Carbon Budgets - Environmental Audit Committee Contents


Written evidence submitted by the Public Interest Research Centre

ABOUT PIRC

The Public Interest Research Centre (PIRC) is an independent charity, whose work is aimed towards building a sustainable society. Through research and advocacy, we press for the structural changes needed to effectively tackle climate change and ecological degradation.

DECLARATION OF INTERESTS

Established in 1971, the Public Interest Research Centre is an independent charity (Registered No 266446). Our funding is provided by charitable foundations and individual donations. We do not receive any corporate or government funding.

SUMMARY

—  Plans to cut the UK's emissions in half by 2025 stand to be cancelled out by a rapid rise in outsourced emissions, unless tough measures are taken to address them.

—  Outsourced emissions are set to negate the UK's contributions to arresting the pace of climate change, severely damage its credibility as a global leader in tackling emissions, pose an obstacle to securing an international climate agreement and have major implications for global justice.

—  A robust evidence base now exists to justify action to mitigate outsourced emissions.

—  Government has known about this issue for a long time and has received advice from many different quarters urging action—but to date has failed to take adequate steps to address the problem.

—  Given this, we recommend that:

—  The Committee on Climate Change is mandated by government to conduct a full investigation of outsourced emissions.

—  DECC ensure action on outsourced emissions is included in its updated Carbon Plan for the fourth carbon budget period.

—  Government publish measurements of the UK's outsourced emissions annually alongside the National Greenhouse Gas Inventory.

—  The forthcoming Green Economy Roadmap and White Paper on the Natural Environment should both enshrine the principle of taking responsibility for the global impacts of UK consumption, including outsourced emissions.

—  We would also welcome a dedicated inquiry into the subject of outsourced emissions by the Environmental Audit Committee.

SUBMISSION

1.  The government's recently announced plans for the fourth carbon budget (2023-27) make provision for a 50% cut in the UK's domestic emissions by 2025. This is a welcome development. However, the government's stated approach for reaching this target[12]—in common with the approach adopted for the first three carbon budgets—contains a major omission: a failure to take into account outsourced emissions.

2.  "Outsourced emissions" are those greenhouse gas emissions resulting from the manufacture of goods and services destined for UK consumption, but emitted overseas—and therefore excluded from the UK's national greenhouse gas reporting and carbon budgets. A range of different terms have been used to refer to these emissions in the past (including "consumption emissions", "embedded emissions", "embodied emissions", and "imported emissions"). In this memorandum, we use the term "outsourced emissions", and occasionally refer to accounting for emissions on a "consumption basis".

3.  Outsourced emissions are a large and growing problem. The UK National Greenhouse Gas Inventory reports a drop in domestic emissions of 12% since 1990. But factoring in outsourced emissions reveals there has in fact been a rise in emissions of 19% between 1992 and 2004.[13] This worrying trend is set to continue. Recently-released analysis from the Carbon Trust shows that UK's total carbon footprint, factoring in outsourced emissions, will at best remain stable or increase into the 2020s. On a consumption basis, UK emissions stood at 844 MtCO2 in 2010. By 2025, the midpoint of the 4th carbon budget, total UK emissions will at best sum to 803 MtCO2, and in the worst case, are anticipated to increase to 908MtCO2e (see graph 1, below). This is forecast to be the case even if the domestic emissions reductions legally required by the first three carbon budgets are met.[14] Other analysis by Stockholm Environment Institute for WRAP suggests outsourced emissions will continue to increase out to 2050 unless remedial action is taken.[15]

Graph 1

TIME SERIES OF UK CONSUMPTION EMISSIONS, 1992-2025.
SOURCE: CARBON TRUST[16]

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4.  Outsourced emissions pose a fundamental challenge to existing attempts by the UK to reduce our contribution to global greenhouse gas concentrations and arrest the pace of climate change. Their continued growth undermines what is being done domestically to reach carbon targets and stay within carbon budgets. As a December 2010 briefing prepared for Defra Ministers on the 4th carbon budget, released under the Freedom of Information Act, states: "increased emissions from UK consumption could cancel out the progress that we have made in reducing domestic carbon emissions."[17]

Allowing the impacts of British consumption patterns and import trends to continue increasing unabated could mean the UK playing little to no role in slowing global warming, and in the worst case, continuing to drive it. As a DECC Ministerial briefing from January 2010 puts it, "The energy that goes into making many consumer goods might be used in another country, but by purchasing these products, we are contributing to that energy consumption."[18] Needless to say, the atmosphere does not care where greenhouse gases are emitted.

