August 31 2022
Time to measure a country’s carbon emission.
With the serious adverse impact that the issue of climate change is having on the globe. It is increasingly important that something has to be done and some things must be done differently to lower the carbon footprint.
Aside, from the issue of climate change. There are other impacts of carbon emission including rising sea levels, depletion of the ozone layer, unbalancing the ecosystem, and flooding among others.
Ensuring a healthier environment is now the responsibility of individuals, companies, industries, and committees of nations. BalancedEarth.org can help with different programs to donate to.
To promote environmentally-friendly engagements, there is a need for a consensus. On the right measure or gauge of carbon intensity at both portfolio levels and individual investment.
However, to date, there is no such consensus. This is evident in emerging market debt profiles. Where metrics and standards are used to monitor the carbon intensity of sovereign bonds.
They are still a bone of contention.
The option of using the metric will have huge implications for the countries. That would get the financial inflows needed to combat climate change.
Below are questions and answers regarding carbon intensity measuring via consumption-based accounting is fair, intuitive and more generally accepted than other means of measurement. The measurement is on a per capita basis.
The two ways of calculating carbon emissions are consumer-based accounting and production-based accounting.
The consumer-based accounting method puts into consideration carbon emissions that are produced domestically in combination with the net carbon emission from imports of goods and services.
While production-based accounting aggregates all gas emissions of goods and services that are exported and produced domestically in a country.
As far as who pays the price is concerned, consumption-based accounting requires that environmental responsibility should be shared with the consuming countries.
While production-based accounting requires emerging countries to take full responsibility for the carbon intensity they accrue.
Comparing the carbon emissions of economies is not the right thing to do. This is because countries have varying sizes and populations.
The appropriate denominator must be used in getting the correct unit of measurement.
Some people believe that carbon intensity measurement is more accurate when greenhouse gas emissions are measured by per capita when using consumption-based accounting.
When using production-based accounting, the emission is more accurate by measuring via a unit of GDP.
However, it is believed that using population as the denominator is less biased and accurate when evaluating carbon emissions via production-based accounting.
This is a result of the inconsistencies involved in measuring GDP across different countries.
Multiplying carbon emissions per GDP by GDP per capita is the same as measuring carbon emissions per capita.
This means that under the carbon/GDP metric, a wealthier country has an advantage over another country that is less wealthy even though they have the same carbon footprint.
The most equitable method of measurement is one that is fair to everyone involved rather than evaluating the carbon intensity based on wealth.