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Time to give the carbon footprint a higher profile in climate change policy

Time to give the carbon footprint a higher profile in climate change policy

 

 

This is shocking. Half the UK’s carbon footprint is accounted for by net imports; and, despite a sharp fall in carbon pollution from domestic sources, our overall footprint was exactly the same in 2015 as it was in 1990. In effect, we have made no contribution at all to tackling climate change. No wonder global emissions are still rising. We have a mountain to climb – but one that hardly features in the national debate. Thanks, though, to Caroline Lucas, for highlighting the problem in a debate in the House of Commons (jointly with Layla Moran MP) and in an article in the Guardian.

This note tells the story, and then looks at what might be done, especially (a) working with the countries that supply our imports to reduce their own footprint, and (b) tackling our own over-consumption. I do not do much more than provide a check-list of things to think about, ranging from financial aid for emerging economies to a Green New Deal at home.  I do, however, offer a framework for thinking about policy interventions: Encourage. Incentivise. Enforce.

At the end, I ask why it is that national and international policy pay so little attention to the footprint. Nationally, the UK’s Climate Change Committee has not published a report on the subject since 2013. Should there be a target, as there is for national emissions, even a budget, enshrined in law? And internationally, why does the UNFCCC not mandate that every country should report its footprint, and make commitments in its next round of climate pledges?

To begin with the data . . .

We have become used to hearing how well the UK is doing in reducing emissions, and it is – though obviously deeper and faster cuts are desirable. But look at the graph below from the EORA carbon footprint model, which uses consumption-based accounting (CBA) to calculate the carbon footprint. Emissions of CO2 have indeed been falling quite rapidly, especially since about 2007: by 27% overall since 1997, when the Kyoto Protocol was agreed, and by 31% since 1990, the Kyoto reference year. But the UK’s carbon footprint, taking account of imports, rose sharply, is now falling, but overall has not fallen at all: it was 656 Mt in 1990, and 657Mt in the latest year for which data are shown, 2015.

Figure 1

Source: https://worldmrio.com/footprints/carbon/

I will return to the numbers shortly, but of course the difference between the two series on the graph is that we are importing a lot of ‘stuff’ - and imports have their own carbon footprint. It looks as though there is a mountain still to climb if overall emissions are to be reduced.

The 'carbon loophole'

Why this matters, and has global policy implications, is that the official reporting, under the terms of the UNFCCC, is of emissions not footprints, and so disguises countries’ overall impact on the climate. This has been described as ‘the carbon loophole’.

Thus, the Kyoto Protocol, adopted in 1997, required (mainly developed) countries to reduce their national Greenhouse Gas (GHG) emissions by 5% below 1990 levels in the commitment period 2008-12. The Doha amendment, adopted in 2012 but not yet formally ratified by a sufficient number of countries, provided for further reductions by 2020. The Paris Agreement in 2015 took a different approach, setting a global temperature target and requiring countries to submit Nationally Determined Contributions towards achieving the target These also focused on national emissions (albeit with some provision for trading between countries). The UK commitment was for a 12.5% reduction in GHG emissions during the first Kyoto commitment period, and, jointly with other EUEuropean Union Member States, for a 20% reduction from 1990 levels by 2020. In Paris, and again jointly with other EUEuropean Union Member States, the UK committed to a 40% reduction by 2030 from 1990 levels.

Now, obviously, the UK is active in trying to meet its commitments in terms of domestic emissions. The commitments are mandated in legislation, thanks to the Climate Change Act of 2008, and implemented through national carbon budgets approved by Parliament. Progress is kept under constant review by the independent Committee on Climate Change, established as a statutory body by the 2008 Act. Most recently, the Government was able to report that GHG emissions fell by 3% in 2018, to a level 44% below the 1990 level, and at the lowest since the 1890s. Claire Perry, minister for energy and clean growth, was reported as saying that ‘We can be proud that we continue to lead the way in reducing emissions while growing our economy’.

