I was pleased to see an article published in the Proceedings of the National Academy of Sciences that highlights the old story of consumption emissions. It is good to see formal scientific studies published on this issue for time to time, as I think this important debate often gets swept under the carpet.

Consumption emissions are the total GHG emissions consumed in a particular country, including embedded emissions in imported goods.

At EEF we know from experience that government isn’t too keen to discuss whether or not the UK should be calculating its emissions on this basis, or stick to the historical way of just counting emissions that take place directly in the UK. We published a report last summer which highlighted that whilst net emissions in the UK have fallen since 1990, by taking account of imported goods, this shows that UK emissions continue to rise. Hence why you can see why government isn’t too keen to consider changing the way it counts carbon emissions.

Although it doesn’t paint a wonderful picture, surely only by including these additional emissions can government really get a grip on how the UK can play its part in tackling global climate change. Without this we are just off shoring the problem, some might say, arranging the deckchairs on the Titanic. Worst still, a policy of just counting net emissions, can put UK manufacturing at a disadvantage against its global competitors, by imposing costly climate change policy here, whilst those overseas competitors increase their share of the market.

The UK looks good because net emissions have fallen, but globally all that has happened is the emissions have gone elsewhere and the problem of climate change has not been tackled at all. It doesn’t take a genius to work out that this is not the answer to solving this global issue.

So another report has been published which states that the EU should alter its 2020 GHG emissions target from -20% to -30% below 1990 levels. The Ecofys report believes that meeting the renewables 2020 target will ensure a -30% saving from 1990 will be achieved, made easier by the recession.

The report states ‘The cap of the Emissions Trading System will need to be adjusted if energy efficiency and renewables targets are to be met’. I can see the logic here, but surely it is a big ask, expecting the renewables target to be met at a reasonable cost. It seems to me that the conclusion of this report – that the EU can move to 30% easily – is based largely on this assumption.

To me it is like saying ‘we can meet any target, if all the measures needed to meet that target are put in place and actioned’. Surely the problem is rarely the targets, but measures put in place to meet those targets. For the UK, the renewables target is a good example, in terms of meeting a GHG target.

The same could be said for energy efficiency, which is surely the easiest nut to crack. Projected savings here are often at low or no cost to implement, yet why are energy efficiency measures not taken up as much as all the reports would have us believe. Is it that these efficiency measures are not fully costed, does the rebound effect play a significant part, or that efficiency measures installed today, become the less efficient pieces of kit tomorrow. Of course we shouldn’t underestimate behavior and how difficult it is to change that.

I am starting to feel sorry for the EU ETS, as anytime something happens either to the economy, or other climate change policies, there are always calls to tighten the EU ETS target, with pundits stating it’s not working. One thing this shows is having a basket of different policy instruments that claim to have the same aim – to reduce GHG emissions – that often pull in different directions doesn’t work effectively to achieve this one aim at least cost. One could say that a renewables target is not a target to reduce GHG emissions, but a target to increase renewable energy generation. If the aim was soley to reduce GHG emission then surely we would just have a GHG emissions target and let the market decide the most cost effective way of achieving this.

Finally, the Ecofys report uses the argument that -30% is easier to meet because of the recession. The first fact is that once the recession is over and production returns to pre-recession levels, so will the GHG emissions, less an amount for ongoing abatement measures. So on this point, the tighter target isn’t easier to meet because of a recession that takes place 10 years before a target needs to be met. Fact number two; all the companies I know lost a magnitude more money during the recession than they might have got from selling ETS allowances and therefore don’t have a massive ‘war chest’ to save for 2020 when the target becomes so tight, that either you buy allowances to cover the shortfall between target and emissions, or you cut production.

Rather than reaching for ambitious, but unachievable targets, the EU should adopt a policy mix that shows that growth and an economically sustainable transition to a low carbon economy are not mutually exclusive.

If you expected clarity any time soon regarding the government’s intentions to mandate greenhouse gas reporting expect no more. Another amber signal has been issued. The hold up this time is due to fears of adding more red tape during a major deregulation exercise – but isn’t this missing the point?

Just to recap. In November we were told the government will decide in early 2011 whether to introduce compulsory reporting. Then, DECC minister Greg Barker told us that government would “announce a robust way forward in the new year that will require a clear route map on how companies are required to report their carbon emissions.”  However, now Defra minister Jim Paice has announced that consultations aimed around the end of May will explore a number of factors, including whether introducing regulations is indeed the best option.

The rationale, it has been cited, is that government wants “genuine” consultation about this without rushing into introducing more red tape if it’s not needed. In the Financial Time’s piece on the matter, published yesterday, the British Chamber of Commerce was quoted saying that it would be “incredible” to impose this requirement in the middle of a major deregulation effort. It warned that it would ensnare lots of medium and small companies, particularly manufacturers.

But doesn't this miss the point? Greenhouse gas reporting could in fact help with the government’s deregulation effort by scrapping the now cumbersome and expensive Carbon Reduction Commitment Energy Efficiency Scheme and replacing it with mandatory reporting.

Not only would it be lighter-touch and cheaper to regulate, we believe it could be more meaningful and cost-effective for manufacturers with the added benefit of potentially helping them improve their competitiveness. As we have always argued such an approach would be streamlining regulation not adding burden, providing the government wasn’t overly prescriptive in how it was applied.

Given that the whole issue is being subject to further delays we will be calling on government to look at the bigger picture; to consider the role of reporting alongside the crowded suite of complicated climate change policies that are already in place, most of which are within the government’s gift to change. Clear and strategic oversight is really what is genuinely needed.