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Climate explained: why countries don’t count emissions from goods they import

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Climate Explained is a collaboration between The Conversation, Stuff and the New Zealand Science Media Centre to answer your questions about climate change.

If you have a question you’d like an expert to answer, please send it to climate.change@stuff.co.nz

I would like to know if New Zealand’s carbon emissions of 0.17% include emissions produced from products manufactured overseas and then imported for the New Zealand consumer?

The latest Ministry for the Environment report, published last month, shows New Zealand contributes 0.17% of the world’s total greenhouse gas emissions.

New Zealand’s population represents just 0.06% of the world’s population (New Zealand 5 million, global 7.8 billion), which means it has a disproportionately high share of emissions for its population size. This is sometimes represented as per capita emissions - and in 2017, New Zealand ranked sixth highest among developed and transitioning countries, at 17.2 tonnes of carbon dioxide equivalent emissions per person. This is almost three times the average per capita share.

The reason for this can be partly explained by the way countries account for their greenhouse gas emissions.


Read more: Climate explained: which countries are likely to meet their Paris Agreement targets


Keeping track of emissions of traded goods

Countries generally use “production-based accounting” to quantify their greenhouse gas emissions. This approach counts emissions from all activities that happen within a country’s territory - which means goods manufactured elsewhere and then imported are not included.

It also means that if a country exports more goods and services than it imports, it will likely have disproportionately higher per capita emissions.

It can be argued that if a country can produce these goods more efficiently (with lower emissions) than other countries, this may be the preferred situation. This is the case for New Zealand’s agricultural production. Research shows New Zealand’s pasture-fed agricultural systems are efficient in producing meat and dairy products - per kilogram of meat or litre of milk, New Zealand emits less than many other countries.

Although most of these products are exported, the emissions from their production count towards New Zealand’s greenhouse gas inventory. In fact, almost half of New Zealand’s emissions in 2018 came from agriculture, and just under three-quarters of these agricultural emissions were methane from cows and sheep.

From a global perspective, climate policy needs to recognise the advantage of producing goods where they can be made with lower emissions. Otherwise there is a risk industries relocate to other (typically less developed) countries with less stringent climate change regulations, and global greenhouse gas emissions rise as a result. This is known as “carbon leakage”.

Patterns of consumption

But there is an important corollary to all of this: considering only the production-based emissions of countries is not enough to address the climate crisis. Even if New Zealand can produce agricultural goods more efficiently than other countries, should these be produced at the current volume - or at all?

Ultimately we need to consider patterns of consumption and assess whether they are in line with a sustainable future for the world.

In practical terms, this means that we should be accounting for both consumption and production-based emissions. An accounting system based on consumption would assess greenhouse gases emitted in the production of goods and services consumed by New Zealanders. This includes imported goods as well as everything that is produced and then consumed in New Zealand - and it excludes exported goods and services.

Two New Zealand studies (for 2011 and 2012) show the biggest contribution to consumption-based emissions comes from three sectors: construction, food and beverages, and education and health services. For food and beverages, animal protein and processed meat contributes 35% of the emissions associated with an average adult New Zealand diet.


Read more: Climate explained: how the climate impact of beef compares with plant-based alternatives


But accounting for emissions from consumption comes with challenges. It requires tracing the point of origin of imported products, often in countries with less stringent emission inventories. There are two types of modelling we can use to support consumption-based analysis. Life cycle assessment starts with a product - say an apple or packet of milk powder - and tracks the entire supply chain back through the retail, distribution and agricultural production. Other models integrate environmental and economic data across multiple regions.

Such data and the insights we glean from both production and consumption accounting could guide future climate policies to enable New Zealand to reduce emissions both within the country and internationally.

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