Carbonfootprintofnations.com blog

Contributing to the IPCC

2010-07-30 10:00:30

I have the great honor to be selected to serve on the IPCC as lead author of the fifth assessment report. It has always been my desire to contribute to addressing environmental problems. Climate Science is fascinating – the ways scientists have found to tease out evidence about past climate are amazing. It is scary to see how the various pieces of the puzzle – not all of them yet found or correctly placed – provide an increasingly complete and compelling picture that – in rich and unforeseen detail –confirms the basic physics laid out by the Swedish scientist Svante Arrhenius 110 years ago.

My task is to contribute to the volume on Climate Change Mitigation – how to reduce emissions of greenhouse gases as to limit climate change to a not-too-disruptive level (IPCC WG3). Specifically, I am selected to serve as lead author to the chapter on energy systems. The selection comes somewhat as I surprise – my group has become a leader in another aspect, connecting the emissions of greenhouse gases to the ultimate causes of their emissions – the goods and services enjoyed by final consumers. This topic would have fit to other chapters. My qualification for the chapter on energy systems comes from work on the life-cycle assessment of various energy conversion technologies, such as bioenergy, wind power and fossil fuels with CO2 capture and storage. For the nomination, I suggested that life-cycle environmental impacts need to be addressed for the full scale at which the technologies will be implemented. ‘Impacts’ should include resource requirements, pollution, and a quantification of net-greenhouse gas benefits. I plan to draw heavily on the expertise of my collaborators and my colleagues at NTNU.

Without prejudging the outcome of our work, my impression is that assessments so far have ignored some of the environmental costs of climate-friendly technologies. They have thus been overly optimistic regarding the prospects of technologies – the degree of mitigation that can be offered and the associated costs. I am not yet satisfied about the scientific information available on the environmental impacts and resource requirements of those technologies compared to resource availabilities. It is premature to judge the effect of these limitations. This information is important because resource and environmental factors must be considered in our decisions about what energy technologies to develop and deploy.

Knowledge gaps regarding the constraints and costs of climate mitigation technologies illustrate that details of climate mitigation have not yet received the required level of attention, compared to the science of the greenhouse effect or the economic assessment of whether to mitigate or not. The research investment has been smaller, as it can easily be seen from just the references in the three different volumes of the IPCC’s 4th assessment report. Technology development is finally receiving more focus, but is still not at an adequate level especially when it comes to large-scale demonstration and deployment. Mitigation science, however, is developing rapidly and I am optimistic about the prospect of offering important, interesting insights to the world once the 5th assessment report will be published in 2013.

UN Resource Panel highlights food and fossil fuel as global problems

2010-06-30 21:08:35

It was my big day in Brussels: The deputy director of the United Nations Environment Programme, Angela Kropper, and the EU's Commissioner for the Environment, Janez Potocnik, were there for the launch of our report, The Environmental Impact of Production and Consumption: Priority Products and Materials. It was the request for the report that prompted me to work on the Carbon Footprint of Nations. The report was written by a working group of the Resource Panel and published by UNEP. The evening before we spent on our mobile phones, giving interviews to Reuters, the Guardian and other news outlets.

The story, as we framed it, was of a top-down assessment to identify the most important causes of environmental problems - the most important consumption categories, materials and industry sectors. Our assessment clearly pointed to the importance of food production and fossil fuels. Agriculture, pastures and fishing emerged in many assessments as important - to a degree that surprised me. The problem with fishing is that we do too much of it, at least in some location: we are destroying the base of this renewable resource. There are more problems, however, with agriculture: it is the dominant cause of land use and hence the change of habitats for animals and plants, threatening biodiversity. It contributes 70% our water use - and you know that water is getting scarce in many regions. In Europe, food production contributes 60% to the overfertilization with nitrogen and phosphorus - another important cause of biodiversity loss according to the Millennium Ecosystem Assessment. Furthermore, food production causes 20-30% of GHG emissions.

The work by Ester van der Voet, one of my co-authors, on the environmental impacts of material flows in Europe clearly identified meat and dairy products as the main culprits. "UN urges global move to meat and dairy-free diet" was the title in the Guardian - somewhat in contradiction to what I tried to communicate in my interviews. It was, of course, not an incorrect conclusion to draw from our findings, but it was not our mission to produce recommendations. Rather, we wanted to put facts on the table.

What I thought as the really novel contribution of our report in the concert of international scientific assessments was not the food story - it was the consumption perspective. It provides novel insights - into what activities, consumption categories and products cause environmental impacts. Our review confirms the triad of shelter, food and transportation as important consumption categories, with the caveats that transportation matters little in poor countries and manufactured products overtake food in some rich countries - as readers of this website will know. Our report highlights clearly that our causation of environmental impacts is a strong function of our income - more consumption implies more impact.

Looking at products and consumption clusters, one also finds that much of what we consume is produced abroad. In fact, for some products, the concept of location of production makes little sense - we see increasingly complex products with value chains spanning the entire globe.

I was pleased to see that at least some news stories picked up this aspect.

In our report, we took a life-cycle perspective. We looked at many aspects and many impacts. Inevitably, there are trade-offs to make. The picture was complex - reflecting a complex reality. Those who bothered to look at the detail will still recognize a consistent picture in which a web of causal relations and interconnections becomes quite apparent - including those aspects we should focus on. The BBC's headline captured this wonderfully: "Sustainability: Choices, choices, choices."

It is those we need to understand.

And to make.

Carbon footprint calculation methods matter for policy

2010-04-09 12:02:47

Recently, the idea of monitoring the carbon footprint of a nation as one option for climate policy has found its way into the legislative process in the UK. A Private Members Bill has been put forward in the House of Lords – the Bill seeks to put in place a consumer emissions target (the current UK Climate Change Act which sets an 80% reduction target only addresses production, i.e. territorial, emissions). Lord Teverson who initiated the bill said: "The Defra report considered the position in the United Kingdom in 2004 and came to the conclusion-I was surprised by the accuracy with which the figures can be worked out by academics-that the consumption emissions of the United Kingdom economy were some 37 per cent higher than our production emissions."