Well, yes. But you might think that both the Government and the independent CCC would have the issue of imported emissions high on their agenda. In fact, the CCC did publish a Report on Reducing the UK’s Carbon Footprint, back in 2013. It said that

‘UK greenhouse gas emissions have fallen substantially over the last two decades. However, UK imports of goods and services have risen significantly over the same period and a number of studies, as well as estimates produced for us, have suggested that the emissions embedded in these imports have caused the UK’s overall ‘carbon footprint’ (i.e. emissions measured on a consumption basis) to increase. These studies also indicate that the UK has one of the largest gaps between production and consumption emissions in the world, with our net imports of emissions higher than those of most other countries. This is due to the types of goods and services we trade – we import a large quantity of manufactured goods, and we primarily export services.’

The main conclusion of the Report was that a global deal was required to achieve climate goals.

There seem to have been no CCC reports on this topic since 2013. However, the Department for Environment, Food and Rural Affairs (DEFRA) published a report in May 2018 on the UK’s Carbon Footprint 1997-2015, based on work by the University of Leeds, and also drawing on the EORA MRIO work cited earlier (see e.g. this paper). This shows (Figure 2) that imported emissions by the UK from all parts of the world rose during the period, most significantly from China. Note that these statistics are described as experimental. They refer to GHGs not just CO2.A new report has just been published, updating the data to 2016. This shows what is described as a 'slight decrease' of 6% in the overall GHG footprint in 2016. 

Figure 2

Source: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/704607/Consumption_emissions_May18.pdf

 

A demonic race between decarbonisation and rising demand

So what is going on? Is this just about exporting services and importing manufactures, as the CCC suggested. Partly, but there are two other factors to consider: rising income and growing population.

On income, and on World Bank data, UK GDPGross Domestic Product per capita rose from $US 28,691 in 1990 to $US 41,537 in 2015, in 2010 constant dollars, an increase of 45%. For population, figures from the Office of National Statistics show that the UK total in 1990 was 57.2m and in 2015 was 65.1m – an increase of nearly 14%. Thus, other things being equal, the footprint would have been expected to rise significantly between 1990 and 2015. In fact, it may be mildly reassuring to learn that the CO2 emissions footprint has fallen over the period, by 50% in the case of emissions per unit of GDPGross Domestic Product (Figure 3), and by 17% for emissions per capita (Figure 4).

Figure 3

Source: https://worldmrio.com/footprints/carbon/

Figure 4

Source: https://worldmrio.com/footprints/carbon/

However, this is only mildly reassuring. Both per capita income and population are projected to rise in the future. There is thus a demonic race between rising demand on the one hand, and on the other, the imperative of decarbonisation.

What to make of this?

The data . . .

First, just to reiterate that the figures are not necessarily the last word. The calculations of embedded carbon and of trade are complex – see, for example, the FAQs on the Eora website. The Eora numbers are for CO2 only, not all GHG. There are other estimates available, for example (also for CO2 only) from The Carbon Project. These appear to be broadly consistent.  There is also a separate debate about the treatment of capital stock in emissions, especially for fast growing economies (see here). But the numbers do not need to be super-accurate to make the point.

The UK compared to other countries . . .

Second, the UK may be a bit of an outlier among developed countries, as suggested by the CCC report. In the UK, 37% of the total CO2 footprint was accounted for by imports (though the DEFRA report says 50% for all GHG). Eora has data for 190 countries, and confirms that the percentage is lower in other developed countries: 34% in France, 15% in Japan, 12% in the US, only 5% in Germany.

For developing countries, the picture is mixed. For China, the CO2 footprint is lower than emissions, by 13%, since so much carbon is exported. But in most poor countries, with lower exports but significant imports, the footprint exceeds the national emissions. This is true, for example, in Ethiopia, Kenya and Tanzania.  It looks as though countries may go through a transition as manufactured exports increase, from a situation in which the footprint exceeds emissions to one where emissions exceed the footprint. Interestingly, Thailand and Vietnam are at a point of balance, where carbon exports about balance carbon imports. Of course, both emissions and footprints are much lower for poorer countries than for rich ones. The UK footprint of 10 tonnes per capita in 2015 compares with 2.3 in Vietnam and 0.1 in Ethiopia.

Pay more attention to carbon embodied in imports . . .

