Energy and Climate Change CommitteeMemorandum submitted by the Committee on Climate Change

As you know, CCC analysis and recommendations are based on a production approach to emissions accounting, as required under the Climate Change Act. This approach reflects the international convention, and is one that has been useful in getting agreement on global action to reduce emissions.

However, calculating emissions on a production basis carries that risk that emissions for which a country is responsible are underestimated. This could be the case, for example, where there are significant imports of goods with embodied carbon (eg manufactured goods from China).

This is an area which is relevant when considering the appropriate level of carbon budgets, and one that we are frequently asked about. In particular, it is important to establish through analysis and evidence any implications that a consumption based approach to emissions accounting (ie allowing for imported carbon) might have for design of carbon budgets and supporting policies.

We would therefore welcome a commission from the Government to undertake a review of consumption emissions, the scope of which could include:

Differences in production versus consumption emissions.

Drivers of consumption emissions.

Lifecycle emissions of low carbon technologies.

Policies to limit consumption emissions and mitigate leakage risks (eg global deal, sectoral agreements, border tariff adjustments)

This is something we could turn to after publishing the fourth progress report in June this year.

I would be happy to discuss this issue with you further, and look forward to seeing your report on consumption based accounting.

March 2012

Prepared 17th April 2012