Apart from the fact that this is the first such initiative to base a policy on consumption-based GHG accounting, the statement about the methodology also deserves attention. What is routine for the national carbon footprint analyst might be puzzling to others who are not involved in the calculations: How can one work out all the emissions created somewhere in the world associated with consumption activities in a completely different place?

The prevailing method for national Carbon Footprint accounting is environmentally extended multi-region input-output analysis (IOA). In such an environmental-economic model, national input-output tables, representing financial transactions between economic sectors within a country and greenhouse gas emissions data by sector are linked together in one coherent accounting framework with trade flow tables, showing the value of exports and imports by country and economic sectors. Thousands of analysts and researchers use analytical input-output techniques and countless scientific publications have impressively demonstrated the ability of IOA to support the quantification of environmental impacts of economic activities.

Despite a politically important and wide-ranging field of applications in carbon footprinting there is still not a widespread acknowledgment of the potential for (hybrid) input-output analysis in other areas. Examples are corporate footprinting which aims at capturing the economy-wide GHG impact of a company and product carbon footprinting aimed at summarising the life-cycle-wide GHG emissions of a specific commodity. One possible reason for this lack of recognition might be the relative initial complexity of implementing environmental input-output models. Specialist knowledge in economic and environmental theory and frameworks is required, the terminology might be more specialised and the input-output mechanism might be intuitively less accessible than the more practical mapping of process flows. Whether due to actual, practical problems or only perceived complexity, few practitioners have so far acquired the skills to carry out (hybrid) carbon footprint or life cycle assessments. However, once established, input-output models are easy to operate and require relatively little data input compared to bottom-up approaches.

A Special Issue of the journal Economic Systems Research on 'Carbon Footprint and Input-Output Analysis' has recently been published, featuring six articles ranging from product, corporate and sector carbon footprinting to national and multi-national carbon accounting. The Special Issue brings together state-of-the-art research in environmental-economic modelling with the practice of greenhouse gas accounting at various levels. > Link to the Special Issue:

Top Environmental Policy Paper

2010-03-11 16:12:23

The Carbon Footprint of Nations has been recognized as the Top Environmental Policy Paper in 2009 by Environmental Science & Technology (announcement).

It is a big honor for us to win that award. ES&T is the most important journal in environmental science and environmental technology, publishing 1500 papers in 2009. We were apparently among 80 papers nominated for the award. Most likely, the popular appeal and policy relevance of our paper was an important factor in our favor.

We have previously been awarded by ES&T. In 2007, Glen Peters and his collaboration parters won the award for their analysis of China's growing CO2 emissions, identifying the growth of the urban population and investment in infrastructure as important causes.

In 2005, Edgar Hertwich was the runner-up to the Top Environmental Policy Paper for his review of methods for household carbon footprints.

Carbon Footprint - Updated

2010-03-11 13:55:43

A recent update of our study on the carbon footprint of nations highlights the role of China, Russia, the USA and the EU.

Steven Davis and Ken Caldeira have just published an analysis of the carbon footprint of nations using the GTAP 7 database, allowing for a comparison of the years 2004 and 2001. The paper published in the prestigious Proceedings of the National Academy of Sciences (PNAS for short) uses the same methods, research questions and data sources as our 2008 and 2009 papers. It highlights the role of the most important polluters and largest trade flows by emissions embodiment.

According to Davis and Caldeira, 23% of the global CO2 emissions from fossil fuel burning were connected to the production of goods ultimately consumed in a different country. The largest trade flows in terms of pollution required to produce the goods traded (embodied emissions) were from China to the United States, Europe, and Japan. The flows from Russia at Europe and from the Arab Middle East to EU and US were also significant, as was the trade between US and EU (see figure).

News stories on the article in the New Scientist and the BBC emphasize the point that many European countries have a larger difference in emissions between the consumption and production perspectives than the United States, measured per capita. In other words, the difference in emissions embodied in imports and emissions embodied in exports is larger. In my opinion, this is really not a relevant way of interpreting the results. What counts is the fraction of the national carbon footprint (consumption based emissions) outsourced to other countries. Europe can hardly be criticized for having a much lower emissions intensity than the United States, which is the reason for why the net trade balance is higher for the EU than the US.

I think that Davis and Caldeira do a particularly nice job highlighting the increasing specialization of production in the global economy and the differences in the imports and exports of different countries. It is striking that the emissions intensity of exports from Russia, China and India are more than 2 kg of CO2 per $ traded, while those of European countries listed are between 0.17 and 0.25 kg per $. The reason for this difference is most likely a combination of the difference in the emissions intensity of the energy mix, the energy efficiency and the value of the products produced.

The split of emissions embodied in trade by traded commodities also indicates the importance of global value chains. The largest flows for most countries shown are “intermediate goods”. The logical next step will be to investigate the makeup of global value chains, analyzing the through-trade of carbon of countries. Given global value chains, how are the carbon footprints of specific products distributed across countries?

Davis and Caldeira did not go through the trouble of adding the emissions of non-CO2 greenhouse gases and could also not assess emissions from land use change. As a result, the emissions in some poor countries are very low – 0.12 tons per capita in Ethiopia and Malawi, compared to 22 tons per capita in the United States. As we have observed in our analysis, for such poor countries, the emissions of methane and nitrous oxide from food production are much more important than the emissions of CO2 from fossil fuel consumption. The lower limit for carbon footprints including these emissions are around 1 ton CO2-equivalent per capita.

For Norway, the analysis shows that Norway had more emissions embodied in imports than in exports. This is a reversal from 2001, when the emissions embodied in exports were still dominating. The reason for this is a steady increase in import volumes and associated emissions. Emissions embodied in exports remain constant over time, as we will show in a future time series analysis.

The paper by Davis and Caldeira, allowing a comparison with our numbers, underlines the importance of emissions embodied in trade. As this paper confirms, rich countries risk fooling themselves by focusing on territorial emissions while their carbon footprints are growing. The objective of climate policy should be to reduce carbon footprints, and not to reduce territorial emissions. This can only be achieved by paying attention to carbon footprints!

