Is Consumption Modelling inherently superior to Production Modelling?

The point is continually made that pure consumption modelling, whilst being possibly more difficult to do than a mixed approach or pure production approach, is inherently superior. I would like to question this. In my view both approaches are valid and in an ideal world we might do both but one is not necessarily superior to the other.

What’s the difference?

Production modelling of carbon emissions allocates the emissions geographically based on where they are produced. You burn gas in your home in the UK so the emissions are allocated to the UK. However if you buy goods produced in China then whatever carbon emissions associated with the production of those goods gets allocated to China.

Consumption Modelling allocates emissions from goods or services to where the goods and services are consumed. If a householder in the UK buys goods from China all of the emissions relating to their production, transportation and retailing are allocated to the UK.

Actually things are little more complicated than this. Both approaches will, to some extent, use fuel purchases not actual consumption or production. So for instance with transportation under NI186 fuel purchased in the UK is allocated to the road network based on traffic flows and assumptions about efficiencies of different vehicles. Some approaches used a blend of consumption and production. The NI186 figures produced by DECC which use a production approach for gas used in homes for heating/hot water/cooking but when it comes to electricity generation they allocate the emissions on a consumption basis.

So why do I think that one is not inherently superior to the other?

Let’s take the following example. If a company closes its operations in Leeds and moves them to China then under a production modelling approach the UK’s emissions will go down. Under a consumption modelling approach they should increase as now emissions relating to the embodied carbon in the goods produced will rise because of the increased transportation distance required. In this case the production approach seems morally questionable. Effectively the UK is cheating by shifting emissions elsewhere whilst continuing to consume in an unsustainable way.

However let’s take another example. Let’s say China now reduces the carbon intensity of its electricity production -while the UK does nothing. Under a consumption approach emissions in the UK will decrease. Under a production approach they’ll remain the same. The consumption approach then gives a morally questionable output. We’ve done nothing yet our emissions have reduced.

Or here’s another scenario. A factory in Leeds which produces goods for export reduces its emissions. Under a production approach UK emissions will reduce. Under a consumption approach they remain unchanged. Does that seem right?

It seems to me that neither approach is perfect. What is important is that globally we reduce our emissions – and fast.  To do this we need to ensure that everyone is working towards that end. Currently international negotiations are based on a production approach. And as long as everyone is working towards that under a global cap, counting emissions consistently and actually reducing them in line with climate science then that’s fine. Of course they’re not, but that’s not inherent in the modelling approach.

Chris Dunham, Managing Director of Carbon Descent

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