Consumption-based emissions accounting and technology transfer possibilities

Analyses using global multi-regional input-output models such as EORA1, EXIOBASE2, the OECD ICIO3 or WIOD4 show that there is a significant global imbalance of where in the world final demand for products occur, where these... [ view full abstract ]

Analyses using global multi-regional input-output models such as EORA¹, EXIOBASE², the OECD ICIO³ or WIOD⁴ show that there is a significant global imbalance of where in the world final demand for products occur, where these products and their intermediate inputs are produced and where most of the pollution along global production chain occurs.

This global imbalance of consumption, production and CO₂ emissions could be substantially reduced by employing state-of-the-art low-carbon technologies around the globe^5,6. This, however, needs to be initiated. Data on consumption-based or – a slightly different concept – final-product-based CO₂ emissions raise the awareness of the link between final goods and the environmental pollution caused by upstream production processes. Consumption-based emissions allocate the emissions to those countries where the final product is consumed, while final-product-based emissions allocates the emissions to the country and industry where the final product is produced. With this data, consumers and producers of final products learn where in the world CO₂ was emitted along the upstream production chain.

Using the OECD Inter-Country Input-Output database and extending the inverse important coefficient methodology⁷ by emission factors enables us to identify “emission hotspots”, i.e. countries/industries where a bulk of the upstream emissions of final products occur. The interaction of input coefficients with CO₂ intensity coefficients adds a term to the original optimization problem that finds the inverse important coefficients. This new methodology enables us to find out for which industries in which countries a change in emission-relevant inputs has the largest impact on final-product based emissions. The knowledge about “emission hotspots” can be used for well targeted technology transfers from CO₂-consuming to CO₂-emitting countries. If industries care about the CO₂ footprints of their final products, these technology transfers can provide a cost-effective way of reducing their footprint. The research at hand presents this analysis using, as an example, Germany’s consumption of final products and final products produced by Germany’s automobile industry. The analysis suggests that technology transfers to both industrialized and developing countries in different industries, mainly energy intensive industries, could imply a significant reduction in CO₂ emitted in upstream production processes.

References

1.         Lenzen et al. Building Eora: a Global Multi-Region Input-Output Database At High Country and Sector Resolution. Econ.Syst.Res. 25 (2013). 

2.           Tukker et al. EXIOPOL – Development and illustrative analysis of a detailed global MR EE SUT/IOT. Econ. Syst. Res. 25 (2013).

3.           Wiebe & Yamano Estimating CO2 Emissions Embodied in Final Demand and Trade Using the OECD ICIO 2015 (2016).

4.           Dietzenbacher et al. The construction of world input-output tables in the WIOD project. Econ.Syst.Res. 25 (2013).

5.           How Clean Technologies Can Improve Health Worldwide. UNEP at medium.com: A guest post from Bertrand Piccard (2016).

6.           UN SDG Goal 13: Take urgent action to combat climate change and its impacts. (2016)

7.           Casler & Hadlock Contributions to Change in the Input-Output Model: The Search for Inverse Important Coefficients. J. Reg. Sci. 37 (1997).