CARBON EMISSION ACCOUNTING IN MRIO MODELS: THE TERRITORY VS. THE RESIDENCE PRINCIPLE

Abstract

Consumption-based CO₂ emissions, which are commonly calculated by means of environmentally extended input–output analysis, are gaining wider recognition as a way to complement territorial emission inventories. Although their use has increased significantly in the last years, insufficient attention has been paid to the methodological soundness of the underlying environmental extension. This should follow the internationally agreed accounting rules of the System of Environmental-Economic Accounting, which addresses the activities undertaken by the residents of a country, independent from where these take place. Nonetheless, some footprint calculations use extensions that account for all the activities within the territory, which leads to methodological inconsistencies. Thus, this article introduces the most relevant conceptual differences between these accounting frameworks and shows the magnitude of the gap between them building on the data generated for the EXIOBASE model. It concludes that the differences are high for many countries and their magnitude is increasing over time.

Keywords:

• Residence principle
• Air emission accounts
• Environmentally extended input–output analysis
• Carbon footprint
• Consumption-based emissions

Acknowledgements

We thank Ander Lezaun for his help with the data work and two anonymous reviewers for their constructive comments on this paper.

Notes

¹The energy first approach described in Eurostat (2009) is used to estimate the emissions arising from combustion processes in EXIOBASE, while the TEAM model, which explicitly models the use of certain technologies (Pulles et al., 2007), is applied to estimate the emissions not related to combustion (Kuenen et al., 2013). Given that this database contains more air emission categories than official statistics and represents more industries and product groups, a common approach for every country was used at the expense of losing some consistency with official air emission accounts. Overwriting the emission data for some countries would have resulted in a relevant decrease of the consistency between the input-output table and the air emission data (Andrew and Peters, 2013). Thus, the differences between the total emission by substance and economic activity represented in the accounts generated for EXIOBASE and those reported by Member States to Eurostat under the Regulation 691/2011 can be due to diverse reasons, for example, an approach used to calculate combustion-related emissions and an approach taken to calculate the emissions from non-combustion uses, emission factors, aggregation level of the economic activities, activity variables used, etc.

²As pointed out by the IEA (2013a, p. 31) in relation to the carbon emission reported from bunkers in UNFCCC inventories, “some countries have incorrectly defined bunkers as fuel used abroad by their own ships and planes. Still other countries ( … ) have included international bunkers in their totals”. This affects the comparability of the results of this item with the IEA and EXIOBASE estimates.

Additional information

Funding

DESIRE was funded by the 7th Framework Program of the European Commission (Grant Agreement no: 308552). This paper does not represent any official position or endorsement of the funding organisation.