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Carbon accounting

December’s Paris climate summit (COP21) is being billed as a crucial step on the path towards reducing global carbon dioxide emissions. The organisers have stated their intention to come to “a binding and universal agreement on climate, from all the nations of the world.” That is something which has never been achieved before in the two decades of UNFCCC negotiations, despite the partial agreement enshrined in the Kyoto Protocol and the high hopes invested in the failed Copenhagen summit (COP15) just over five years ago.

As Oscar Wilde might have said, to fail to reach agreement once could be seen as misfortune, but to fail twice looks like carelessness. More importantly, to fail twice makes the prospects of achieving agreement at a third attempt increasingly unlikely. Not to come up with some agreement could fatally weaken the whole UNFCCC process in its current form.

The effectiveness of any possible deal in terms of significantly reducing global emissions will come second to the achievement of the deal itself. Industrialised countries are already putting their own commitments on the table to ease the process. Recently, for example, we see that Obama orders cuts in Federal greenhouse gas emissions, one of a series of Executive Orders on climate change issues the US President has been able to make without needing to seek approval from Congress.

More difficult, but vital to any meaningful deal, is to secure commitments which are worth something from large emerging economies, particularly China. China is by far the world’s biggest emitter of CO2, having overtaken America just eight years ago. And last year another milestone was passed, with China becoming the world’s largest economy.

Having invested heavily in energy generation to literally fuel this growth (and continuing to build more power stations for some time to come), China has effectively locked in at least the current level of emissions for the lifetime of the generation fleet. It is unclear when emissions there will peak, although President Xi Jinping promised last year, in a joint statement with President Obama, that it would be ‘around 2030’.

The background to this from the FT can be found at How China set its emissions peak target. There seems to be broad consensus within the country that this will be achieved by a combination of slower economic growth, greater deployment of nuclear and renewable generation plant, reducing carbon intensity (increasing energy efficiency) and “a broad shift in the economy towards the less polluting services sector and away from heavy industry.”

There are two key points to take note of here. First, by the time emissions peak, they will actually be about one third higher than now (China CO2 emissions to rise by one third before 2030 peak –study). The second lies in the quote from the FT article: if China is to move away from heavy industry, either global economic growth has to slow or, more likely, the production is exported elsewhere.

This would be part of an inevitable cycle: 60 years ago, Japan built up its industrial base and played the same role as China does today, becoming the low-cost producer of choice for a whole range of energy- and labour-intensive goods. As Japan became rich and lost its comparative advantage, industrial jobs were exported to South Korea and other later-emerging economies.

China is on the same path, but the future of its heavy industry could increasingly be in India or even Africa. The point is that the phenomenon of so-called ‘carbon leakage’ – offshoring energy intensive industry – will continue while there are countries offering lower costs. The undertaking by China, such as it is, actually not only guarantees that global emissions will be significantly higher in 2030 than they are today, but also hides the fact that carbon leakage will be part of the reason for a peaking and decline of their emissions.

This seemingly inevitable trend has been the basis for regular calls for carbon accounting to be on the basis of consumption rather than generation, most recently, CO2 cuts claim sees ministers challenged by experts. The story is of a report a team of Leeds University researchers, led by Prof John Barrett.

The stark fact reported is that, although carbon dioxide emissions from the UK fell by 194 million tonnes between 1990 and 2012, an extra 280 million tonnes was added as ‘embedded carbon’ via imports of goods. In other words, the carbon dioxide emissions for which the UK can be deemed responsible actually rose by 86 million tonnes over this period.

Prof Barrett believes that making this situation more widely known would change attitudes and ensure people were less inclined to throw things away. He is quoted as saying "This is about adding a complimentary [sic]approach so we can look at additional policy options beyond just changing the energy system, to changing our lifestyles and tackling the social practices which we all conduct." Unfortunately for the good professor, people are seldom as idealistic as he seems to believe.

Another approach which has been proposed is the imposition of import taxes based on the embedded carbon content of products. Economics might make a difference to buying and usage patterns, but would politicians seriously consider erecting trade barriers which would negatively impact the world’s biggest economy and most populous country?

In the real world, we have to accept that carbon dioxide emissions will continue to rise until at least 2030, and possibly significantly longer, unless the majority of us submit to dictatorial rationing. Climate change negotiators may not like this, but they have to face reality. Any agreement reached in Paris will have no impact on global emissions for perhaps a generation. Anyone seriously concerned about the possible impact of climate change should be focussing on adaptation and developing alternative energy sources rather than blindly pursuing a quixotic path of planned emissions reductions. 

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