5.  Outsourced emissions have important global justice implications. The present situation results in the UK and other developed nations effectively depositing responsibility for cleaning up production processes onto developing countries, without paying the full ecological costs for the products we consume.

6.  Without addressing outsourced emissions, the UK cannot maintain its reputation as a global leader in tackling climate change. The UK possesses one of the most progressive pieces of climate legislation in the world, the Climate Change Act, and has recently become the first nation to set binding carbon targets beyond 2020. But once it is understood that the UK's successes to date in reducing emissions stem substantially from the outsourcing of industry and agriculture (and hence emissions) overseas, particularly to developing countries, these successes appear hollow. Many western countries have significant levels of outsourced emissions; but the UK's performance is particularly poor—our consumption emissions are 34% higher than our production emissions, a ratio that puts us ahead of Germany, Japan and the USA, although behind France and Sweden.[19] Being seen as one of the countries doing most to dump the problem on other nations is a less desirable accolade, but it is one the UK may acquire if it fails to tackle the problem.

7.  The continued outsourcing of emissions to developing countries comprises not only an injustice but a stumbling block to achieving a strong international climate agreement. Disagreement over how to divide responsibility for emissions between developed and developing countries continues to hamstring the UNFCCC process. China is now the world's largest emitter, but between 23% and 34% of its emissions result from exporting goods to the rest of world.[20] Steven Davis of the Carnegie Institution of Sciences, who has conducted analysis of outsourced emissions, argues that "allocating responsibility for some portion of these emissions to final consumers elsewhere may represent an opportunity for compromise."[21] With the Kyoto Protocol set to expire in 2012, precious little negotiating time remains to agree on a successor treaty. The UK should play a leading role in helping break the deadlock by taking greater responsibility for its outsourced emissions.

8.  Outsourced emissions are a problem that the government is well aware of, but has so far failed to adequately address—or even acknowledge publicly. Documents PIRC has obtained under FOI show that civil servants have been looking at this issue since at least 2004.[22] The extent of government awareness, and the breadth of advice it has received urging action on outsourced emissions, is summarised below. We follow with a short assessment of the adequacy of its policy responses to date.

9.  The Committee on Climate Change's advice for the fourth carbon budget recognises outsourced emissions are a major problem and recommends further investigation. Their report states: "Our assessment of emissions reduction from diet rebalancing raises broader questions about production- versus consumption-based emissions accounting approaches, which we believe it would be useful for the Committee to investigate in detail, both as regards agriculture and more generally."[23] A Defra Ministerial briefing on the fourth carbon budget from December 2010 states: "The Government should commission the CCC to look into the implications of considering UK emissions on a consumption rather than a production basis."[24] The Committee has also shown a long-standing interest in the issue, as its meeting minutes attest. Yet to date the government has repeatedly refused to ask the CCC to investigate the matter: at first stating it would wait to see the outcome of Copenhagen,[25] then claiming the Committee was too busy to undertake such work,[26] and most recently—in response to Parliamentary Questions from Joan Walley MP—simply refusing outright.[27]

10.  Defra's Sustainable Consumption and Production (SCP) team is a small unit whose responsibilities include accounting for the global impact of UK consumption patterns. To date, the SCP team have commissioned two pieces of research into outsourced emissions and consumption-based emissions accounting. The first of these, a study by Stockholm Environment Institute (SEI), showed the UK's total emissions rose by 19% between 1992-2004. Though completed by January 2008, it was not released until July that year, and some controversy surrounds the delay in its release.[28] PIRC understands that a Ministerial Special Advisor attempted to block its release. To Defra's credit, the report was published and a follow-up analysis into key drivers in consumption emissions commissioned, and finally released in October 2010. The first report recommended that "an 'embedded CO2 indicator' showing a time series of CO2 emissions from a consumption perspective ('carbon consumption') should be considered for publication with official UK statistics, alongside already existing greenhouse gas emission trends. This would give a more complete picture of emissions induced by UK economic activity." For two years and a half years, this recommendation was not acted upon. However, in December 2010, a contract was let to SEI to "monitor the greenhouse gas emissions associated with UK consumption" for the next five years.[29] But uncertainty remains around whether this indicator will actually be published alongside the National Greenhouse Gas Inventory each year.

