Post-Kyoto greenhouse gas inventories: production versus consumption

For the long-term stabilization of greenhouse gas (GHG) concentrations it is important that post-Kyoto policy has broad participation to ensure environmental integrity. Many post-Kyoto frameworks have been debated, but surprisingly approaches that focus on consumption have received little attention in the climate change literature despite broader interest in other areas. In this article we extend the argument for constructing GHG inventories using a country's consumption rather than production. First, we argue that constructing GHG inventories using a country's economic activity instead of geographic territory solves allocation issues for international activities such as international transportation and carbon capture and storage. Second, we argue that consumption-based GHG inventories have many advantages over production-based inventories. The main advantages are to address carbon leakage, reduce the importance of emission commitments for developing countries, increase options for mitigation, encourage environmental comparative advantage, address competitiveness concerns, and naturally encourage technology diffusion.