Sharing the atmosphere

2009-12-28 18:55:41

The Climate Conference in Copenhagen has ended as expected: with a political declaration instead of a legally binding agreement. Nonetheless, there seems to be wide-spread disappointment among the public. Commentators are busy portioning out blame for the failure of the negotiations, where the U.S., China, and the unwieldy UN procedures receive the largest shares. Those involved in the negotiations process see Copenhagen as a stepping stone rather than a finish line: they point out that the Copenhagen Accord keeps going the process towards a final agreement – scheduled for next winter’s meeting in Mexico City. Furthermore, as a first international document to trace developing country commitments, the Accord is necessary to get the US Senate to pass climate legislation. From my perspective, the most remarkable feature of the conference has been that the most difficult arguments evolved around climate justice.

The Copenhagen climate conference clearly demonstrates the inadequacy of the political response to the climate challenge. It reflects and is the result of a lack of political will to pursue the necessary changes in development on part of most national governments and their (special interest) constituencies. The politically problematic aspect of the UNFCCC process is that it provides cover for those politicians responsible for inaction on the national level. It allows them to claim that they act – by partaking in the process – and at the same time to blame other parties for the slow progress. We are not on track to reduce greenhouse gas emissions enough to prevent dangerous levels of climate change, and political leaders should not give the impressions that this is a problem they have under control. Far from it!

Having said so much, in light of the dismal record of this now ending “lost decade”, the Accord is a quite remarkable document. It acknowledges that global warming should be limited to no more than 2°C, and that a deep cut in greenhouse gas emissions are required to achieve this target. Industrialized countries commit to establishing new targets for emissions cut for 2020, and developing countries commit to implementing mitigation actions. Both targets and mitigation actions will be specified in the coming months. In addition, industrialized countries commit to establishing a Copenhagen Green Climate Fund for financing mitigation and adaptation in developing countries and to establishing a Technology Mechanism for development and transfer of climate-friendly technology. Let’s hope the targets and mitigation action commitments lead to serious actions being implemented, which is what counts in the end.

I was surprised about the degree to which the negotiations focused on distributional issues and climate justice, even though I myself had raised these issues in pre-conference interviews. I also thought that the effectiveness of the developing countries coalition (G77+China) was remarkable. Their message was loud and clear: industrialized countries are responsible for (most of) the historical carbon dioxide emissions and they have benefited tremendously from those emissions. It is now the industrialized countries’ responsibility to reduce their emissions first and to provide financial assistance to developing countries both as a compensation for the climate damage already occurring and as a way to share the economic gains incurred as a result of the historical emissions.

The Carbon Footprint of Nations study shows a remarkable correlation between the national per capita consumption level and carbon footprint. Historical studies also indicate a similar connection between rising incomes and rising fossil energy used. But to what degree is the high energy use the cause of, or the consequence of, economic growth? There is some scientific controversy about this question. A seminal analysis of the United States’ economic development over a 100 year time period by Bob Ayres and Ben Warr indicates that access to cheap fossil fuels has indeed played an important role in fostering economic growth. Increased input of useful physical work explains more than half of economic growth, while increased input of labour and capital account for the remainder. Physical work is the product of the input of energy resources and the efficiency of energy conversion.

If energy input is indeed as central to economic activity as these statistical studies indicate, the access to and price of this energy input is of highest political importance. Fossil fuels and hence CO2 emissions have allowed us to gain access to this energy input at low prices and have hence made possible the unprecedented consumption levels that we enjoy. If access to the atmosphere as a cost-free dump for the waste products of fossil fuel combustion really determines our possible consumption levels, we must not be surprised that this access is subject to really tough negotiations. National leaders are occupied by their countries’, and constituencies’, economic interest.

Our atmosphere is a globally shared, common resource that has been over-utilized by a mere 20% of the global population. In principle, all humans should have equal rights to use this resource. The climate negotiations are the only global negotiations allowing developing countries to raise the issue of unfair access to globally shared resources. Their positioning in the negotiations may at times seem self-serving, trying to extract bribes for pursuing a low-carbon development course which should be in the developing countries interest anyway, given their disproportional vulnerability to climate change. It would be a mistake not to take seriously the issue of climate justice and the connection of global resource access and economic product. These issues must be accorded more importance by industrialized countries, which must be more willing to stop their irresponsible overuse of the atmosphere. (For an interesting suggestions of allocating responsibility for emissions reductions, see this).

Negotiations must not be a zero-sum game. Yes, we must equitably share our common resources among humans, both current and future generations. However, there is a large scope to improve energy and resource efficiency and to generate energy with much less emissions. International cooperation will in fact help us to take advantage of those opportunities, because it allows us to share technical progress and implement solutions more widely and thereby reduce their price. Still, the climate debate has been so long dominated by technological optimists that issues of justice have been overlooked. I think it is about time to accord them more importance. We must start a debate about how to fairly share our global resources, both in principle and practically. A debate of principles is necessary to make clear to those guilty of too high emissions that the status quo is not right. A debate of practicalities is necessary to find low-carbon development options for poor countries and to avoid transfer mechanisms that corrupt developing country elites and impede development in ways that payments for the extraction of other resources often do.

Exported Emissions at COP15

2009-12-14 22:01:16

The Guardian and industry actors call for considering Carbon Embodied in Trade as part of a climate deal at Copenhagen.

On December 7, 2009, 56 newspapers from 20 countries published a joint editorial calling world leaders to use the 14 days of climate negotiations in Copenhagen in order to come to an effective and fair agreement to limit climate change.

At the time I am writing this, it is too early to see whether the call will be heeded. The editorial points correctly to what has emerged as the core element of the negotiations: the need to fairly distribute the responsibility for reducing emissions. A critical passage of the editorial, calls for recognizing the issue of emissions embodied in trade:

Social justice demands that the industrialised world digs deep into its pockets and pledges cash to help poorer countries adapt to climate change, and clean technologies to enable them to grow economically without growing their emissions. The architecture of a future treaty must also be pinned down – with rigorous multilateral monitoring, fair rewards for protecting forests, and the credible assessment of "exported emissions" so that the burden can eventually be more equitably shared between those who produce polluting products and those who consume them.

