A new and evolving approach to GHG inventories is to use a method that measures lifecycle emissions associated with state or local consumption. These consumption inventory methods offer a radically different method of accounting for a community's contribution to greenhouse gas emissions. Traditional inventories evaluate the emissions associated with a diverse set of activities within a geographic area. These activities can include manufacturing, transportation of materials, transportation of people, use of electricity, use of energy for heating and cooling, and production of wastes. Some of the emissions - including emissions associated with electricity production and waste disposal - may occur outside of the geographic area. But typically, a traditional inventory focuses on emissions that physically originate inside the community.
A consumption inventory also involves a geographic area. Consumption activities within that geographic area are viewed as the root driver, or cause, of emissions. The consumption inventory includes only those emissions that are associated with consumption inside the geographic area. These emissions typically span the globe. Some will physically originate within the geographic area, while many will originate elsewhere. Emissions physically originating inside the geographic area but not resulting from or associated with "consumption" inside the geographic area are not included.
It is important to understand what is meant by the term "consumption" and how this relates to materials use. "Consumption" is not the same as "use". Specifically, consumption refers to the purchase of goods and services by households and governments, and business purchases that are classified as investment or capital - typically, goods that are kept in inventory for more than one year, and not quickly passed on to another business. Other business-to-business expenditures - materials "used" by local businesses are not part of "consumption". However, the treatment of consumption means that when local businesses use such materials, the emissions associated with those materials are counted in a consumption-based inventory if the use is part of a supply chain that is satisfying local consumption.
Consumption inventories can be multi-regional, that is, they trace supply chains through multiple regions, using different emissions factors for different areas. This allows for an understanding of which consumption-based emissions physically originate with the community, vs. other areas.
Consumption inventories are not the same as "systems inventories".
Consumption inventories are still in their infancy. Four examples are provided below of how this concept is being applied to GHG inventories. The fifth example provides a simpler, crude approach that could also be used.
Consumption methods include DEFRA and the "Cool Climate Calculator."
Side Note On the Treatment of Recycling in Consumption-Based Inventories:
In a consumption-based inventory, the emissions associated with producing goods are assigned to the community that purchases the goods (or causes the goods to be purchased, in the case of goods used in the supply chain). Emissions associated with disposal of goods by consumers (households and government) are assigned to the community the disposes of the goods. It is important to understand how this method of assigning emissions treats emissions reductions resulting from community-scale recycling programs.
To the extent that the community-scale recycling effort diverts waste from landfills or incinerators, and the wastes diverted would otherwise produce GHG emissions (e.g. paper in a landfill, plastics in an incinerator), the reductions in disposal-based emissions should be reflected in a consumption-based inventory.
However, for most materials recycled, the majority of GHG reductions occur not at disposal facilities, but rather upstream, primarily in manufacturing. For paper recycling, EPA’s WARM model also posits a large GHG benefit resulting from indirect (induced) carbon storage in forests. When manufacturers use recycled feedstocks, and reduce emissions associated with manufacturing process and energy use, these reduced emissions should be reflected in the emissions intensities for industries, and thus, carry through into consumption-based emissions. Because consumption-based inventories have not yet factored in emissions sinks associated with land use (forests, agriculture), the forest-related emissions reductions will not be accounted for.
However, the nature of consumption-based inventories is that the emissions intensities for industries are typically calculated based on state- or national averages. The emissions reductions within industries using recycled materials as feedstock are already included in the "upstream" emissions factors. However, these calculations are based on national or even global average recycling rates. What if a community-scale recycling effort contributes more (or less) to the stream of recyclables than the state or national average?
The State of Washington and Sound Resource Management Group (SRMG) partially accounted for this issue in the development of Washington’s Consumer Environmental Index. While not an inventory tool per se, the CEI uses many of the same methods as consumption-based emissions inventories.
In addition, consumption-based inventories are not currently accounting for land-use related changes in carbon storage. For paper recycling, the added carbon stored in forests is a significant contributor to the overall GHG benefit.