Skip to main content

How production-based and consumption-based emissions accounting systems change climate policy analysis: the case of CO2 convergence

Environmental Science and Pollution Research volume 26, pages 16682–16694 (2019)Cite this article

Abstract

Much of the existing research analyses on emissions and climate policy are dominantly based on emissions data provided by production-based accounting (PBA) system. However, PBA provides an incomplete picture of driving forces behind these emission changes and impact of global trade on emissions, simply by neglecting the environmental impacts of consumption. To remedy this problem, several studies propose to consider national emissions calculated by consumption-based accounting (CBA) systems in greenhouse gas (GHG) assessments for progress and comparisons among the countries. In this article, we question the relevance of PBA’s dominance. To this end, we, firstly, try to assess and compare PBA with CBA adopted in greenhouse gas emissions accounting systems in climate change debates on several issues and to discuss the policy implications of the choice of approach. Secondly, we investigate the convergence patterns in production-based and consumption-based emissions in 35 Annex B countries for the period between 1990 and 2015. This study, for the first time, puts all these arguments together and discusses possible outcomes of convergence analysis by employing both the production- and consumption-based CO2 per capita emissions data. The empirical results found some important conclusions which challenge most of the existing CO2 convergence studies.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

43,34 €

Price includes VAT (Finland)
Tax calculation will be finalised during checkout.

Fig. 1
Fig. 2

Notes

  1. Emissions embodied in trade are significant part of the global emissions as recent studies estimated that up to 25–30% of global emissions are generated from such operations (Zhang et al. 2017; Wang et al. 2015; Davis and Caldiera, 2010; Peters and Hertwich 2008).

  2. The gap between embodied emissions in imports and exports might be due to the increasing gap between the trade volume of import and export as well as changing the trade patterns.

  3. For the Stocktaking process and long-term objectives of the Paris Agreement, see http://www.wri.org/blog/2017/05/insider-designing-global-stocktake-under-paris-agreement-catalyst-climate-action

  4. These various concepts can in turn be divided into absolute and conditional convergence. In contrast with absolute convergence, conditional convergence assumes the possible differences among countries.

  5. For a detailed literature review of convergence studies on environment, please refer to Pettersson et al. 2014; Bilgili and Ulucak 2018; Acar et al. 2018.

  6. A number of recent studies acknowledges ecological footprint in convergence analysis. Yet, these studies do not solely rely on CO2 emissions per capita, instead use ecological footprint as an indicator, which includes six environment-related components (Ulucak and Apergis 2018; Bilgili and Ulucak 2018; Solarin 2019; Özcan et al., 2019). Our study differs from these studies both in terms of scope, database, and methodology as their analysis cover much broader context while we directly focus on CO2 emissions calculated by PBA and CBA.

  7. The Global Carbon Atlas Database (2018) can be viewed from http://www.globalcarbonatlas.org/en/CO2-emissions

  8. (xmper) data is calculated by dividing exports plus imports of goods and services by total population.

  9. Due to the issues on completeness of data on CBA, we excluded Iceland, Liechtenstein, Luxemburg, Malta, and Monaco from the original Annex B list.

References

  • Acar S, Söderholm P, Brännlund R (2018) Convergence of per capita carbon dioxide emissions: implications and meta-analysis. Clim Pol 18(4):512–525

    Article  Google Scholar 

  • Afionis S, Sakai M, Scott K, Barrett J, Gouldson A (2017) Consumption-based carbon accounting: does it have a future? WIREs Climate Change 8:e438. https://doi.org/10.1002/wcc.438

    Article  Google Scholar 

  • Aldy JE (2006) Per capita carbon dioxide emissions: convergence or divergence? Environ Resour Econ 33(4):533–555

    Article  Google Scholar 

  • Aldy JE (2007) Divergence in state-level per capita carbon dioxide emissions. Land Econ 83(3):353–369

    Article  Google Scholar 

  • Amador OF, Francois JF, Oberdabernig DA, Tomberger P (2017) Carbon dioxide emissions and economic growth: an assessment based on production and consumption emission inventories. Ecol Econ 135:269–279

    Article  Google Scholar 

  • Aşıcı AA, Acar S (2016) Does income growth relocate ecological footprint? Ecol Indic 61(Part 2):707–714

    Article  Google Scholar 

  • Barassi MR, Cole MA, Elliott RJ (2011) The stochastic convergence of CO2 emissions: a long memory approach. Environ Resour Econ 49(3):367–385

    Article  Google Scholar 

  • Barassi MR, Spagnolo N, Zhao Y (2017) Fractional integration versus structural change: testing the convergence of CO2 emissions. Environ Resour Econ 71:923–968. https://doi.org/10.1007/s10640-017-0190-z

    Article  Google Scholar 

  • Bilgili F, Ulucak R (2018) Is there deterministic, stochastic, and/or club convergence in ecological footprint indicator among G20 countries? Environ Sci Pollut Res 25(35):35404–35419