I find it personally gratifying that the issues of forests and trade are finally being recognized, as we have spend considerable effort to raise these issues. Together with Glen Peters and Anders Stømman, I have personally worked on quantifying and modeling the emissions embodied in trade.
We have shown that for Norwegian household consumption, most of the carbon footprint is located abroad, where consumer goods and materials are produced. (Our calculations are now included in the official Norwegian climate calculator.) We have quantified the emissions embodied in trade for all major economies for 2001, using the same data that was also used to calculate the national carbon footprints displayed in this web page. Our results show that in 2001 more than 20% of global CO2 emission was caused by the production of exported products. The figure shows single country results from our study.

Since then, the fraction has probably increased substantially, as national-level studies suggest. My colleague Richard Wood has just updated the calculations for Norway, which indicate a dramatic growth of the emissions embodied in imports by 50% from 1999 to 2007, while emissions embodied in exports have stayed approximately constant. The changes in the emissions embodied in trade are much larger than emissions reductions due to Norway’s Kyoto target. In the UK, a similar increase in exported emissions has occurred, as results obtained by colleagues at SEI and the University of Surrey show.
Maybe the strongest evidence for the global shift in emissions is evidence from China, unearthed by Glen Peters, Dabo Guan, Chris Weber and Klaus Hubacek (Also discussed in the Guardian). Their modeling indicates that emissions embodied in export have increased from 21% of the total national emissions to 33% from 2001 to 2005, at a time when total emissions increased by 40%. Growth in emissions embodied in China’s export was the most important factor for the exceptional global emissions growth during this period.
Why does this matter? Economists argue strongly in favor of economic instruments to reduce global emissions. Carbon pricing provide an equal incentive for reducing emissions both through shifts in energy technologies, through increases in energy efficiency, and through changes in consumption patterns. We will need all these strategies to achieve climate stabilization. If, however, we have unequal carbon prices in different regions of the world, the danger is that carbon intensive production is relocated to where it is cheapest. This is, in any case, where growth is today. If that happens, gains from efficiency and structure are jeopardized.
What can be done? Most of the schemes to avoid carbon leakage and the relocation of energy-intensive industries to countries without emissions obligations are subsidy schemes: The EU Emissions Trading System (ETS) provides free emissions quotas to energy-intensive industry. There are plans to compensate the Aluminium industry directly for the high electricity price produced by the ETS. (Only from 2012, and it is not clear whether there will be any Al electrolyses left in Europe to protect.) These schemes all result in reduced costs for energy-intensive products also to consumers in carbon-limited industrialized countries and do nothing to impose the true carbon costs on imports.
The only solution that avoids these negative effects is a so-called “border tax adjustment”. This adjustment would imply that an incremental carbon tax is imposed at the border, reflecting the emissions embodied in the product imported. For most products, such a tax would be small. The global average GHG emissions per $ GDP is about 700g. A 100$/t tax implies an average 7% tax. For other products, it would be prohibitive. It would not make sense for Europe to import Aluminium produced with Chinese or South African coal power – but that is precisely the point!

The Environmental Footprint of Biofuels

2009-11-15 21:08:04

A new UN report emphasizes the importance of addressing land use, water, and biodiversity impacts of biofuels.
The jury is now in on biofuels: Current government mandates in the United States, Europe and other countries to blend biofuels into ordinary car fuels cause substantial environmental damage, do little to reduce greenhouse gas emissions, and have a questionable contribution to energy security. A new UN report and a new book document many, sometimes fascinating facets of this intricate issue. There are many types of biomass, different options for growing this biomass, a few technologies for converting the biomass to various liquid fuels. It is not surprising that the environmental impacts depend on the particularities of the growing, harvesting, transporting, converting and use of the fuels. However, there are only very few production routes currently used, and these routes are harmful to the environment in several ways.

The report “Towards sustainable production and use of resources: Assessing Biofuels” was produced by the International Panel for Sustainable Resource Management (IPSRM) and relased by the head of the United Nations Environment Program Achim Steiner on 23 October. I am also a member of IPSRM, but have not contributed to this report. The book '"Biofuels for Road Transport: A Seed to Wheel Perspective", was written by the Dutch environmental scientists Lucas Reijnders and Mark Huijbregts. Both works present an extensive review of scientific work on biofuels.

To understand biofuels, one must look at thermodynamics, that is, to account for energy flows in a biomass system similar to how one would account for money flows. Already in 1982, Perezblanco and Hannon published an analysis of the energy required to produce one unit of energy in the form of corn-ethanol and wood-methanol. They showed that the energy used to run tractors, produce fertilizers, and convert corn to ethanol is more or less equal to the energy in the ethanol produced – so that there is little point in whole exercise. Methanol from wood, however, has a substantial net energy gain. These results have since then been confirmed by a great number of studies, also for other biofuel products derived from these biomass resources.
If there is little energy gain, there is also little benefits in terms of greenhouse gas emissions. The figure illustrates the reduction GHG emissions reductions – or the lack thereof – achieved by different biofuel production routes. Today’s biofuel comes all from food crops – maize, wheat, vegetable oil, and sugar cane, which are easy to convert but require high inputs of fertilizer and machine power to produce – with the exception of sugar cane.

The substantial insights of the two new publications, however, is the insight of the high ecological impacts that come from converting land for biofuel production, emissions from land use, as well as the runoff of fertilizer and pesticides. These effects are often not sufficiently considered in life-cycle assessment. In the United States, it is reported that increased fertilizer application for biofuels has lead to increased runoff of phosphorus and nitrogen, which stimulates increased algae growth in waterways and leads to oxygen depletion and fish death as a result.

The issue of land conversion and its effect on carbon stored in soil and plants has been discussed prominently in recent years and months. It is central to determining the greenhouse gas benefit of biofuels. The report underlines that declining yield increases and increasing food demand imply that the current global cropland needs to expand further. Increase biofuels product will hence inevitably require the conversion of virgin land to cropland. Certifying biofuels grown on already established agricultural land has hence little effect, as this only displaces food production to previously marginal land.

