The Problem with the Way We Measure Carbon Emissions

Carbon Leakage

Wealthy countries can just choose to outsource their emissions and continue to stay compliant with their climate goals. They needn’t make any economic sacrifices, as long as there’s a poorer country willing to take on the burden of production. Seeing as it’s the wealthiest consumers who have the largest carbon footprints — the world’s richest 10% produce half of all carbon emissions — consumption and not just production of carbon is the key challenge¹. Our current approach to measuring emissions fails to capture this.

Fairness

Deciding who gets to pollute how much is the central challenge of international climate cooperation. The argument goes that developed countries have already done their share of polluting and should make larger cuts to their emissions, and that developing countries should have a longer leash to pollute until they catch up. The Paris Agreement addresses this through the concept of Common But Differentiated Responsibilities (CBDR)² ³ .

Environment Kuznets Curve (EKC)

The EKC traces the impact of economic growth on the environment. The theory is that the economic growth of a country initially comes at the cost of rising environmental degradation; however, once a certain per capita income level is reached, the curve sees an inflection point after which environmental quality begins to improve. This progression gives the EKC a u-shaped curve.

Environment Kuznets Curve — Source:Wikipedia

Incentives

If wealthy consumers were held accountable for their embodied emissions (emissions associated with the products that they consume), they would demand greater transparency in the supply chain⁴. This would direct the spotlight towards environmentally unfriendly practices in producer countries, and promote more sustainability in supply chains. Consuming countries will also have more incentive to share technology and best practices with their producer counterparts. The incentives are lost when the consumer is left out of the picture.

Market Dynamics

Another consequence of the singular focus on production is that markets are prevented from seeking out alternative, more efficient means of production.

Producer vs Consumer Emissions Numbers (Source: Income-based environmental responsibility)

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