Proposing a beneficiary-based shared responsibility approach for calculating national carbon accounts during the post-Kyoto era

Abstract

Considerable progress has been made in Europe towards cutting GHG emissions during the last decade, but this achievement is partly due to the delocalization of manufacturing industries to emerging countries. Under the United Nations Framework Convention on Climate Change, the current emission accounting method is production-based and cannot fully capture this effect. The use of such a method is clearly unfavourable for emerging countries and could lead to difficulties in engaging them in climate policy negotiations. The consumption-based approach represents the other extreme in apportioning emission responsibilities. This article proposes the beneficiary-based shared responsibility approach, which outperforms previous methods in terms of scientific justification and political acceptability. Consumer countries benefit from enjoying the product itself, while producing countries benefit from the production process, which provides them with employment, government income, and company profit. Thus, emissions related to the material throughput used to produce exported products should be allocated to the final place of consumption. The income of production activities benefits the producer country, so emissions associated with these values should be allocated to them. The main reason for taking this accounting approach is that the responsibility for emissions and the benefits of enjoying a product should not be decoupled.

Policy relevance

Present emission accounting methods do not motivate significant emitters like China to engage in international emission reduction targets as their economies rely heavily on export-oriented growth. An accounting method is needed that does not shift the responsibility for GHG emissions solely onto the producer country. The beneficiary-based shared responsibility approach presented in the article provides a politically more acceptable option for emission accounting as it takes into account the economic and consumer benefits associated with the production of traded goods. Empirical results make clear that accurately assessing the impacts of trade on emission data is of utmost importance for drawing meaningful conclusions about the success of climate policy. Emission accounting based on a beneficiary-based shared responsibility approach could result in the participation of more emerging countries in future climate agreements as more acceptable reduction targets could be set and accepted by a broader scope of countries.

Keywords:

• China
• embodied carbon
• GHG accounting
• GHG emissions
• input–output accounting
• Kyoto Protocol

Acknowledgements

The research described in this article was supported by the ‘Sustainable supply chain’ OTKA (Hungarian Scientific Research Fund) 50888 project. Zsófia Vetőné Mózner would also like to acknowledge the contribution of TÁMOP project 4.2.2./B-10/1-2010-0023 of the Doctoral School of Management and Business Administration, Corvinus University of Budapest, for proofreading services.

Notes

1. In the presented model, a simplified one producer country–one consumer country model was assumed, where the importing country is the consuming country. However, in the real world, final goods and services might be the result of production across many countries. The value chain of final goods can stretch across multiple countries, and value-added can occur in more than one country.