The effect of this is quite clear, as the report underlines: “Increased biofuel production is expected to have large impacts on biological diversity in the coming decades, mostly as a result of habitat loss, increased invasive species and nutrient pollution. Habitat loss will mainly result from cropland expansion. Species and genotypes of grasses suggested as future feedstocks of biofuels may become critical as invaders. Nutrient emissions to water and air resulting from intensive fuel cropping will impact species composition in aquatic and terrestrial systems.”
We afford climate mitigation measures that are so ineffective in reducing greenhouse gas emissions but destroy ecosystems and biodiversity. It is time to reconsider biofuel mandates!

Carbon Market Promises and Woes

2009-10-18 20:53:06

Economists argue that the carbon market suffices to reduce greenhouse gas emissions and attack additional policy tools for increasing mitigation costs. Time to look at how the carbon market works in practice!

In my last blog I have pointed to the campaign of a few Norwegian economists against climate policy tools such as the newly established green certificate market, which ensures a higher electricity price for renewable electricity. I published a similar critique in Dagens Næringsliv, a business daily. The prompt response by Professor Michael Hoel of the University in Oslo was that I did not understand the quota market. Professor Hoel lectured me on basic microeconomics, pointing to the fact that increased renewable energy would lead to reduced prices for emissions allowances and hence increased emissions somewhere else in the European Emissions Trading System (ETS). The emissions reductions achieved through subsidies for energy efficiency or renewable would necessarily be more expensive than the marginal emissions reductions in the ETS. The response did not my argument that technology learning required niche markets which the green certificates created, and that without new technologies we would not be able to reduce emissions sufficiently. Instead, Hoel suggests that Norway should buy large amounts of emissions allowances and retire them – just to drive up the price. Let’s have a look at how the carbon market really works to see what would happen.

The EU ETS has been in operation since 2005, and the market for project-based mechanisms has existed even longer. The experience with these markets provides a good basis for assessing the ability of carbon market to address the climate crisis. In the European carbon market, large industrial facilities and power stations require emissions allowances (EUA) for every ton of CO2 they emit. Allowances are distributed by governments to cover most, but in theory not all of the needs by industry. The problem in the first period 2005-2007 was that some national governments had given out too many allowances. Up until the EUA market collapsed in 2007, the price varied in the €10-30 per ton range (Fig.2.5 in Carbon 2008). In that period, it became obvious that power companies who had allowances for free passed almost all of the costs through to the customers – as if they had paid for the allowances. As a result, the carbon market generated windfall profits for power generators and redistributed tens of billions of Euros from electricity consumers to producers – apparent in the balance sheet of utilities. (BBC documents new examples of windfall profits.)

The overallocation of EUAs and the resulting collapse of the carbon market was an embarrassing for the European Commission, which responded by restricting the national allocation of allowances by member states for the 2008-2012 period. Estonia and Poland were not satisfied with the amount of allowances they were allowed to distribute and sued the EC in front of the European Court of Justice. In September 2009, the Court ruled in favor of Estonia and Poland. It said it was up to member states not the EC to set national emissions targets. It is uncertain how this wrangle will continue, but Eastern European member states have received a joker in the political tug-of-war about emissions rights.

The very political nature of the process by which emissions allowances worth billions of Euros are created and allocated was also apparent in the negotiations about the continuation of the European ETS for the 2013-2020 period. In a recommendable move to improve the system, the European Commission proposed to sell the emissions allowances instead of giving them away for free, something that would make the system a lot better. Industries which are exposed to tough international competition would continue to receive free allowances. Poland managed to negotiate an allocation of free allowances to its power sector – which certainly is not exposed to international competition from outside the ETS area! The argument was that Polish industry and households could not bear the high electricity prices. If experience with the ETS is any guide, Polish utilities will pass on the carbon costs to their customers and take the free allowances as a subsidy.

Now, one can imagine what the reaction of EU countries would be to a sudden purchase of a large amount of emissions allowances by the Norwegian government. Instead of allowing the carbon price to rise, EU governments would simply distribute more allowances, thus turning the Norwegian purchase into a subsidy for allowance-receiving industry. Polish coal-fired power stations are favored candidates for receiving these gifts of Norway.

There is plenty of documentation of phony projects and cheating at the heart of the project-based emissions reductions, especially Clean Development Mechanisms. It reminds me of the story of economic incentives for catching rats, which some Caribbean government had tried as a measure to control this pest. At first, it brought down the density of rats, but then it gave rise to organized rat breeding. The International Energy Agency has now proposed a different mechanism for providing incentives to emissions reductions in developing countries.

One may wonder how the carbon market would work if politicians managed to solve the problems with allocation and cheating. There is another aspect which is not normally reflected in the economists’ models: the variation of the carbon price in response to economic cycles, uncertainty and imperfect information. The economic risk to investors in energy technology posed by the medium-term uncertainty in the quota price is a significant deterrent to investments, as energy companies recently told a hearing by the UK House of Commons. It is totally unnecessary to generate such a varying price signal because we know already today that in the long run, polluting fossil power stations are not acceptable.

I agree with an increasing number of analysts that emissions allowances should be replaced by a pollution tax, which is simpler to implement, gives much less opportunity to cheat the system or achieve huge gains through lobbying. The problem with carbon pricing in general and a tax in particular is that it costs the public a lot, and that the amounts of money that needs to be rechanneled are much larger than the marginal changes in investment costs that are affected by this policy. The political price of carbon pricing is hence high. To limit that price, it is advantageous to also use more targeted, effective policy tools to achieve emissions reductions, such as energy efficiency regulations for houses, cars, and gadgets, subsidies for all sorts of technology development, information tools, and subsidies/niche markets for emerging low-carbon technologies.

Emissions allowances are funny money – a fantasy creation that works well in economists’ highly stylized model world, but unfortunately not (yet?) in reality. It is time that economists return to their forefathers' understanding of “political economy” (which considers the interests of different parties) and observe real markets before intervening in politics.

Hurra for Green Electricity!

