PRODUCTION AND CONSUMPTION BASED EMISSIONS

From the perspective of providing a sustainable future for our descendants, reducing GHG emissions (to net zero ASAP) is the critical parameter, New Zealand and the world needs to focus on.

There are several ways of classifying and therefore measuring emissions. Some information about the different standards used, including the approach to measuring New Zealand’s GHG emissions can be found here. This section focuses on production and consumption based emissions. Goods and services are produced and subsequently consumed/used, (they are the two sides of the same coin) with the total emissions arising from the overall (production and consumption) process being the figure that reflects the lifecycle emissions for the product/service.

In terms of assigning “ownership” of emissions however - and therefore potentially, driving behaviors around emission reduction activities - the production/consumption distinction does have a potentially perverse outcome. Because national GHG emission figures are production based (see below), consumers in countries that are net importers of the goods/services that they consume are not seen as having any responsibility for the production emissions of goods/services (such as clothes manufactured in Asia for consumption here) which is counter-productive. Conversely export dependent countries - such as China - that export a lot of goods to overseas markets are held responsible for the production related emissions of the goods that people in other countries consume.

In practice the situation is more nuanced. Most countries both export and import goods and services. In New Zealand’s case, while the production-based emission measurements regime in place sees the relatively substantial emissions from the production of animal products that are exported as New Zealand’s responsibility, we are also an importer of many things including clothes and apparel for our use. The production related emissions from these items is the responsibility of the country where they are manufactured.

For New Zealand as a developed country, consumption related emissions have direct relevance to households and their contribution to the global warming problem. From a New Zealand perspective, the magnitude of our household emissions raises two issues:

  • Understanding the differences and the quanta of the two emission types and how a better understanding of household emissions can inform our choices about our emission reduction activities.

  • Wider, social justice considerations and New Zealand’s position as a contributor to the global climate change problem that are introduced here

Production versus consumption emissions in New Zealand

Production based GHG emissions are those generated, within New Zealand’s borders, by the production of goods and services (e.g. turning animals into meat and dairy products, providing banking services). In contrast, consumption based GHG emissions are those that are generated by the goods and services that we (New Zealanders) consume (e.g. the purchase and use of a car, going to the movies).

Production based:

  • Underestimates the the emissions of typically wealthy, first-world countries that are importers of goods that are highly emission intensive especially if the country has a low emitting production base.

  • Where the goods and services are used/consumed is not a consideration. An example of this is that emissions associated with clothing manufactured in, say, Bangladesh for the New Zealand market would be part of Bangladesh’s GHG inventory, not New Zealand’s.

  • Used for the “GHG inventory” of all human generated GHG gas emissions and removals in New Zealand and used for international reporting and measuring progress against targets. [Gross emissions are emissions from the agriculture, energy, industrial processes and product use and waste sectors (as well as gross emissions from Tokelau). Net emissions are gross emissions combined with emissions and removals from the land use, land use change, and forestry (LULUCF) sector.]

  • Useful for understanding the impact of emissions of domestic industries. 

Consumption based

  • Can underestimate the total territorial emissions from countries, such as New Zealand, that are high volume exporters of products (e.g. meat and dairy) that are consumed overseas.

  • Calculates emissions based on where goods/services are consumed, taking into account the emissions embodied in imported products. 

  • Provides a more comprehensive picture of a country's overall emissions impact but can be more complex to calculate as it requires data on the entire supply chain of goods. 

New Zealand per capita production and consumption GHG emissions compared

For the 2022 calendar year New Zealand’s per capita consumption-based emissions were 7.5 tonnes CO2e, half of the ~15 tonnes CO2e production-based per capita figure.

The difference is due to the fact that most of New Zealand’s animal products production (activities which generate ~50% of the country’s emissions, primarily as methane) is exported. These emissions are therefore counted in our production emissions total rather than the countries in which the products are sold and consumed - but are not counted in our consumption based emissions.