UK Energy Research Centre Response to the Energy and Climate Change Committee Consultation on Consumption-based Emission Reporting.

Greenhouse gas (GHG) emissions can be allocated to a country in different ways, territorial-, production- and consumption-based emission reporting. There is a marked difference in end results depending on the chosen system. For example, the UK territorial-based emissions have shown a 19% reduction between 1990-2008. Conversley, consumption-based emissions show a 20% increase during the same period, which is driven by GHG embodied in imported products.

It is possible to develop a robust methodology for measuring GHG emissions on a consumption-based approach. In the past 10-years there have been multiple independent studies published on this subject that display consistent results. The methodology of choice is Environmentally Extended Multi-Region Input-Output (EE-MIRO) Analaysis. Whilst there are uncertainties relating to the large and often incoherent datasets, it is believed that standard error estimates can be used to provide confidence in the results.There is significant expertise in EE-MIRO in the UK.

Consumption-based emission inventories are not a silver-bullet for climate policy. Different emission inventories contain complementary information, and thus, consumption-, production-, and territorial-based emission inventories should be considered together.

That said, consumption-based emission modelling does have speciific advantages, in that:

1. It may reveal policy approaches specific to different products.
2. It enables the possibility of standard carbon accounting for organisations globally.

The main disadvantage to consumption-based emission modelling is that it requires additional accounting and analysis.

It is desirable to adopt emission reduction targets based on consumption, in addition to production, for three reasons:

1. It would incorporate options to address ‘weak carbon leakage’ (carbon embodied in imports).
2. It encourages reduction of emissions at least cost, even if the most cost effective option addresses non-territorial emissions.
3. Consumption-based emissions are increasing and as such are undermining UK domestic climate policy.

UKERC proposes three-steps the UK Government could pursue should they wish to move towards consumption-based emissionreporting:

1. The UK Government, in conjunction with UNFCCC and Eurostat, could establish standards for the harmonisation of consumption-based emission reporting methods to ensure robustness and consistency between country estimates.
2. The UK Government should commission a report to assess all the UK demand-side strategies contributing to emission reduction within and without of the UK.
3. The UK Government could assess the cost-effectiveness of demand-side strategies to understand whether they are revenue generating or a cost.