Production Emissions

Summary:

emissions attributable to emissions produced domestically and include domestic consumption and exports

Description:

Production emissions are emissions attributable to emissions produced domestically and include domestic consumption and exports. This definition follows the territorial emissions approach adopted by UNFCCC for annual national inventories and is typically referenced by sovereigns in their Nationally Determined Contributions (NDCs).

In line with UNFCCC, the emissions should cover GHG emissions from specified key sectors and categories (energy, industrial processes and product use, agriculture, forestry, other land use, and waste).10 However, there is a divergence of views among emissions data providers and climate experts regarding the accounting of land use, land-use change, and forestry (LULUCF) emissions given significant data uncertainty. Also, LULUCF emissions have the potential to distort the overall trends of the key sectors (energy, industrial processes) that contribute to global warming.

Because LULUCF emissions are typically included in countries’ mitigation targets in their NDCs, PCAF recommends using the complete emissions data (including LULUCF) for reporting for accounting purposes. FIs might also consider tracking and reviewing the data excluding LULUCF for a deeper assessment of sovereign GHG reduction progress.

Although Production Emissions is currently the key metric to account for sovereign GHG emissions, PCAF also recommends that FIs track the GHG emissions of countries more holistically and use Consumption Emissions as an optional supporting metric (e.g., Absolute Emissions Levels, Emission Intensity).