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Carbon Leakages: Towards Tailored Policies to Reduce Emissions Embodied in the EU Petrochemical Sector
Michel Zimmermann & Vincent Moreau
27th August 2019, Session 3C: Energy Policy II
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Decoupling Greenhouse Gas Emissions fromEconomic Growth in the EU is vital
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The EU and its Member States have achieved (relative) decoupling of over the last decade
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Index (
2007 =
100)
GDP at market prices - EU GHG emissions - EU
GPD at market prices - Germany GHG emissions - Germany
GDP at market prices - Poland GHG emissions - Poland
Eurostat, 2019
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The Petrochemical Industry achieved necessarydecoupling
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Source: Cefic, 2018
Development of EU chemicals production and greenhouse
gas emissions A successful decoupling
has been achieved by reducing GHG emissions, even though production has grown substantially
This however neglects the trade dynamics of the petrochemical industry
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Production- vs. Consumption-based Accounting16th
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Production-based AccountingConsumption-based Accounting
Producer carbon responsibility Consumer carbon responsibility
Method adopted by UNFCCCAlternative method that puts the burden
of emitting GHG on consumers
Accounts for GHG emitted within a
country’s territory when goods, services
or energy are produced
Accounts for GHG emitted within a
country’s territory when goods, services
and energy are consumed
Does not consider where goods are
finally consumed (i.e. imports)
Does not consider where goods are
produced (i.e. exports)
Unable to account for potential carbon
leakage, both weak and strong
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Focusing on Territorial Emissions favours highly Industrialised Countries
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• Big differences between the
developed and developing
economies with respect to
their emission trade balance
• The GHG emission trade
deficit illustrates the potential
distortion of the carbon
responsibility of developed
countries
Peters and Hertwich, 2007
Emissions embodied in industry and exports
compared to total production-based emissions
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Embodied Emissions in the Petrochemical Industry16th
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Year 2014
Virtual carbon flows between petrochemical sectors among EU
member states (Gt of GHG) are becoming increasingly more
integrated
Year 2000
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Research Objectives16th
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As a result of only focusing on territorial emissions, the analysis of whether decoupling is
achieved for European petrochemical industries may not be an accurate representation
We aim to analyse the state of decoupling in EU petrochemical industries,
based on a range of different measures of carbon responsibility
Neglecting embodied emissions further raises questions about the responsibility of different
countries with regards to their contribution to the European emission inventory
We illustrate how the allocation of GHG emissions impacts the “true” carbon
responsibility of different countries and their respective petrochemical sector
and enable a more equitable representation of the contribution to emission
reduction targets
National and industrial energy and climate policies are mainly as a result of territorial emission
inventories only and similarly focus on the reduction thereof
We therefore propose taking account of the varying emission burdens of
countries and the petrochemical industry in policy-making, by showing the
impact of the different carbon responsibility measures
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Scenarios16th
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IFull producer carbon responsibility (i.e. territorial emissions
from production + exports)
IIFull consumer carbon responsibility (i.e. territorial
emissions from production + imports – exports)
IIIShared carbon responsibility
A mix between full producer and carbon responsibility, e.g. an