Beyond undertaking research, the SCP team has supported the development of a product carbon footprinting standard (PAS 2050) and produced a number of "product roadmaps" mapping out how industry can reduce the impacts of their goods and services. However, it is now clearer than ever that these policies are inadequate to the scale of the challenge posed by outsourced emissions. Furthermore, the SCP is, in the words of a recent Green Alliance report, "significantly under-resourced relative to the scale of the challenge".[30] It is not clear how far recent budget cuts within Defra have affected the SCP's capacity further.

11.  The Chief Scientific Advisors at both DECC and Defra have spoken out on the subject of outsourced emissions in the recent past. Prof Bob Watson, Defra CSA, confirmed that total UK emissions had risen and urged that "We've got to be more open about this" in an interview in September 2010.[31] Prof David MacKay, prior to being appointed DECC CSA, wrote about outsourced emissions in his popular book Sustainable Energy Without the Hot Air, arguing in his chapter on manufactured goods: "Should we ignore the energy cost of making the gizmo, because it's imported? I don't think so." His own estimates of the scale of outsourced emissions are "in the same ballpark" as an independent study by Dieter Helm, and in excess of the estimates in the Defra-SEI 2008 report.[32]

12.  Both the Carbon Trust and WRAP have produced research into outsourced emissions, as discussed previously in paragraph (3). The Carbon Trust concludes that its analysis "demonstrates the importance of compiling consumption-based emission inventories and quantifying the emissions associated with international trade on a regular basis."[33]

13.  The Government's 2005 Sustainable Development Strategy enshrined the principle that "There would be little value in reducing the environmental impacts [of a product] within the UK if the results were merely to displace those impacts overseas or close off bene?ts at home or abroad."[34] Whether this principle has been adhered to in ensuing policy is questionable. The current Coalition government has not indicated it will be issuing an updated or replacement sustainable development strategy.

14.  An extensive and increasing evidence base regarding outsourced emissions now exists, upon which the government is able to draw to develop policy. Recent academic papers on the subject include studies by the Universities of Stanford,[35] Oxford,[36] and Surrey;[37] by Stockholm Environment Institute;[38] and by researchers collaborating between institutions.[39] NGOs and think tanks who have produced analysis of outsourced emissions include Policy Exchange,[40] Green Alliance,[41] WWF,[42] and the New Economics Foundation.[43] Former Government Chief Scientific Advisor Sir David King is currently preparing research on outsourced emissions for publication in June 2011.[44] Lord Stern has spoken of his concern about the issue;[45] Lord Giddens has written about it;[46] whilst Lord Teverson introduced a Private Members' Bill into the Lords in January 2010 to measure and reduce emissions from consumption.[47]

15.  This is an issue which the Environmental Audit Committee has touched upon in the past, although it has not yet investigated it in detail. In 2008, the National Audit Office produced a report for the EAC on greenhouse gas reporting, in which it suggested: "Issues which the Environmental Audit Committee might be interested in pursuing include …. the degree to which UK policy could or should take account of consumption-based emissions estimates—bearing in mind international reporting requirements, and the lack of reliable data and additional uncertainties involved in such estimates".[48]

16.  Inadequacy of the government's policy response to date. It is plain that, despite the weight of evidence and quantity of sound advice it has received to date on outsourced emissions, the government has failed to respond adequately. DECC appear to have no civil servants working on the issue. Defra's SCP team are under-resourced and their activities incommensurate to the scale of the problem. The government now possesses no detailed overarching sustainable development strategy that could embody the principle of taking outsourced emissions into account, and with the closure of the Sustainable Development Commission, no body to hold it such principles. Though the Green Economy Roadmap may yet enshrine such a principle, there is no certainty it will, and its release has already been delayed. The government's repeated refusal to mandate the Committee on Climate Change to investigate is worrying and unacceptable. The Carbon Trust's research into outsourced emissions has been invaluable but since its budget has been cut by 40%, there is no guarantee its work here will continue. Defra's decision to commission SEI to measure total UK emissions, including those from consumption, is a welcome development—though these do need to be published alongside the National Greenhouse Gas Inventory. Lastly, and most importantly, accepting the problem of outsourced emissions exists is of course only the first step: we then, collectively, have to actually reduce them.

