. In press. Available soon at Stirling Economics Discussion Papers.

16 Slides from presentation “Modelling the impacts of changes in economic activity on consumption measures of pollution generation”
http://www.cccep.ac.uk/Events/Past/2011/July/KarenTurner-economic-activity-consumption-measures-pollution-generation.pdf

17 UK Energy Research Council. “Carbon Emission Accounting—Balancing the books for the UK” July 2011.

18 DEFRA “Introduction for Lord Henley 26 May 2010” Obtained under FOI March 2011
http://www.scribd.com/doc/69607224

19 “Briefing pack—Consumer Emissions (Climate Change) Bill Second Reading Debate, Friday 15 January 2010”. Obtained under FOI, April 2011. http://www.scribd.com/doc/69298520/Upload-1-Annex-a-Request-10-2638

20 Briefing pack—Consumer Emissions (Climate Change) Bill Second Reading Debate, Friday 15 January 2010
http://www.scribd.com/doc/69298520/Upload-1-Annex-a-Request-10-2638

21 Hansard, 15 Jan 2010: Column 747,
http://www.publications.parliament.uk/pa/ld200910/ldhansrd/text/100115-0006.htm

22 Upcoming decisions on Carbon Budgets, DEFRA 2010. Obtained under FOI Fe 2011.
http://www.scribd.com/doc/70091128/2010-12-FINAL-SCP-Update-Slides

23 Publication of DEFRA research report, Embedded C02 emissions associated with UK imports. 29 May 2008. Obtained under FOI http://www.scribd.com/doc/69593201/BIS-FOI-Appeal-Briefing-Doc-29-May-2008

24 See 59.

25 UK in “delusion” over emissions. BBC News online, 31 July 2008
http://news.bbc.co.uk/1/hi/sci/tech/7536124.stm

Prepared 17th April 2012