Effect of Crude Oil Carbon Accounting Decisions on Meeting Global Climate Budgets

The Intergovernmental Panel on Climate Change quantified a cumulative remaining carbon budget beyond which there is a high likelihood global average temperatures will increase more than 2 °C above pre-industrial temperature.... [ view full abstract ]

The Intergovernmental Panel on Climate Change quantified a cumulative remaining carbon budget beyond which there is a high likelihood global average temperatures will increase more than 2 °C above pre-industrial temperature. While there is global participation in mitigation efforts, there is little global collaboration to cooperatively mitigate emissions. Instead, countries have been acting as individual agents with specific emission reduction objectives. However, such asymmetric unilateral climate policies create the opportunity for carbon leakage resulting from the shift in embodied carbon emissions within trade networks. In this analysis, we use an optimization-based model of the global crude trade as a case study to demonstrate the importance of a cooperative, systems level approach to climate policy in order to most effectively, efficiently, and equitably achieve carbon mitigation objectives. To do this, we first characterize the cost and life cycle greenhouse gas emissions associated with the 2014 crude production and consumption system by aggregating multiple data sources and developing a balanced trade matrix. We then optimize this network to demonstrate the potential for carbon mitigation through more efficient use of crude resources. Finally, we implement a global carbon cap on total crude emissions. We find that such a cap would require crude consumption to drop from 4 giga-tons (Gt) to 1.1 Gt. However, if each country had an individual carbon allocation in addition to the global cap consistent with the nationally determined contribution limits resulting from the 2015 United Nations Climate Change Conference, allowable consumption would further decrease to approximately 770 million metric tons. Additionally, the carbon accounting method used to assign responsibility for embodied carbon emissions associated with the traded crude further influences allowable production and consumption for each country. The simplified model presented here highlights how global cooperation and a systems level policy approach could guide climate policy efforts to be more cost-effective and equitable.