Third, though, the figures do emphasise how important it is to see what the countries which provide our imports are doing. For example, the UK’s carbon imports from China are presumably mostly a question of growing volume, offset by falling carbon intensity. We can see from the Eora database that emissions per unit of GDPGross Domestic Product are falling rapidly in China, by over 80% since 1970.  There is evidence that efficiency improvements have been driving a reduction in the energy intensity of manufacturing, as might be expected (see e.g. here). China has become a leader in climate change diplomacy, and is making major investments in renewable energy and electric vehicles. But is progress sufficient? The Climate Action Tracker rates China’s Nationally Determined Contribution as ‘highly insufficient’ on a fair share basis, mainly because of issues related to coal. Indeed, China’s reliance on coal is a recurrent news item – see e.g. this recent report, raising the alarm about a coal power construction spree.

Figure 5

Source: https://worldmrio.com/footprints/carbon/

 

Deliver change abroad: Encourage. Inncentivise. Enforce.

Fourth, then, and in relation to all exporting countries, it seems reasonable to ask what can be done to realise faster change abroad. There are some options. They can broadly be described as: Encourage. Incentivise. Enforce. Each of these deserves longer treatment, but in brief:

  • Encourage greater ambition in the global climate talks.

2020 is an important year in the UNFCCC process, with countries which submitted pledges to 2025 required to submit their second round of pledges, and those which submitted pledges to 2030 required to update their pledges – all this in preparation for a global stocktake in 2023. Article 4 of the Paris Agreement states specifically that

‘Each Party's successive nationally determined contribution will represent a progression beyond the Party's then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.’

There are also opportunities to build on the Global Climate Action Summit, held in 2018. This brought non-state actors in the public and private sectors firmly into the picture. More than 500 commitments were made, by national and sub-national Governments, mayors, industry leaders and others.

For 2019, the UN Secretary General has convened a Climate Change Summit, to be held in September, and designed to encourage action in a series of ‘action portfolios’, including energy and industry transitions, nature-based solutions, and action by cities.

It is also important to recognise the impact on the public mood, and therefore on the political process, of Greta Thunberg, the School Strike Movement and initiatives like Extinction Rebellion.

  • Incentivise greater ambition by means of financial support and technical cooperation.

Finance has been a key theme of global climate negotiations, with the iconic figure of $US 100 bn per year first mentioned in the Copenhagen Accord agreed by a group of countries at the climate talks in 2009. Climate finance is regarded as a key requirement to bridge the gap between conditional and unconditional Nationally Determined Contributions: for 2030, this difference is estimated at 2-3 Gigatonnes of GtCO2e, a significant additional contribution. Individual countries have made climate finance pledges. For example, the UK has an International Climate Fund worth £5.8bn between 2016 and 2021. There are many (too many) international funds and programmes, including the Climate Investment Funds and  Green Climate Fund. Overviews of progress are available from institutions like ODI and WRI. The UNFCCC provides a biennial review of climate finance, most recently in 2018. The OECD/DAC also tracks climate-related development finance.

Technology has also been a key issue in the climate talks. A Technology Mechanism was established in 2010. A chapter on innovation policy in the 2018 UNEPUnited Nations Environment Programme Emissions Gap Report provides an authoritative overview, emphasising the importance of patient strategic finance, directed (=targeted) investment portfolios, and mission-oriented innovation.

  • Enforce faster action by means of taxes or administrative measures.

The UNEP Emissions Gap Report 2018 again provides authoritative analysis of this issue, especially of financial measures. It summarises the conclusions as follows:

‘Border carbon adjustments are a specific form of carbon tariff that involve levying taxes on imported goods according to their carbon footprint . . . However, implementing border carbon adjustments requires substantial (and accurate) information on production-side emissions and on the direct or implicit carbon prices in exporting countries. Improved monitoring, reporting and verification systems can therefore help make border carbon adjustments more accurate. . . Focusing on particularly carbon-intensive goods (e.g. cement and steel) and conducting an ex ante evaluation on trade impacts can help overcome . . . downsides and make border carbon adjustments more effective . . . Carbon tariffs are not necessarily compatible with World Trade Organization rules, although they could be covered by Article XX of the General Agreement on Tariffs and Trade (GATT), which stipulates that trade policies can be used for achieving environmental goals if no other policies are feasible that are less distortive to trade.’

No doubt there is a literature on regulation. The case that springs to mind is the US attempt to ban tuna caught with purse seine nets, back in 1991. That was under GATTGeneral Agreement on Tariffs and Trade rules and was rejected, though the ruling was not formally adopted. There are various WTOWorld Trade Organization workstreams on trade and the environment, including regulation, though apparently no work specifically on climate change.

