European Union CO2 emissions: different accounting perspectives

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Courtesy of European Environment Agency (EEA)

The aim of this technical report is to explain to a wider audience the concepts and methodologies behind different air emission accounting perspectives and the resulting emissions data at the EU level.

In brief, there are three of these different accounting perspectives: territorial, production and consumption.

Three perspectives on air emissions

The territorial perspective considers emissions that are released to the atmosphere from within a country's borders and from areas that are under a country's jurisdiction. This perspective is the only method accepted by international environmental law to account for a country's emissions and mitigation efforts. Territorial.emission datasets that focus on the physical location of emissions are also used as the basis for the atmospheric modelling of environmental impacts.

The production perspective considers those emissions from companies that have their economic interest within the economic territory of the country (known as being 'resident') irrespective of the geographic location where their activities take place.

It also considers emissions from resident households in relation to their economic output (production), irrespective of the geographic location where these activities take place. The production perspective stems from the System of Environmental Economic Accounting (SEEA), and a legal basis for reporting of environmental economic accounts has recently been implemented in the EU.

The consumption perspective considers those emissions that result from the national consumption of goods and services within a country, irrespective of the geographic location where production of these goods and services result in emissions. The consumption perspective complements the territorial perspective and the production perspective by relating environmental impacts to demand for goods and services by citizens. The consumption.based perspective is not addressed in international conventions, although consumption emissions are embedded in the EU's policy framework on sustainable production and consumption, for example via product standards.

In order to reduce complexity and facilitate understanding of methodology, this report will only use these perspectives to look at CO2 emissions in the EU.27.

Different data, different results

In principle these accounting perspectives provide a complementary source of information on air pollutants and greenhouse gases being released into the atmosphere. This information includes the amount and location of air pollutants and greenhouse gases as well as the economical, technical and societal drivers of these emissions.

However, before using these perspectives in a complementary manner, users should be aware of some issues. These three perspectives are all based on different datasets. These datasets use different 'system boundaries' (the type of information that is included) and calculation methods. They also vary in terms of the quality of data they use. These differences in underlying methods and input data affect the resulting emissions calculations. Some results therefore have a percentage of 'uncertainty' attached to them that reflects the gaps that exist in the data they are based upon. This in turn has an effect on how applicable some of the resulting data is to policymaking.

Consumption.based emissions calculations are especially vulnerable to this uncertainty because of the 'sequenced' nature of the accounting methods. This 'sequencing' means that territorial emissions are used as a basis for calculating production emissions, and production emissions are in turn used as an input to consumption.based emission calculations. Thus the quality of information (and degree of uncertainty) in the resulting consumption.based emission calculations is dependent on the quality of the territorial emissions and production emissions information. It is also dependent on the availability of global data on the supply, use and trade of goods and services.

The absence of standardised calculation methods is a further weakness of consumptionbased calculations. In contrast to territorialand production.based methods, there are no standardised methods for calculating consumption.based emissions, and the choice of method will lead to different results in emission estimates. An important limitation to providing time.series of consumption emissions is the fact that statistical data on supply, use, and international trade are not updated frequently. This means that approximations have to be made to provide complete time series.

Another issue, which affects all three accounting methods, is the quality of information on non.OECD countries. The quality of emission information for non.OECD countries is rather uncertain, and this affects the quality of territorial and production emission inventories.

All these differences produce different final results. For example, based on available data, EU.27 emissions according to the consumption perspective appear to be higher than those calculated according to the production and territorial perspectives. Note should be taken on the uncertainty in the different datasets which means that these differences can be larger or smaller when more accurate data becomes available in the future.

Consumption perspective emissions show a trend of increasing emissions over time, whereas the production and territorial perspectives show a trend of reducing emissions. In spite of this difference in emission results, when it comes to considering the contribution of EU.27 emissions to global CO2 emissions, all three accounting methods point toward a decreasing contribution over time.

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