    Article  Google Scholar 

  • Boitier B (2012) CO2 emissions production-based accounting vs. consumption: insights from the WIOD databases. In WIOD Conference Paper, April

  • Brannlund R, Lundgren T, Soderholm P (2015) Convergence of carbon dioxide performance across Swedish industrial sectors: an environmental index approach. Energy Econ 51:227–235

    Article  Google Scholar 

  • Brizga J, Feng K, Hubacek K (2017) Household carbon footprints in the Baltic States: a global multi-regional input–output analysis from 1995 to 2011. Appl Energy 189:780–788

    Article  Google Scholar 

  • Brock WA, Taylor MS (2003) The kindergarten rule of sustainable growth. NBER Working Paper Series, 9597

  • Chen B, Yang Q, Li JS, Chen GQ (2017) Decoupling analysis on energy consumption, embodied GHG emissions and economic growth: the case study of Macao. Renew Sust Energ Rev 67:662–672

    Article  Google Scholar 

  • Cole MA (2004) Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages. Ecol Econ 48(1):71–81

    Article  Google Scholar 

  • Copeland BR, Taylor MS (2013) Trade and the environment: theory and evidence. Princeton University Press

  • Criado CO, Grether JM (2010) Convergence in per capita CO2 emissions: a robust distributional approach. CEPE Working Paper No 70, www.cepe.ethz.ch

  • Davis SJ, Caldeira K (2010) Consumption-based accounting of CO2 emissions. PNAS 107(12):5687–5692

    Article  Google Scholar 

  • Dobson, S. and Fellows, G.K. (2017). Big and little feet: a comparison of provincial level consumption- and production-based emissions footprints. University of Calgary, The School of Public Policy Research Paper, 10:23

  • Fan JL, Hou YB, Wang Q, Wang C, Wei YM (2016) Exploring the characteristics of production-based and consumption-based carbon emissions of major economies: a multiple-dimension comparison. Appl Energy 184:790–799

    Article  Google Scholar 

  • Grasso M (2016) The political feasibility of consumption-based carbon accounting. New Political Economy 21(4):401–413

    Article  Google Scholar 

  • Grasso M (2017) Achieving the Paris goals: consumption-based carbon accounting. Geoforum 79:93–96

    Article  Google Scholar 

  • Hao Y, Liao H, Wei YM (2015) Is China’s carbon reduction target allocation reasonable? An analysis based on carbon intensity convergence. Appl Energy 142:229–239

    Article  Google Scholar 

  • Hubacek K (2016) Consumption-based accounting of U.S. CO2 emissions from 1990 to 2010. IDE Discussion Paper No. 593, JETRO

  • IEA (2017) World Energy Outlook. IEA Publications, International Energy Agency, Paris

  • Karakaya E, Alataş S, Yılmaz B (2017) Replication of Strazicich and List (2003): are CO2 emission levels converging among industrial countries?. Energy Econ

  • Kearsley A, Riddel M (2010) A further inquiry into the pollution haven hypothesis and the environmental Kuznets curve. Ecol Econ 69(4):905–919

    Article  Google Scholar 

  • Kıran Baygın B (2017) Stochastic convergence of per capita greenhouse gas emissions among G7 countries: an evidence from structural breaks. Istanbul University Econometrics and Statistics e-Journal 26:60–70

    Google Scholar 

  • Liddle B (2018) Consumption-based accounting and the trade-carbon emissions nexus. Energy Econ 69:71–78

    Article  Google Scholar 

  • Liu L, Wu T, Huang Y (2015) An equity-based framework for defining national responsibilities in global climate change mitigation. Climate and Development 9(2):152–163

    Article  Google Scholar 

  • Mankiw NG, Romer D, Weil DN (1992) A contribution to the empirics of economic growth. Q J Econ 107(2):407–437

    Article  Google Scholar 

  • Martino R, Nguyen-Van P (2016) Environmental Kuznets curve and environmental convergence: a unified empirical framework for CO2 emissions. Working Papers of the Bureau d'Economie Théorique et Appliquée, 18, UDS, Strasbourg

  • Mir G, Storm S (2016) Carbon emissions and economic growth: production-based versus consumption-based evidence on decoupling.. Institute for new Economic Thinking working paper series no. 41., Available at SSRN: https://ssrn.com/abstract=2772131

  • OECD (2011) Towards green growth: monitoring progress-OECD indicators. Sixth Meeting of the UN Committee of Experts on Environmental-Economic Accounting New York, 15–17 June 2011, ESA/STAT/AC.238 UNCEEA/6/11

  • Panopoulou E, Pantelidis T (2009) Club convergence in carbon dioxide emissions. Environ Resour Econ 44(1):47–70

    Article  Google Scholar 

  • Peters GP, Hertwich GH (2008) CO2 embodied in international trade with implications for global climate policy. Environ Sci Technol 42(5):1401–1407. https://doi.org/10.1021/es072023k