2009-09-13 10:40:17

Some economists argue that support for renewable electricity leads to more coal power. Their reasoning is curiously flawed and oversees the crucial role of technological learning.

A curious discussion about climate policy has arisen in Norway now that the country has agreed with Sweden to join Sweden’s ”green certificate” market (a.k.a. el-certificate, similar to the renewable portopholio standard) . This policy tool creates de-facto a niche-market for specific kinds of renewable energy, which are traded at higher prices than on the spot market for electricity. Economists like Böhringer and Rosendahl, Michael Hoel and Odd Godal (DN 9 and 11 Sept.) now argue that the increased production of renewable electricity in Nordic countries will have no effect on the emissions of greenhouse gases in Europe, and it may even contribute to increasing greenhouse gas emissions globally by leading to a reduced price of fossil fuels.

On some level, the argument is really silly: Since lawmakers have set absolute limits on the allowed emissions, reduced production of coal-based electricity in Scandinavia will free up emissions allowances which will be used somewhere else in Europe to emitt CO2. The support for renewable energy hence undercuts other emissions-reducing efforts. Of course, the same argument can be applied to any emissions-reducing effort anywhere within the EU’s cap! If the argument is hence followed through and applied everywhere, everybody would stop their emissions-reduction efforts, and there would be no reduction at all. Europe would fail it’s goals to reduce emissions. Renewable electricity is one of the many measures required to achieve emissions reduction targets and is hence not futile.

Of course the econmists could respond that I misread their argument, which could be more subtle than it comes across in the media: Dedicated support for renewable electricity reduces the quota price (which is part of the argument) and hence leads to a shift in what measures are adopted to achieve the goal. Instead of energy conservation in Poland, you get wind power in Norway, but on total the measures are (not necessarily, but possibly) more expensive. That’s fair, in the economists’ idealized world, having one emissions price as the only policy tool to achieve emissions reductions is most efficient. However, this oversees some crucial realities.

First and foremost, there are other criteria than efficiency which affect the desirablity of a policy, such as political feasibility and distributive justice. There is a limit to level of carbon and electricity price that is politically acceptable, and that limit varies by country. Poland has already managed to negotiate concessions from other EU countries: a large allottment of free emissions allowances their coal-fired power plants. Sharing the pain of emissions reductions means that also in countries high cost level measures will have to be implemented, even if they are more expensive.

Second, if it is easier to achieve the emissions reductions aimed for in 2012, the ambition level for the next period will be higher. Hence, the amount of emissions is not really fixed as the reasoning of Böhringer and Rosendahl implies, but depends on the ease and success of effort to reduce emissions, and the green certificates will help this effort. Besides, the installed renewable plants will be in operation beyond the time horizon of existing cap-and-trade systems.

Third, carbon pricing strategies such as the EU’s Emissions Trading System lead to windfall profits: anybody who already has low-emissions power production such as large hydro or nuclear plants profits from the resulting increase in electricity price. The amount of money redistributed to owners of existing facilities is much larger than the investment costs for the required emissions reductions, as I have argued elsewhere. Of course t here are other arguments for high electricity prices, as these lead to conservation. However, this can be achieved through taxes which benefit the general public instead of multi-billion Euro windfall profits for power companies. By reducing the quota and hence electricity price, subsidies for renewables reduce the windfall profits of power companies, which should be seen as a good thing.

Fourth and most importantly, niche markets are required for new technologies to mature and bring down cost. As Wright has shown in an analysis of the cost of making air planes published in 1936, costs are reduced with cumulative production because of technological learning. This has been extensively documented also for energy technology: for successful technologies, a doubling of cumulative production brings on average a 20% reduction in per-unit cost (Figure source) Niche markets are required to provide an opportunity for improving the technology, working out the kinks, developing the organisation of new value chains. Policy support for nacent technologies is hence justified by long-term benefits that the development of these technologies brings. While this ”technology learning” rationale has been central for creating the green certificate markets and similar policy initatives, it has been totally ignored in the economists’ arguments against these instruments.

While I don’t think that renewables alone are sufficient to stop climate change and more fundamental changes to our economies are required, they are an indispensible element of any climate strategy. Green certificates could be criticized for being less effective in supporting new technology than feed-in tariffs, the successful approach taken e.g. by Germany, but better some support than none.

Can Technology Spare the Earth?

2009-08-27 22:03:58

The IPCC says that we need to reduce greenhouse gas emissions by at least 80 % by 2050 to achieve the goal of limit global warming to not more than 2°C, agreed to by the EU and the G8.

Recent research indicates that the cumulative emissions in the period 2000-2050 should be not more than 1000 billion tons of CO2. In the first 7 years of this 50 year period; 234 billion tons were already emitted. Even if we give up the 2°C goal, risking unpredictable feedback mechanisms disrupting the climate in more severe manners, quick, deep emission reductions are required to stabilize atmospheric CO2 concentrations. Given that energy access is so essential for the economy, we need to ask ourselves:

How can such reductions be achieved?

What is the role of technology, behavior change, and a change in our path of development?

It appears that policy makers and too many scientists have already made up their mind. Technology is the solution! I was reminded of this again by Norway’s Minister for Environment and Development, Erik Solheim, who started his speech on the political prospects for climate protection at NTNU with a rhetorical question of where we would stand without technology today, pointing to the increase in life expectancy from 40 to 70 years since the industrial revolution. Without technologies, it would be back to the caves. Solheim’s rhetoric contributes to making a taboo of any other solution strategy, something we can ill afford in the precarious situation we have put ourselves in.

Of course technology is an indispensible part of the solution! It would be impossible to even feed the current population 6.9 billion without technology, not to talk about the 9 billion we expect by 2050. Alluding to a life in the caves, however, it not helpful when we consider how we could lower our carbon footprint to less than one ton per person and year, from 15-30 tons in developed countries today. One needs to ask whether technology is sufficient, or whether other changes are required as well? What are the environmental, social and monetary costs of technological solutions, compared to other approaches? I see that the exclusive focus on technology clouds our thinking about the implications of climate change for our development.