RECOMMENDATIONS

Actions in the UK

1.  The government must mandate the Committee on Climate Change to undertake a full investigation into outsourced emissions. The Committee is the body best placed to advise on whether outsourced emissions should be included in future carbon budgets, and how they can be reduced.

2.  DECC needs to develop a policy response on outsourced emissions as part of its updated Carbon Plan, to be published by November 2011. It must begin to devote resources to tackling outsourced emissions. Defra's Sustainable Consumption and Production team must be given more resources adequate to the task of addressing outsourced emissions, or its responsibilities moved into DECC.

3.  Government must publish measurements of the UK's outsourced emissions annually alongside the National Greenhouse Gas Inventory.

4.  The forthcoming Green Economy Roadmap and White Paper on the Natural Environment should both enshrine the principle of taking responsibility for the global impacts of UK consumption, including outsourced emissions, and not just emissions that occur within UK territorial borders. In future, all government policies need to be assessed not simply for their impact on emissions in the UK, but whether they will reduce or increase emissions overseas as well.

5.  We would also welcome a dedicated inquiry into the subject of outsourced emissions by the Environmental Audit Committee.

6 June 2011


12   Chris Huhne, Secretary of State for Energy and Climate Change, Oral Statement to the House of Commons, 17 May 2011, http://www.decc.gov.uk/en/content/cms/news/cb_oms/cb_oms.aspx  Back

13   Stockholm Environment Institute, Development of an Embedded Emissions Indicator, report for Defra, July 2008. Back

14   Carbon Trust, International Carbon Flows, May 2011,
http://www.carbontrust.co.uk/policy-legislation/international-carbon-flows/pages/default.aspx  
Back

15   WRAP, Meeting the UK climate change challenge: The contribution of resource efficiency, 2009. WRAP Project EVA128. Report prepared by Stockholm Environment Institute and University of Durham Business School.
http://www.wrap.org.uk/downloads/Final_Report_EVA128_SEI_1_JB_SC_JB3.37c58d44.8038.pdf 
Back

16   Carbon Trust, International Carbon Flows, ibid. Back

17   Defra Ministerial briefing, "Upcoming decisions on carbon budgets: Annex giving further details on relevant Defra policy areas", 13 December 2010, slides 21-22. Released under FOI in March 2011, available for download from http://pirc.info/foi_outsourced.zip Back

18   DECC, "Briefing pack-Consumer Emissions (Climate Change) Bill Second Reading Debate", 15 January 2010. Released under FOI in March 2011, available for download from http://pirc.info/foi_outsourced.zip Back

19   Carbon Trust, International Carbon Flows, ibid. Back

20   The 23% figure is from the Tyndall Centre Briefing Note No. 23, "Who Owns China's Emissions?", October 2007, http://www.tyndall.ac.uk/sites/default/files/bn23.pdf. The estimate of 34% is from Steven J Davis and Ken Caldeira, Carnegie Insitution for Science (Stanford University), "Consumption-based accounting of CO2 emissions", Proceedings of National Academy of Sciences, vol 107, no 12, March 2010. Back

21   Carnegie Institution of Science (Stanford University) press release, 8 March 2010,
http://carnegiescience.edu/news/carbon_emissions_outsourced_developing_countries  
Back

22   The documents are available for download from http://pirc.info/foi_outsourced.zip. Back

23   Committee on Climate Change, The Fourth Carbon Budget, December 2010, p 296. Back

24   Defra Ministerial briefing, "Upcoming decisions on carbon budgets: Annex giving further details on relevant Defra policy areas", 13 December 2010, slides 21-22. Released under FOI in March 2011, available for download from http://pirc.info/foi_outsourced.zip Back

25   DECC Ministerial briefings, "Lib Dem debate briefing", 21 October 2009, and "EAC enquiry-Carbon Budgets briefing", 16 October 2009. Available for download from http://pirc.info/foi_outsourced.zip Back

26   DECC Ministerial briefing, "Briefing pack-Consumer Emissions (Climate Change) Bill Second Reading Debate", 15 January 2010. Released under FOI in March 2011, available for download from
http://pirc.info/foi_outsourced.zip. See also statement by Lord Faulkner to the House of Lords during debate on Lord Teverson's Private Members Bill, 15 January 2010. 
Back