    Article  CAS  Google Scholar 

  • Peters G, Andrew RM, Karstensen J (2016) Global environmental footprints: a guide to estimating, interpreting and using consumption-based accounts of resource use and environmental impacts. Nordic Council of Ministers. https://doi.org/10.6027/TN2016-532

  • Pettersson F, Maddison D, Acar S, Söderholm P (2014) Convergence of carbon dioxide emissions: a review of the literature. Int Rev Environ Resour Econ 7(2):141–178

    Article  Google Scholar 

  • Sala-i-Martin XX (1996) The classical approach to convergence analysis. Econ J 106(437):1019–1036

    Article  Google Scholar 

  • Sato M (2012) Embodied carbon in trade: a survey of the empirical literature. Centre for Climate Change Economics and Policy, Working Paper No.77, Grantham Research Institute on Climate Change and the Environment

  • Scott KA (2016) Integrating embodied emissions into climate change mitigation policy. Unpublished PhD Thesis, The University of Leeds Sustainability Research Institute School of Earth and Environment, 2016

  • Scott K, Barrett J (2015) An integration of net imported emissions into climate change targets. Environ Sci Pol 52:150–157

    Article  Google Scholar 

  • Scott K, Daly H, Barrett J, Strachan N (2016) National climate policy implications of mitigating embodied energy system emissions. Clim Chang 136:325–338. https://doi.org/10.1007/s10584-016-1618-0

    Article  CAS  Google Scholar 

  • SEI (2017) Consumption-based accounting reveals global redistribution of carbon emissions. Stockholm Environment Institute Discussion Brief, https://www.sei-international.org/mediamanager/documents/Publications/SEI-2017-DB-Dawkins-Croft-CBA.pdf

  • Solarin SA (2019) Convergence in CO2 emissions, carbon footprint and ecological footprint: evidence from OECD countries. Environ Sci Pollut Res, 1–15

  • Steininger K, Lininger C, Droege S, Roser D, Tomlinson L, Meyer L (2014) Justice and cost effectiveness of consumption-based versus production-based approaches in the case of unilateral climate policies. Glob Environ Chang 24:75–87

    Article  Google Scholar 

  • Stern DI (2017) The environmental Kuznets curve after 25 years. J Bioecon 19:7–28

    Article  Google Scholar 

  • Strazicich MC, List JA (2003) Are CO2 emission levels converging among industrial countries? Environ Resour Econ 24:263–271

    Article  Google Scholar 

  • The Global Carbon Atlas Database (2018) http://www.globalcarbonatlas.org/en/CO2-emissions

  • Tukker A, Dietzenbacher E (2013) Global multiregional input-output frameworks: an introduction and outlook. Econ Syst Res 25:1–19

    Article  Google Scholar 

  • Ulucak R, Apergis N (2018) Does convergence really matter for the environment? An application based on club convergence and on the ecological footprint concept for the EU countries. Environ Sci Pol 80:21–27

    Article  Google Scholar 

  • Wang H, Zhang Y, Lu X, Nielsen CP, Bi J (2015) Understanding China’s carbon dioxide emissions from both production and consumption perspectives. Renew Sust Energ Rev 52:189–200

    Article  CAS  Google Scholar 

  • Wiebe K, Yamano N (2016) Estimating CO2 emissions embodied in final demand and trade using the OECD ICIO 2015, OECD science, technology and industy working papers, 2016/05, OECD Publishing, Paris

  • World Bank (2017) World development indicators (Washington, D.C.)

  • Yavuz NC, Yilanci V (2013) Convergence in per capita carbon dioxide emissions among G7 countries: a TAR panel unit root approach. Environ Resour Econ 54:283–291

    Article  Google Scholar 

  • Zhang Z, Zhu K, Hewings GJD (2017) A multi-regional input–output analysis of the pollution haven hypothesis from the perspective of global production fragmentation. Energy Econ 64:13–23

    Article  Google Scholar 

  • Zhou P, Wang M (2016) Carbon dioxide emissions allocation: a review. Ecol Econ 125:47–59

    Article  Google Scholar 

Download references

Author information

Affiliations

  1. Aydın, Turkey

    Etem Karakaya

  2. Department of Economics, Faculty of Economic and Administrative Sciences, Adnan Menderes University, Nazilli, Aydın, Turkey

    Burcu Yılmaz & Sedat Alataş

Authors
  1. Etem Karakaya
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Burcu Yılmaz
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sedat Alataş
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Sedat Alataş.

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Responsible editor: Philippe Garrigues

Electronic supplementary material

ESM 1

(RAR 12.8 kb)

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Karakaya, E., Yılmaz, B. & Alataş, S. How production-based and consumption-based emissions accounting systems change climate policy analysis: the case of CO2 convergence. Environ Sci Pollut Res 26, 16682–16694 (2019). https://doi.org/10.1007/s11356-019-05007-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-019-05007-2

Keywords

  • Consumption-based accounting
  • CO2 convergence
  • Climate policy
  • CO2 and trade
  • Annex B countries