The past century and a half have brought tremendous economic development. The quality of life of individuals has improved greatly, and a household’s possessions of everything from living space to clothing and gadget have grown substantially, at least in the rich quarter of the global population. Many take the expression sustainable development to imply that the less wealthy and very poor would catch up with us, but also that we would continue the expansion of possessions and travel distances as we have done in recent decades. The base-line of our energy scenarios is such economic development, where business-as-usual implies that it occurs using incrementally improving technology with improvement corresponding to current rates (1% energy efficiency gain per year, technology learning for new energy technologies), while mitigation scenarios imply the adoption of different energy technologies to satisfy the needs of the ever-expanding economy.

In the mind of policy makers, technology is the ultimate band-aid that solves the CO2 pollution problem from energy, allowing for a continued expansion of energy services without any limits. The trouble is that this perspective is not even supported by the energy technology models from which it has emerged. My reading of the International Energy Agency’s Energy Technology Perspectives is that climate mitigation to the 2°C level is simply not possible if the economy develops along a baseline scenario.

One reason is certainly food production, which already causes more greenhouse gas emissions that we can afford globally from all consumption activities. There it is methane from cows, nitrous oxide emissions from soils and the fate of soil organic carbon which play an essential role. This leaves little room for emissions from the energy system. Even if we go to totally fossil-free energy technologies, material production will require the oxidation of carbon. Furthermore, there are resource constraints which affect carbon-free energy production. Jesse Ausubel, from whose influential 1996 American Scientist article I borrowed the title of this blog, has pointed out that the limited availability of land constrains all renewable sources. The increasing opposition to wind power projects indicates that maybe we want to keep part of nature for other purposes. Nuclear fission has its own resource limits. In addition, concerns about proliferation need to be taken seriously in today’s world.

I think it should be possible to achieve our current level of material wealth with much lower greenhouse gas emissions, even though I would like to see the feasibility of a <1 ton per year carbon footprint demonstrated by model calculations that take both life-cycle emissions and resource limits into account. The current development path, however, does not stop there. The wealthier the individuals, the more air travel they do, and there is no technology on the horizon to take carbon out of the aviation business. Richard Branson’s Virgin Galactic vision and enterprise demonstrates that we are on the trajectory to commercial space-flight being available to the upper classes. Such a development can never be sustainable.

We need to simply acknowledge the resource limits on this planet and to change course towards a development that occurs within these limits. The limit on greenhouse gas emissions is one crucial limit, but limits on the yields of fish stock and land, as well as of energy and material resources, are also important. It is not that we need to halt economic growth – only totalitarian regimes can put a lid on human ingenuity – but that we need to change the direction in which the economy develops. Innovations and growth which rely on more energy, more resources need to become impermissible. Enforcing such constraints will provide a new set of opportunities for innovation and technological development, for cultural expression and human well-being in harmony with nature.

We are still far away from having the constraints and price signals in place under which economic growth could be environmentally beneficial. As such, the current economic crisis is a blessing and an opportunity to use the involuntary pause to change course, to reorient development, to green the economy. There are some efforts in that direction, but they need to be strengthened dramatically.

What does the Carbon Footprint mean?

2009-08-13 17:01:08

Many people have asked how a country’s carbon footprint compares to the territorial emissions reported to the United Nations Framework Convention on Climate Change (UNFCCC)?

In hindsight, it was perhaps remiss of us not to include this data in the paper. However, it was not our motivation.

Focusing on whether the emissions are bigger or smaller misses a large part of the story. The main focus of the paper is on what consumption categories cause emissions and how this varies across countries with different incomes. The current approach in the UNFCCC reveal what the emissions are from electricity, transportation, and so on. This is vital information, however, only a carbon footprint can reveal what the emissions are to produce food, car, television, or to get a hair cut. This information is needed by consumers if they want to reduce their own personal footprint (http://www.springerlink.com/content/1976p75463860416/). The real value of a carbon footprint is the information it reveals, not necessarily if the footprint is bigger or smaller than the territorial emissions.

In a broader global perspective, if a country’s carbon footprint grows over time relative to territorial emissions then it means that the country is increasingly importing products at the expensive of domestic production. If that country has an emission limitation in the Kyoto Protocol and the imports are coming from countries without emission limitations then global emissions may increase while it “appears” emissions are decreasing. This is known as carbon leakage (http://www.nature.com/climate/2008/0804/full/climate.2008.25.html).

In fact, this is what is happening now. Since 1990 the emissions in countries with an emission limitations have largely stabilized, while the emissions in countries without emission limitations have increased about 80%. The main reason for this is the explosive growth of China, however, recent research has shown that about 50% of the growth in Chinese emissions since 2000 is due to the production of products exported from China and consumed in other countries (http://www.agu.org/pubs/crossref/2009/2008GL036540.shtml).

An analysis of the carbon footprint is useful for an analysis of carbon leakage, but the footprint better measured another way (http://dx.doi.org/10.1016/j.ecolecon.2007.10.014). The carbon footprint in our article only directly considers trade to final consumers (such as households) and trade to industry is calculated internally in the model. Thus, the footprint of the USA includes emissions that occur to extract iron-ore in Australia, to produce steel in China, to produce a car in Japan, which is consumed in the USA. While this is perfectly logically, it means that the imported emissions are not directly comparable to the import statistics which only consider the first trading partner (the trade from Australia to China is not included in the US trade statistics). To make trade statistics and imported emissions consistent it is more intuitive to consider only the first link in the supply chain, but include imports to both industry and final consumers. This method was used in another of our papers (http://pubs.acs.org/doi/abs/10.1021/es072023k) and we call a Consumption-Based Inventory.

In the two different approaches the imported emissions differ, but the exported emissions need not differ if the arithmetic is done correctly. In the Carbon Footprint of Nations paper, the imported emissions cover the global emissions required to produce the final consumption in each country, while in a Consumption-Based Inventory the imported emissions cover the domestic emissions in each country to produce total (final and industry) consumption in each country. If trade to industry and final consumers is include, then only domestic emissions are included to avoid double counting.

