Last reviewed 31 January 2012

John Barwise asks if we are rising to the climate change challenge or just kidding ourselves on emissions reduction.

Imported emissions — a Kyoto reporting loophole?

The UK, like many of our European neighbours, is on track to meet international commitments to reduce greenhouse gas (GHG) emissions. But the Kyoto Protocol only requires countries to account for terrestrial emissions and does not include embodied carbon in imported products, which experts say are significantly higher than home-grown emissions. The Energy and Climate Change Committee (ECCC) has launched an inquiry to find out whether there is a case for including emissions from imported consumer products.

Total GHG emissions in the EU-27 (all Member States) have been falling consistently every year since 2004 and were 17.4% below 1990 levels in 2009, representing a net reduction of 974 million tonnes of CO2. There are one or two Member States that could do better — Austria and Italy for example — but collectively the EU is meeting its Kyoto obligations. This was the bargaining tool the European Commission used at the climate change talks in Durban, South Africa, to put pressure on other countries to sign up to a new legally binding commitment to reduce GHG emissions beyond 2012 when the Kyoto Treaty official ends.

“If we can do it, so can you!”

That was the message the EU took to Durban. And it worked! The aptly named “Durban Platform” now commits countries around the world to a new legally-binding climate treaty by 2015 which will come into force in 2020. This will include the world’s biggest GHG emitters, China and the United States, which have so far managed to stay outside the Kyoto Protocol. The EU, along with a few other star performers, is so confident about its emissions reduction programme that it has agreed to register its existing emissions pledges under an extended Kyoto Protocol until the new agreement comes into force.

The EU Emissions Trading Scheme (EST) has played its part in meeting the targets, with most of the big emitters reducing energy consumption and emissions from industrial processes. Renewable energy has also helped, with most countries now expanding their inventories of solar PV, wind power and other renewables. The UK, for example, generated over 25 Giga Watt hours (GWH) in 2010 from renewables and the figure for 2011 will be much higher. Energy efficiency has also helped to lower GHG emissions, even in the domestic sector where double glazing, loft insulation and other energy savings measures have helped to reduce GHG emissions — despite the continued growth in energy-consuming gadgets that have invaded our homes in recent years.

But are we being honest about our real GHG emissions?

The Kyoto Protocol only requires targets for home-grown production-based emissions — GHG embodied in all imported household gadgets and other consumer products are not included in those emissions targets.

Recent research from the National Academy of Sciences (PNAS) tracks the GHG routes between developed and developing countries and shows that transfers of emissions from traded goods from developing to developed countries has risen from 0.4 Gt CO2 in 1990 to a staggering 1.6 Gt CO2 in 2008. The Department for Environment, Food and Rural Affairs (Defra) also reported that UK consumption-based emissions rose by nearly 20% over the same period. In 2004 alone, 55% of the total emissions associated with goods purchased by UK households occurred overseas.

The UK’s Carbon Budget, which sets carbon reduction targets to 2050, is based on production-based emissions in much the same way as the Kyoto Protocol and does not account for consumption-based emissions. A recently published paper by the UK Energy Research Centre (UKERC) shows that while energy efficiency and renewables have helped to reduce GHG emissions, the UK has achieved its Kyoto targets largely by outsourcing production to developing countries and relying on importing consumer products from abroad.

Professor John Barrett, whose research formed the basis of the UKERC report, said: “Out of the 10 largest GHG global emitters, the UK has the largest gap between its consumption and territorial emissions, meaning urgent attention is required to explore the policy options available to the UK Government to reduce emissions embedded in imports.”

The UK is a net importer of manufactured goods and, according to the Carbon Trust, a net importer of emissions as well, with 40% of domestic consumption emissions occurring outside the country. Along with our European neighbours and other developed countries, the UK is effectively externalising our GHG footprints to developing countries where there are fewer controls on GHG emissions. This is giving rise to some alarming trends in global emissions.

The most worrying aspect from a climate change perspective is that despite a levelling of GHG emissions from many developed countries (UK levels are actually falling), total global emissions reached record levels in 2010 and continue to rise faster than the worst-case scenarios outlined by the Intergovernmental Panel on Climate Change (IPCC).

In September last year, the Energy and Climate Change Committee (ECCC) launched an inquiry to investigate the case for consumption-based GHG emissions reporting in the UK and whether it is feasible to adopt a consumption-based reporting regime with viable reduction targets. It will also consider what the implications might be for international negotiations for the UK and others who adopt this approach.

The ECCC’s written consultation process attracted a wide range of public and industry sector interest. Various opinions have been expressed to reflect differing stakeholder interests, but the overwhelming argument from respondents is that the UK should adapt a consumption-based approach to GHG emissions reporting.

In its response to the inquiry, Small World Consulting (SWC) explained that we regularly import from countries whose industries are significantly less energy-efficient than the UK. As an example, SWC’s Director, Mike Berners-Lee, pointed out that Chinese primary energy has roughly three times the carbon per monetary unit as UK primary energy (coal being both a cheaper and a more carbon-intensive form of energy than oil, gas, nuclear or renewable energy).

One of the other key issues raised by some of the respondents suggests that self-imposed regulations and taxes such as climate change levies, emissions trading schemes and the Kyoto Protocol, which are designed to help reduce emissions, may be disadvantaging home-based production and forcing manufacturers to take their production lines to countries where Kyoto targets and other sanctions do not apply and where manufacturing costs are cheaper.

In its response to the inquiry, the Mineral Products Association (MPA) highlighted the problem that unequal carbon pricing on UK manufacturing threatens to increase the rate of manufacturing loss from the UK. As an illustration the MPA highlights the sales of British cement decreasing by 26% over the period 2001–2010 but imports by non-British manufacturers have increased by 10% and now stand at 13%. The MPA argues that some cement companies in the UK owned by global companies have actually closed because of the increased pressures from carbon taxation.

Next steps

The written consultation ended in October and the ECCC is currently taking aural evidence from many of the respondents to the inquiry, which will be followed by further submissions from representatives of the Department of Energy and Climate Change. The final session of the inquiry is 31 January 2012 and the ECCC is expected to publish its final report and recommendation by the end of February 2012.

The report will no doubt highlight the inadequacies of production-based emissions in tackling global warming and may even recommend some form of consumption-based emissions reporting. How the Government will respond to the ECCC report is not clear. It will not want to compromise its own terrestrially-based carbon emissions targets set between now and 2050. George Osborne has already said he is prepared to do as much for the environment as our European neighbours, but no more. On the other hand, the potential loss of UK manufacturing base because of iniquitous GHG trading standards may stir political action to introduce some GHG-based controls on imports, but this is unlikely to happen without European consensus. In the meantime we will continue to meet our extended Kyoto commitments, along with our European neighbours.

Meanwhile, there is little pressure at an international level for countries to do much to reduce GHG emissions — terrestrial or consumption-based — until the next phase of Kyoto kicks in, which will be 2020 at the earliest and may be a long time after that. There is no guarantee that future GHG emissions targets will really solve the global warming crisis.

Should we be worried?

The US Department of Energy recently released new data showing that the increase of CO2 releases in 2010 were the highest ever recorded, with global emissions rising by 6% in one year. In short, yes.