average
Other scenarios planned with alternative weights E.g. Attribution of relative responsibility based on the individual contributions of each
actor in the supply chain to value added
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Use of EORA dataset, an open source global multi-regional input-output table, which links 26 activities (i, j = 1, 2, … 26) in 189 countries plus RoW (C = 1, 2, …, 190) and provides complete time series from 1990 to 2015
Assessment of the impact of different carbon responsibility measures, depending on emission factors 𝑒𝑖, final demand 𝑦𝑖𝑗 and technical coefficients matrix 𝐴𝑖𝑗
Multi-Regional Input-Output Analysis16th
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𝑝11 ⋯ 𝑝1𝐶⋮ ⋱ ⋮𝑝𝐶1 ⋯ 𝑝𝐶𝐶
=𝐸1 ⋯ 0⋮ ⋱ ⋮0 ⋯ 𝐸𝐶
𝐼 − 𝐴11 ⋯ −𝐴1𝐶⋮ ⋱ ⋮
−𝐴𝐶1 ⋯ 𝐼 − 𝐴𝐶𝐶
−1 𝑦11 ⋯ 𝑦1𝐶⋮ ⋱ ⋮𝑦𝐶1 ⋯ 𝑦𝐶𝐶
𝑃𝑟𝑜𝑑𝑢𝑐𝑒𝑟 𝑟𝑒𝑠𝑝𝑜𝑛𝑠𝑖𝑏𝑖𝑙𝑖𝑡𝑦𝑖 = 𝑗𝑝𝑖𝑗
𝐶𝑜𝑛𝑠𝑢𝑚𝑒𝑟 𝑟𝑒𝑠𝑝𝑜𝑛𝑠𝑖𝑏𝑖𝑙𝑖𝑡𝑦𝑖 = 𝑝𝑖𝑖 +𝑗(𝑝𝑖𝑗−𝑝𝑖𝑖) −
𝑖(𝑝𝑖𝑗−𝑝𝑗𝑗)
𝑆ℎ𝑎𝑟𝑒𝑑 𝑟𝑒𝑠𝑝𝑜𝑛𝑠𝑖𝑏𝑖𝑙𝑖𝑡𝑦𝑖 = 𝑗𝑝𝑖𝑗 , 𝑝𝑖𝑖 +
𝑗(𝑝𝑖𝑗−𝑝𝑖𝑖) −
𝑖(𝑝𝑖𝑗−𝑝𝑗𝑗)
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Results: 100 % Producer Carbon Responsibility16th
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Ind
ex
[20
00
= 1
00
]
–Germany –Spain
–UK –France
–Poland –Italy
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Results: 100 % Consumer Carbon Responsibility16th
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Ind
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–Germany –Spain
–UK –France
–Poland –Italy
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Results: Shared Responsibility - 50% Producer Responsibility and 50 % Consumer Responsibility
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Ind
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–Germany –Spain
–UK –France
–Poland –Italy
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« True » picture of decoupling in the EU petrochemical industry: Producer Responsibility vs. Consumer Responsibility
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0,0
1,0
2,0
3,0
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5,0
6,0
7,0
8,0
9,0
10,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Kg
CO
2eq
/ U
SD [
20
10
USD
$]
POL PBA FRA PBA DEU PBA GBR PBA ESP PBA ITA PBA
POL CBA FRA CBA DEU CBA GBR CBA ESP CBA ITA CBA
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Comparison –Consumer Carbon Responsibility: Worldwide vs. Intra-EU
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10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
DEU ESP FRA GBR ITA POL
∆ k
TC
O2
eq
2000 2005 2010 2014
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Main Lessons for Policy-Making16th
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ILooking at territorial emissions favors large exporting
petrochemical industries in certain countries over its import-
reliant counterparts
IILittle improvement in reducing emissions has been achieved
over the last decade, irrespective of the carbon accounting
method
IIIThe use of a mix of carbon responsibility measures allows
policy-makers to evaluate the emission burden on national
petrochemical industries more comprehensively
IVAs the emission trade with the rest of the world is becoming
more and more important, policy-makers will have to consider
potential carbon leakage with future energy policies
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Conclusions16th
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IGreat differences in producer and consumer carbon
responsibility among EU petrochemical industries
IIDynamic shifts in carbon trade balances between the EU and
the rest of the world among EU countries
IIIScope for using a range of carbon responsibility methods to
devise more informed policies
Future work Testing of more elaborate responsibility attributions (e.g. based on value added)
Inclusion of structural effects by means of computable general equilibrium modelling
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Eurostat, 2019. Database
Cefic, 2018. Facts and Figures of the European Chemical Industry
Peters and Hertwich, 2007. CO2 Embodied in International Trade with Implications for Global Climate Policy
References16th
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Embodied Emissions in the Petrochemical Industry: Comparison with Textile Industry
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This is much less accentuated in a less interconnected industries
Year 2000 Year 2014