From Production-Based to Consumption-Based National Emissions Inventories

Under the United National Framework Convention of Climate Change (UNFCCC) countries are required to submit National Emission Inventories (NEI) to benchmark reductions in greenhouse gas (GHG) emissions. Depending on the definition and system boundary of the NEI, the mitigation options and priorities may vary. The territorial system boundary used by the UNFCCC has been critiqued for not including international transportation and potentially causing carbon leakage. To address these issues, past literature has argued in favour of using consumption-based NEI in climate policy. This article discusses several issues in moving from the standard production-based NEI to consumption-based NEI. First, two distinct accounting approaches for constructing consumption-based NEI are presented. The approaches differ in the allocation of intermediate consumption of imported products. Second, a consistent method of weighting production-based and consumption-based NEI is discussed. This is an extension of the previous literature on shared responsibility to NEI. Third, due to increased uncertainty and a wide system boundary it may be difficult to implement consumption-based NEI directly into climate policy. Several alternative options for incorporating consumption-based inventories into climate policy are discussed.