Consumption based approach for mitigating GHG emissions with special reference to forest industries. Pekka Kauppi & Laura Saikku 13 November 2008

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1 Consumption based approach for mitigating GHG emissions with special reference to forest industries Pekka Kauppi & Laura Saikku 13 November 2008

2 HENVI -project January 2009 July 2011 Project leader: Prof. Pekka Kauppi Researcher in the project: Laura Saikku (currently PhD candidate) Environmental Science and Policy, Faculty of Bioscience

3 Goals of the HENVI study We aim at studying embodied emissions in trade i.e. consumption based CO 2 emission Aim at providing detailed knowledge on embodied emissions related to forest industries in particular. We study how to include trade embodied emissions, transport emissions and ecosystem dynamics in effort sharing A goal is to provide information for policy-makers for reducing GHG emissions during the post-kyoto period.

4 Humans need ecosystems, ecosystems do not need humans Human Well-being and Poverty Reduction Basic material for a good life Health Good Social Relations Human Well-being Security Freedom of choice and action Indirect Drivers of Change Demographic Economic (globalization, trade, market and policy framework) Sociopolitical (governance and Indirect Drivers institutional framework) Science and Technology Cultural and Religious Ecosystem Services Direct Drivers of Change Changes in land use Species introduction or removal Direct Drivers Technology adaptation and use External inputs (e.g., irrigation) Resource consumption Climate change Natural physical and biological drivers (e.g., volcanoes)

5 Increasing interest in consumer impact, rather than the easy solution of outsourcing environmental responsibility to business and industry KUUKAUSILIITE Helsingin Sanomat, 7 November 2008 Carbon footprint: Are You a good person?

6 Previous research related to the project Saikku, L., Rautiainen, A. & Kauppi, P The sustainability challenge of meeting carbon dioxide targets in Europe by Energy Policy 36 (2), Saikku, L. & Soimakallio, S Top-down approaches for differentiating of emission reduction commitments - Uncertainties and sensitivities in the EU27. Environmental Science and Policy 11 (8), Peters, G., Marland, G., Hertwich, E. & Saikku, L., Rautiainen, A. & Kauppi, P. E., Trade, Transport, and Sinks Extend the CO 2 Responsibility of Countries. Submitted

7 Analysing Climate policy in EU27 How did development of population, affluence, technology and intensity of energy use affect on CO 2 emissions in the ? What kind of improvement in dematerialisation and decarbonisation are needed by 2020? How could the GHG emission reduction effort be shared outside the EU s emission trading system within the EUcountries by 2020 by simple top-down approaches? What kind of sensitivities and uncertainties are related in different top-down approaches?

8 Case 1: The sustainability challenge of meeting carbon dioxide targets in Europe by 2020

9 ImPACT model (Waggoner & Ausubel 2002) I = P x A x C x T I = impact emissions P = population population A = affluence, income GDP/capita C = consumption energy/gdp T = technology emissions/energy CO 2 = pop * GDP/capita * energy/gdp * CO 2 /energy

10 Changes in macro-level forces Annual changes: i, p, a, c, t i = p + a + c + t negative t: efficiency/decarbonisation negative c: dematerialisation Compensating population and affluence growth with technology and consumption?

11 Average annual change in p, a, c, t and i during

12 Emissions Trends of EU15 countries dominant: EU15 population 80% and GDP 90% of the whole area EU15 countries: absolute level of Energy/GDP and CO 2 /Energy at around 40% lower level compared to new EU countries

13 EU27 CO2-emissions in 2020? Emission must be reduced in 12 years ( ) -1.75%/year. When growth in population and affluence considered, CO 2 /GDP would have to change around -5%/y (vs. -2% ), around 2.5 times faster than change in % reduction target challenging Other GHG emissions, forest sinks

14 Case 2: Viewpoints and approaches for greenhouse gas emission reduction effort sharing in EU27 at national sectors

15 Effort sharing scenario settings, non-ets 1. The annual rate of change in GHG/GDP is the same in all Member States during 13 years, GHG/GDP becomes equal in all countries in National rates of GHG/GDP are the same as they were in In order to reach a reduction of 20% by 2020, an additional reduction is required. This additional annual reduction is set constant over time and the same for all countries in percentage terms. 4. GHG per capita becomes equal in all countries in 2020.

16 Assumptions in calculations ETS reduction based on grandfathering in all scenarios -20% from 2005 emissions Non-ETS -8% Baseyear for emissions 2005, assuming 2008 equal to 2006 Baseyear for GDP 2008 Eurostat forecast (non-ets) Population forecasts: Eurostat baseline scenario GDP growth converges in all countries to level 2% (Saikku et al. 2008)

17 Test runs for all scenarios 1) The base year for emissions is changed to ) Emissions in the ETS sector are reduced by 20% from the second national allocation plans for ) Emissions in the ETS sector are reduced 0% from the verified emissions in ) GDP forecasts presented in Mantzos et al. (2003) and POLES model (Russ et al., 2007). 5) The base year for GDP is changed to 2004 and 2005, in addition, overall GDP is used instead of non-ets GDP 6) Population forecasts are calculated according to Eurostat High and Low variants