Reduce the footprint: act on lifestyles

Fifth, it is necessary to look much more closely at overall lifestyles. What can be done to reduce the carbon footprint?

It goes without saying that rich people have larger footprints than poor ones, globally and nationally.

Globally, Oxfam have looked at the distribution of emission footprints, suggesting that the average emissions of someone in the richest 10% of the world population is 50 times more than that of someone in the poorest 10%. Footprints are much higher in rich countries than poor ones, as noted.

Nationally, the Open University cite data (from a paper by Gough et al in 2012) showing that in the UK ‘the carbon footprint per person for households with the highest 10% of incomes is about three times that of people living in households with the lowest 10%. This is true for all categories, but especially for consumables (goods), private services and transport.’ Similar findings are reported for the US.

Figure 6

Source: https://www-cdn.oxfam.org/s3fs-public/file_attachments/mb-extreme-carbon-inequality-021215-en.pdf

Figure 7

Source: https://www.open.edu/openlearn/nature-environment/environmental-studies/environment-treading-lightly-on-the-earth/content-section-2.1.2

There is an important implication of these findings, which Lutz Sager, the author of the LSE study on EUEuropean Union emissions, describes as the ‘equity-pollution dilemma’, viz that redistributing income from the rich to the poor would most likely increase emissions:

‘The research predicts that if the US had the same household income distribution as Sweden, COemissions from private households would be 1.5% higher, and would increase by 2.3% . . . (Further) despite having a smaller carbon footprint, the consumption of households on lower incomes is more carbon-intensive per dollar because they spend a greater proportion of their income on fossil-fuel-based utilities, for example energy. . .  transferring US$1,000 from a richer household to a poorer household could increase the emissions created by that sum by 5%, or 28.5kg of CO2..’

With that caveat in mind, the issue is what measures can be taken to reduce consumption, contributing to reductions in both imported and national emissions. Again, the earlier model would seem useful as an organising framework: Encourage. Incentivise. Enforce.

There is work on all these, for example at the LSE/Grantham in a work stream on Changing Behaviour, or in a new work programme on lifestyles, being launched at IDDRI in Paris. IDDRI’s earlier work on the European food system is relevant, seeking to balance diet quality and agro-ecological imperatives, inter alia involving fewer imports of animal feed and lower meat consumption. Others focus on housing and mobility: for example, the 1.5 degree Lifestyle Report reviews options like car-free travel, living closer to workplaces and off-grid energy. Green procurement is one of the options examined by the Report on Closing Europe’s Carbon Loophole.

Work on the circular economy is also relevant, for example by Patrick Schroder at IDS in Sussex, linking the circular economy to debates about ‘degrowth’. One way in which this topic has been approached is via an argument for regenerative economics, popularised by Kate Raworth in her book on Doughnut Economics. This links nicely to the case for a New Green Deal, in the UK and now in the US. These initiatives attempt to tackle one of the concerns about degrowth, that it may not create enough jobs, arguing instead that an environmental focus, for example on retrofitting buildings to be more energy efficient, will create many new sources of employment. Maybe. But globally? Africa needs 18 million jobs a year, remember, just to stand still.

Strengthen the reporting and regulatory framework

Finally, an important question remains about how to reflect the issues covered here in national policy and international negotiations.

In terms of national policy, should not the UK Committee on Climate Change, and its counterparts in other countries, pay more attention to footprint issues? The relevant Government Department (DEFRA - Department for Environment, Food and Rural Affairs) reports annually on emissions, and has just published data for 2016. But how about an annual report from the CCC, with recommendations? A long term target, even enshrined in law? A footprint budget, to match the national carbon budget? Of course, a research programme. Parliamentary bodies could also take more interest. In the UK, this could mean the Environmental Audit Committee.

Internationally, a step change is needed in the way in which the UNFCCC handles consumption issues. At the very least the Secretariat should be asked to report regularly on the topic: better data and reporting is a recurrent theme of work on this topic (see e.g. here). More ambitiously, countries should be asked to incorporate consumption targets and commitments into the next round of national pledges.

Image: https://www.123rf.com/stock-photo/carbon_footprint.html?oriSearch=footprint&sti=nb8cgrk9c25tlpii9a&mediapopup=80988343

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