Great initiative to DECC to start accounting for the UK emissions that are already embodied from the  imported goods.

Here are some of my thoughts on consumption-based reporting or what it’s the same: managing the emissions embodied in imported products.

• Consumption-based emissions reporting should not be done for the sake of it (as an accounting exercise). It should aim at re-designing the flow of imported goods and systems to radically reduce the overall emissions created by a country’s consumption.

• The key leverage is that many products are designed in the west and manufactured in Asia. Decisions at product design level by a UK product manager could cut dramatically the emissions of making that product in Asia, reducing the imported emissions of the UK (and most importantly, the rest of the world). That design would immediately become a key service that the UK could export. Unfortunately I don’t see much policy thinking on this critical area.

• Re-designing products is the most effective way of reducing the emissions from the increasingly export-oriented Asian economies. (easier and quicker than subsidising these developing economies to go for renewables).

• For our products, carpet tiles, around 70% of the total carbon footprint is on the raw materials. Only 10% is production and the rest is transport, end of life and vacuum cleaning. We have been focusing on the last years to reduce our ‘imported embodied’ impacts of the raw materials that we use to make our products.

• InterfaceFLOR’s latest product, Biosfera Micro, made with 350g of 100% recycled yarn, was redesigned to half the carbon footprint of a normal carpet tile. Embodied carbon reductions are easier to achieve than own direct emissions. See more at http://www.interfaceflor.co.uk/web/sustainability/gobeyond

• So the key leverage of a product importer, service exporter country like the UK is not in reducing home emissions. It’s in using its people’s brains (their service industry) to reduce the impacts for goods produced in other countries. It’s about coming out with innovations that will substitute high energy intensive materials. Countries that will invest in these technological breakthroughs will get a competitive advantage. Whoever comes with a substitute for steel or cement will have a huge advantage, either company or country.

• Measuring embodied impacts of products will enable consumption based taxes rather than inputs based taxes such us national or European carbon trading or carbon floor prices. The issue of carbon leakage could also be addressed much easier by taxing finished goods based on their embodied carbon. (since it doesn’t matter where the goods are produced, goods produced internally or imported would face the same tax). That would be the final nail on the coffin for carbon leakage.

• That would mean taxing physical things based on embodied carbon and taxing energy hungry machines based on their carbon emitted at use level. Taxing things at consumption / product level can be easier than the complex carbon trading mechanisms. It could also enabling tax discounts for products with super-low carbon impacts, if at some point governments are brave enough to consider things such as reduced VAT.

• It’s rather pointless that governments (eg DEFRA’s clumsy attempts) and retailers embark in doing LCAs for all the products that pass through them. Governments should ask companies to produce LCAs for the products they put on their markets and Retailers such as supermarkets should ask for their suppliers. At the end of the day, the core knowledge is with the producer. And the key to redesign a product to radically have less embodied impact is with the producer.

• It’s actually neither that complex nor expensive to produce LCAs / EPDs for products. Starting from zero could be £10-15k. In our company we have the competence in-house and it costs us much less.

• Transparency of embodied impacts (using magic metrics such as gCO2/kg of material or gCO2/m2) could enable transformative regulation at all leves with a changing power equal to what gCO2/km did for the car industry. See magic metric article attached.

• Rather that supporting ailing high-energy intensive industries, government industrial policy should encourage radical alternatives to those energy intensive materials. IP in these areas could be a critical source of growth in the countries of invention.

• We should move away from the rather constraining scope 1,2,3 thinking. We should just shift mindsets from direct company and country footprints to product footprints.