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Cutting emissions: my country’s, BHP’s, mine, or thine?

By Geoff Carmody - posted Tuesday, 29 October 2019

'If you can't measure it, you can't manage it'. Obvious, right? When cutting greenhouse gas emissions (GHGs), however, how do you do it?

Who's responsible for Australian GHGs? Australia? BHP? Me? Thee? If you're a zealot, all of the above, and more. Simultaneously.

Accounting for GHGs can fry your brain. A long time ago it was agreed countries should take responsibility for their national production of GHGs. This remains the 'official' accounting measure of countries' GHG reduction efforts (eg, under the Paris 'Agreement').


Before that, zealots went for 'extended producer responsibility' (EPR). EPR says any business or person producing anything that generates GHGs over the life of that product is responsible for all of those GHGs. Don't ask me how that's a practical measure.

If encouraging a global deal on emissions reduction is central to dealing with an assumed global problem, some suggest measuring and reducing national GHGs consumption is best. I did, back in 2008. This measure eliminates trade competitiveness issues blocking a global deal. National GHGs production measures build-in such trade competitiveness 'blockers' where countries act at different times, as we know they have, and will.

Today, anything and everything goes. All these accounting measures for GHGs are advocated. Many 'green' supporters advocate all three measures at the same time. Consistent accounting frameworks? Double counting? Who cares? Those are concerns for number nerds. If we get a bigger GHG reduction by using all three, and more, go for it!

This is reminiscent of H.G. Nelson's exhortation about sport. 'Too many measures of GHG emissions are barely enough'.

What happens if national production and national consumption GHG reduction targets are both achieved globally? National accounting ensures that, globally, the total sum of national production equals the sum for national spending. And global exports equal global imports.

GHGs reductions from international trade in energy therefore would be delivered twice: once as exports, and again as imports. 'Green' advocates will applaud – and want more.


Isn't this far-fetched? Today, zealots are arguing that Australia's global GHG contribution is much more than the 1.3% (and falling) share based on the globally-agreed national production measure. They assert we must add to Australia's 1.3% GHGs production share, the GHGs due to our energy exports used in importers' production. On that basis, they claim our 'share' of global emissions could rise from 5% now, up to 13% or more.

Why should we add other countries' GHGs production from using their Australian energy imports to our Australian GHGs production? Isn't this tendentious double-speak? Isn't it also counted as importers' GHG production as per the agreed international accounting framework for measuring GHGs?

Maybe not, if we revert consistently to EPR accounting. This accounting isn't part of international agreements about measuring and managing GHGs. But zealots and some major corporates say they support this EPR model.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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