Both approaches do lead to some confusion, but they serve a different purpose. A Carbon Footprint tells us what consumption categories are important and how we may reduce emissions by consuming differently. The Consumption-Based Inventory focuses on trade relationships and how the trade relationships redistributed emissions between countries. Depending on the question being asked, one method is usually preferred.

News Stories on Carbon Footprint of Nations

2009-06-24 11:50:29

A good week has gone since the release of the website and the online version of our article.

A number of news outlets picked up the story, including the venerable Neue Züricher Zeitung (Switzerland) and the tabloid VG (Norway). It was really interesting to discuss our research with numerous journalists and to see what they picked up. Here is some highlights.

Consumption as key driver for carbon footprints: Basically all stories emphasize the importance of goods for personal and national carbon footprints. ETH Life and pressetexte show ladies shopping. (Ironically, men usually have higher carbon footprints and are traditionally responsible for shopping high-impact items.) The news stories also point out that increased consumption leads to increased carbon footprints and that this tendency does not level off even at high expenditure levels. There is no “Kuznets curve” for carbon footprints. This message is very much part of our intention to alert the world to the fact that, even when consumed goods or services do not require energy for their consumption, they cause greenhouse gas emissions during their production and consumption.
The outsourcing of carbon footprints: The news stories also focus on the contribution of countries to the climate problem and on how this contribution changes if we take emission embodied in trade into account (1,2). Our analysis shows that for most OECD countries, the emissions caused by the production of imports are clearly higher than that caused by the production of exports. A carbon footprint accounting would have clear implications for the assignment of responsibility for future emissions reduction. In the interviews, I have emphasized the importance of using carbon footprints as a complementary indicator to the conventional national emissions inventories in international climate policy. We want to ensure that measures that are taking to not lead increases in emissions somewhere else. I would also argue that the development of the national carbon footprint over time is much more relevant for the success of climate policies than the development of national emissions.
Some stories have also picked up on the relevance of the results for integrated product policy. Our study has focused on the importance of eight different consumption categories. Integrated product policy (IPP) has been successfully applied by the EU to influence the content of electronic products, reducing toxic compounds, and to reduce energy consumption of energy using products. Now the EU is interested in extending product policy to also reduce energy use in the manufacturing of the products. Our study will hopefully help the EU to target its policy on the largest problems.

The importance of national carbon footprint accounting

2009-06-15 13:48:23

Congratulations to Edgar Hertwich, Glen Peters and the NTNU team for presenting the 'Carbon Footprint of Nations' as a politically relevant way of accounting for greenhouse gas emissions, based on a sound methodology.

The publication and website comes at an important time – the decisive climate policy negotiations in Copenhagen are only half a year away – and it will be a useful input to this process. For both, producers and consumers, as individuals, companies and nations are responsible for emissions and both have a joint responsibility to address the problem with determination. The burden of this responsibility must be shared, only then can a meaningful and comprehensive deal to cut global emissions be achieved. The exact nature of this sharing is yet to be determined in negotiations but it is certainly useful to provide the viewpoint of both, production-based and consumption-based emission inventories.

The work is also important from a methodological point of view. Whilst it is, of course, not the first publication to present findings from an environmentally extended multi-region input-output (EE-MRIO) model (numerous other researchers and the authors themselves have driven forward this field of research), it clearly emphasises the applicability and usefulness of this method. The consistent combination of existing, mostly standardised, environmental and economic accounts and the unambiguous allocation of impacts to consumption categories are the strengths of EE-MRIO. It is also an acknowledgement that international trade is the key element in separating production from consumption in a globalised world and that the complex trade relationships need to be addressed in a methodological sound manner. Clearly, much more needs to be done to make the method robust enough for political target setting. An upcoming report from the recent European EIPOT project makes suggestions on methods, data and institutions to develop EE-MRIO in that direction (www.eipot.eu).

Looking at greenhouse gas emissions from a consumption perspective is politically significant and addresses arguably the most important environmental challenge faced to date. But it cannot provide the full picture of relevant impacts and it will be necessary to monitor other indicators alongside the carbon footprint, such as the ecological footprint, water footprint and results from more specialised ecological impact models, informing about biodiversity, ecosystem health and other categories.

I wish the 'Carbon Footprint of Nations' website plenty of attention and hope it helps in conveying the message of consumption-based accounting.

Welcome to the Carbon Footprint site!

2009-06-12 15:28:05

We are excited about launching this web site. Many years of our research have gone into developing models and analyzing data on the connection of industrial production, consumption and environmental pressures.

Profound insights have been gained, and an approach has matured which we think is indispensible to address climate change and resource scarcity. Now, we feel that the world really should pay attention! We want to use this website to communicate our research findings to a broader public and to enter into a dialogue with those interested.

Climate change is now increasingly acknowledged as the most urgent global environmental problem. Humans have changed the composition of the atmosphere in a manner that disturbs our planet’s energy exchange with the rest of the universe, thereby leading to a small but measurable increase in temperature on our planet. The main process by which we have changed the atmospheric composition is combustion. Combustion happens on fields, in industry, in stoves and car engines, mostly intentionally and for a specific purpose.

Our problem is that while politicians are waffling about how to address the climate challenge, the rate at which the concentration of greenhouse gases increase is itself increasing. Energy consumption increases, and the fraction of carbon dioxide absorbed by the biosphere and oceans may be going down. It is hence important to act – but to act, we need to know what to do.

The occasion of opening this website is the publication of a paper by Dr. Glen Peters and myself, modeling and analyzing the carbon footprint of 73 nations. Here you can find out whether, in your country, it is nutrition which contributes most to the average person’s footprint, housing or mobility. You can see how your country does, compared to others, and how much of the carbon footprint is due to imported goods.

Our main message is: all of our purchases are relevant to the climate. The attention often focuses on the direct use of energy. Yes, that is where we are causing the highest emissions of greenhouse gases per unit money spent. But on the aggregate, the emissions caused by the production of goods and services we consume are more important. We need to reduce both direct and indirect. We need to be careful that the reduction of direct emissions does not shift emissions elsewhere.

Of course, the problem is exceedingly complex, and there is much more to the story than the headline. I hope this website will be able to shed some light on important aspects that have often been overlooked.