Scientists use inventories of natural and anthropogenic (human-caused) emissions as tools when developing atmospheric models.
Regulatory agencies and corporations also rely on inventories to establish compliance records with allowable emission rates.
[2] The Intergovernmental Panel on Climate Change defines production-based emissions as taking place “within national territory and offshore areas over which the country has jurisdiction”.
[4][obsolete source] Almost all countries in the world are parties to the Paris Agreement, which requires them to provide regular production-based GHG emissions inventories to the United Nations Framework Convention on Climate Change (UNFCCC), in order to track both countries achievement of their nationally determined contributions and climate policies as well as regional climate policies such as the EU Emissions Trading Scheme (ETS), and the world's progress in limiting global warming.
Today, much international effort is put into slowing the anthropogenic release of GHG and resulting climate change.
In order to set benchmarks and emissions targets for - as well as monitor and evaluate the progress of - international and regional policies, the accurate measurement of each country's NEI becomes imperative.
Emissions are calculated not directly but indirectly from fossil fuel usage and other relevant processes such as industry and agriculture according to 2006 guidelines issued by the IPCC for GHG reporting.
However, as production has become increasingly international and the import/export market between nations has flourished, Multi-Regional Input-Output (MRIO) models have been developed.
Table 3 also shows how these processes of production, consumption and trade have changed from 1990 (commonly chosen for baseline levels) to 2008.
The ISO 14064 standards provide governments, businesses, regions and other organisations with an integrated set of tools for programs aimed at measuring, quantifying and reducing greenhouse gas emissions.
Other key advantages include: extending mitigation options, covering more global emissions through increased participation, and inherently encompassing policies such as the Clean Development Mechanism (CDM).
[6] However, by having appropriate mechanisms in place, such as a harmonized global tax, border-tax adjustment or quotas, a consumption-based accounting system could shift the comparative advantage towards a decision that includes environmental factors.
[4] This system would have the effect of embedding the cost of environmental load in the price of the product and therefore market forces would shift production to where it is economically and environmentally preferable, thus reducing GHG emissions In addition to reducing emissions directly this system may also alleviate competitiveness concerns in twofold ways: firstly, domestic and foreign producers are exposed to the same carbon tax; and secondly, if multiple countries are competing for the same export market they can promote environmental performance as a marketing tool.
Peters[6] argues that this last prediction means that consumption-based accounting would advantageously result in greater emissions reductions irrespective of increased participation.
Despite coming under heavy criticism (see Evans,[26] p134-135; and Burniaux et al.,[27] p58-65), the theory is that as the marginal cost of environmental abatement is lower in non-Annex B countries a scheme like this will promote technology transfer from Annex B to non-Annex B countries resulting in cheaper emissions reductions.
However, levels and accuracy of data will improve as more and better techniques are developed and the scientific community produce more data sets - examples including the recently launched global databases: EORA from the University of Sydney, EXIOPOL and WIOD databases from European consortia, and the Asian IDE-JETRO.
[30] Crucially it proposes that at each stage of the supply chain the emissions are shared by some pre-defined criteria between the different actors involved.
[29] Whilst this approach of sharing emissions responsibility seems advantageous, the controversy arises over what these pre-defined criteria should be.
As no criteria set has been adequately developed and further work is needed to produce a finished methodology for a potentially valuable concept.
[4] Not only does consumption-based accounting encompass global emissions, it promotes good environmental behaviour and increases participation by reducing competitiveness.
However, as yet no adequately developed methodology exists for this third way, so further study is required before it can be implemented for policy-making decisions.
Today, given its lower uncertainty, established methodology and reporting, consistency between political and environmental boundaries, and widespread implementation, it is hard to see any movement away from the favoured production-based accounting.
With further work into the methodologies of consumption-based accounting and sharing emissions responsibility, both can play greater roles in the future of climate policy.