18 Average change in non-ets emissions in different scenarios for 2020 in comparison with Error bars represent the variation range in terms of percentage points. 100 % Non-ETS emission reduction target in 2020 vs % 60 % 40 % 20 % 0 % -20 % -40 % -60 % -80 % LATVIA SLOVAKIA ROMANIA LUXEMBOURG MALTA POLAND SWEDEN HUNGARY DENMARK CZECHR. UK IRELAND BULGARIA SPAIN PORTUGAL GREECE LITHUANIA ITALY FINLAND BELGIUM AUSTRIA FRANCE GERMANY SLOVENIA ESTONIA NETHERLANDS CYPRUS

19 Test Run 1: Impact of changing the emission base year from 2005 to 2004 Non-ETS emission reduction 2020 vs % 80 % 60 % 40 % 20 % 0 % -20 % -40 % -60 % SCE1 SCE3 SLOVAKIA PORTUGAL GERMANY GREECE BULGARIA ROMANIA AUSTRIA FINLAND BELGIUM SLOVENIA CZECHR. IRELAND FRANCE DENMARK LUXEMBOURG HUNGARY SWEDEN MALTA ITALY SPAIN LATVIA NETHERLANDS CYPRUS UK LITHUANIA POLAND ESTONIA

20 Test run 2: Emissions in the ETS sector are reduced by 20% from the second national allocation plans for When the base year for ETS reductions is changed from 2005 to the Kyoto allocations ( ), non-ets effort increases for all countries by one to two percentage points. In 2005 total emissions in the ETS sector were relatively equal to those annually allocated for the period for most of the countries and at the EU27 level.

21 Impact of changing the requirement for ETS sector emission reductions from -20% to 0% compared to 2005 level in two example scenarios, 3 and % 60 % SCE3 SCE4 40 % 20 % 0 % -20 % -40 % -60 % -80 % MALTA ROMANIA SLOVAKIA PORTUGAL BULGARIA SPAIN HUNGARY GREECE POLAND LITHUANIA LATVIA ITALY CZECHR. CYPRUS SLOVENIA SWEDEN ESTONIA AUSTRIA GERMANY FRANCE BELGIUM UK NETHERLANDS FINLAND DENMARK LUXEMBOURG IRELAND Non-ETS emission reduction 2020 vs. 2005

22 Test Run 4: Impact of changing GDP forecasts in Scenario 1 (baseline compared to reference forecasts). Change in non-ets emission % 60% 40% 20% 0% -20% -40% -60% -80% ROMANIA BULGARIA LATVIA LITHUANIA ESTONIA HUNGARY POLAND SLOVAKIA CZECHR. SLOVENIA MALTA PORTUGAL GREECE SPAIN IRELAND CYPRUS BASELINE, Saikku et al 2008 (ppp) Mantzos et al 2003 POLES (ppp) SWEDEN AUSTRIA UK FRANCE ITALY BELGIUM FINLAND LUXEMBOURG NETHERLANDS GERMANY DENMARK

23 Development of Energy intensity and international trade? CO 2 /energy due consumption production Energy embodied in international trade? Year 2001: around 89% of CO 2 emissions due to consumption in EU were met by its own production (Peters & Hertwich 2008) Czech Rp, Romania, Bulgaria, Poland and Finland export emission intensive products, others net importers Development of consumption based emissions in the past? Carbon leakage in the future?

24 Conclusions (1) CO 2 emissions have been increasing in EU, the changes in technology and consumption have not been able to compensate to growth in affluence Reducing GHG s -20% by 2020 is challenging Emission reduction targets for MS depend significantly on the target for ETS sector and the method applied for non- ETS sector

25 Conclusions (2) Forecasts, especially economic, have high uncertainties Using backcalculation methods? Selection of the baseyear can influence the results Longer time-period more representative Emissions or ETS allocations may have significant influence on the targets for some countries Selection of baseyear for GDP or use of overall GDP instead of non-ets GDP have likely insignificant influence

26 Conclusions (3) Top-down approaches in general Strengths Transparent Data easily available Weaknesses Limited ability to consider country-specific factors Structure of economy, climatic and geographical conditions, imports and exports and emission reduction costs not considered Political acceptance may be better than in conventional bottom-up approaches?

27 Open issues what next? Emissions due to international trade, international bunker and aviation emissions problematic Consumption based emissions the uncertainty in the estimates, especially forest sector Carbon sequestration of trees relates to land-use changes and is relatively large International trade and forest sink in effort sharing? Role of population, affluence, technology, intensity of consumption, trade and sinks in the future?

28 HENVI-project: Research hypothesis 1) Emissions embodied in international trade have an increasing role on countries emissions. Changes in sinks and deforestation have an increasing role. 2) The import and export fluxes at the forestry sector are relatively large in comparison to the domestic fossil emissions of C in the forest sector. 3) In the future, the role of population through migration may increase in developed countries. Affluence growth boosts emission growth strongly in most nations.

29 HENVI-study Part I. Consumption based inventories and forest industries We assess the role of forest industries and flows of residues that seldom have any economic value in traditional input-output analysis, that are often used for determining the embodied GHG flows in trade. We estimate forest sinks and carbon embodied in imported round wood and in traded wood products, in the forest residues; and discuss substitution effects Focus: Finland, global implications are taken into account

30 HENVI-study Part II. Mitigation Policy We aim at understanding how changes in population, affluence, consumption and technology, and also trade affect the development of emissions globally We study how to include trade embodied emissions, transport emissions and ecosystem dynamics in the different algorithms for sharing mitigation burden We show the implications of including population and affluence forecasts in the emission scenarios We emphasize and make explicit the uncertainties and sensitivities of emission reductions scenarios

31 Thank you!