9 Carbon taxes and embedded carbon
91. In our inquiry into Consumption Based Emissions
Reporting, we concluded "There is a clear divergence
between the UK's territorial emissions and its consumption-based
emissions".[127]
DECC's official greenhouse gases figures (which count territorial
emissions from power stations and transport etc, within UK borders)
showed an almost 20% reduction between 1990 and 2009.[128]
But research commissioned by DEFRA revealed that greenhouse gas
emissions were 20% higher in 2009 if emissions embedded in imports
were included.[129]
92. These embedded emissions were left out of the
Kyoto processdespite the successes of many EU countries
in cutting territorial emissions, global emissions have not fallen
because many of the territorial gains have been offset by importing
goods manufactured elsewhere.[130]
93. There is a need to address these consumption
based emissions but current policy instruments do not allow us
to do so. Prof. Paavola said "In 20 or 30 years' time the
majority of emissions are from consumption, not production, and
the current policy instruments don't really give any leverage
over that." [131]
The pricing of embedded carbon could be achieved through a tax
or through a cap-and trade system for carbon embedded in goods,
so that the cost of carbon is also embedded as it crosses borders.[132]
94. We explored a border tax adjustment mechanism
during the Consumption Based Emissions Reporting inquiry,
specifically through border tax adjustments (BTAs) in which a
tariff would be placed on the carbon embedded in a country's imports,
bringing the price of the embedded carbon in line with that imposed
on domestically produced carbon emissions.[133]
Border tax adjustments can incentivise countries to introduce
their own schemes to generate a carbon-pricing process so that
they benefit from the tax too.[134]
When this was put to DECC, they said "We are less than keen
on starting an international trade war at a time of global recession."[135]
95. We welcome
the Department's acknowledgement of our concerns as outlined in
our Consumption Based Emissions Reporting inquiry and their plan
to increase the prominence of consumption-based emissions alongside
territorial emissions in their literature. However, this does
not address the emissions due to embedded carbon, or go far enough
towards tackling global emissions. As our report highlighted,
we recognise the enormous difficulty of achieving a legally binding
agreement on emissions reductions based on consumption rather
than territorial emissions, not least because all international
negotiations hitherto have been based on the latter. We are therefore
not proposing that consumption based emissions should immediately
be introduced into the international process. However we urge
the Government to show leadership and acknowledge that consumption
in the UK and some other developed countries is driving up territorial
emissions elsewhere . This acknowledgement would encourage a more
equitable approach to reducing emissions globally.
127 Energy and Climate Change Select Committee, Twelfth
Report of Session 2010-12, Consumption Based Emissions Reporting,
March 2012, HC 1646, para 15 Back
128
DECC Statistical Release, 31 March 2011, www.decc.gov.uk/assets/decc/Statistics/climate_change/1515-statrelease-ghg-emissions-31032011.pdf Back
129
Defra Statistical Release, 8 March 2012,www.defra.gov.uk/statistics/files/Release_carbon_footprint_08Mar12.pdf Back
130
Q 117 Back
131
Q 127 [Prof. Jouni Paavola] Back
132
Q 112 Back
133
Energy and Climate Change Select Committee, Twelfth Report of
Session 2010-12, Consumption Based Emissions Reporting,
March 2012, HC 1646, p 34 Back
134
Q 118 Back
135
Q 224 Back
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