27   Written responses to Parliamentary Questions tabled by Joan Walley MP, 28 February 2011,
http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110228/text/110228w0009.htm#11030127000251, and 19 May 2011, http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110519/text/110519w0003.htm#11051961002201.  
Back

28   As BBC environment correspondent Roger Harrabin noted at the time, "The government sat on the Defra SEI report since February, tested its calculations, then published it in an obscure press release on 2 July." Roger Harrabin, "UK in 'delusion' over emissions", BBC news online, 31 July 2008, http://news.bbc.co.uk/1/hi/sci/tech/7536421.stm. A Defra briefing on the SEI study from 29 May 2008 PIRC obtained under FOI states: "lt is well known, at least in the research community, that Defra has recently completed this project. There is no good reason to delay publication and doing so may attract unwarranted negative attention." Available at http://pirc.info/foi_outsourced.zip. Back

29   See http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=17729&FromSearch=Y&Publisher=1&SearchText=embedded&SortString=ProjectCode&SortOrder=Asc&Paging=10#Description  Back

30   Green Alliance, A Pathway to Greener Products: Recommendations from Green Alliance's Designing Out Waste Consortium, September 2010, p 7. Back

31   Press Association, "UK urged to be more open about greenhouse gas emissions", 3 September 2010,
http://www.guardian.co.uk/environment/2010/sep/03/uk-greenhouse-gas-emissions-bob-watson  
Back

32   David MacKay, Sustainable Energy Without the Hot Air, 2009. Back

33   Carbon Trust, International Carbon Flows: Background & Theory, May 2011,
http://www.carbontrust.co.uk/policy-legislation/international-carbon-flows/global-flows/pages/background.aspx  
Back

34   HM Government Sustainable Development Strategy, Securing the Future, 2005, p 43. Back

35   Steven J Davis and Ken Caldeira, Carnegie Insitution for Science (Stanford University), "Consumption-based accounting of CO2 emissions", Proceedings of National Academy of Sciences, vol 107, no 12, March 2010. Back

36   Dieter Helm, Oxford University, Too Good to Be True? The UK's Climate Change Record, December 2007. Back

37   Angela Druckman and Tim Jackson, University of Surrey, "The carbon footprint of UK households 1990-2004: A socio-economically disaggregated, quasi-multi-regional input-output model", Ecological Economics 68, 2009, pp 2066-2077. Back

38   Stockholm Environment Institute, Development of an Embedded Emissions Indicator, report for Defra, July 2008. Back

39   For example, Glen Peters, Jan Minx et al, "Growth in emission transfers via international trade from 1990 to 2008", Proceedings of the National Academy of Sciences, vol 108 no 21, pp 8903-8908, March 2011. Back

40   Andrew Brinkley & Simon Less, Policy Exchange, Carbon Omissions: consumption-based accounting for international carbon emissions, October 2010. Back

41   Green Alliance, A Pathway to Greener Products: Recommendations from Green Alliance's Designing Out Waste Consortium, September 2010. Back

42   WWF and Stockholm Environment Institute, Counting Consumption: CO2 emissions, material flows and Ecological Footprint of the UK by region and devolved country, 2006. Back

43   New Economics Foundation, Chinadependence: The 2nd UK interdependence report, 2007.
http://www.neweconomics.org/publications/chinadependence. 
Back

44   Referenced by Fiona Harvey, "World must face 'inconvenient truth' of emissions rise, says UN climate chief", 31 May 2011,
http://www.guardian.co.uk/environment/2011/may/31/emissions-rise-un-climate-chief, and personal correspondence with Smith School of Enterprise, which Sir David King directs. 
Back

45   George Monbiot, "Stern breaks the east-west deadlock on who's responsible for CO2", Guardian online, 27 May 2009,
http://www.guardian.co.uk/environment/georgemonbiot/2009/may/27/monbiot-stern-east-west-deadlock-co2 
Back

46   Discussed by Lord Giddens in his book The Politics of Climate Change, 2009. Back

47   House of Lords debate on Lord Teverson's Private Members Bill, 15 January 2010,
http://www.publications.parliament.uk/pa/ld200910/ldhansrd/text/100115-0006.htm  
Back

48   National Audit Office, UK greenhouse gas emissions: measurement and reporting, March 2008. Back


 
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Prepared 11 October 2011