Production-based CO2 emissions is the amount of CO2 emitted in a particular country.
Consumption-based CO2 emissions are adjusted for trade and reflect CO2 emissions related to goods and services consumed in a particular country.
Explanation of production vs Consumption-based CO2 emissions
Suppose the UK used to produce its own steel, the production process would cause CO2 emissions reflected in UK stats. However, suppose the UK steel industry closes down and the UK now imports steel from China. Closing the UK steel industry would see a fall in UK CO2 emissions and a rise in Chinese CO2 emissions.
However, although the UK shows less production of CO2, the CO2 emissions still relate to UK based consumption.
Countries with a large trade deficit, (exports less than imports of goods) usually have lower production CO2 emissions than consumption
Example of UK consumption and production
In the early 1980s, the UK experienced a period of deindustrialisation (a decline in manufacturing industries). Since the 1980s, the UK has largely run a current account deficit and especially a deficit on import of goods. Therefore, CO2 from production emissions are lower than CO2 emissions relating to consumption in the UK.
In recent years, China has accelerated past the United States and is the biggest polluter in absolute terms, (which is unsurprising given China’s population and fast economic growth. India is also catching up.)
Biggest CO2 Polluters per capita
This measures the level of CO2 per person. Thus China with the highest CO2 in absolute terms is ranked considerably lower down.
The highest CO2 Polluters per capita are dominated by oil producing countries who refine oil and emit CO2 in the oil extraction and refining process.
Consumption-based emissions (trade adjusted)
It is worth bearing in mind that this data shows CO2 production in a country. CO2 by consumption would look different. For example, the UK is a net importer of CO2. In recent decades, the UK has reduced CO2 emissions per capita because manufacturing has declined and we import goods from other countries. In other words, CO2 emissions are produced elsewhere but the UK enjoy the goods.
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Readers Question: Does inflation causes unemployment?
There are a few different scenarios where inflation can cause unemployment. However, there is not a direct link. Often we will notice a trade-off between inflation and unemployment – e.g. in a period of strong economic growth and falling unemployment; we see a rise in inflation – see Phillips Curve.
Also, it is important to bear in mind, (especially in the current climate) If the economy has deflation or very low inflation and the monetary authorities target a modest rate of inflation, then this may help boost growth and reduce unemployment.
Inflation can cause unemployment when:
The uncertainty of inflation leads to lower investment and lower economic growth in the long term.
Inflationary growth is unsustainable leading to a boom and bust economic cycle.
Inflation leads to a decline in competitiveness and lower export demand, causing unemployment in the export sector (especially in a fixed exchange rate).
Inflation creates uncertainty and lower investment
One argument is that a period of high and volatile inflation discourages firms from investing. Because inflation is high, firms are less certain investment will be profitable. It is argued that countries with higher inflation rates tend to have lower investment and therefore lower economic growth. Therefore, if there are poor levels of investment, this could lead to higher unemployment in the long term.
It is argued that countries with low inflation rates, such as Germany have enabled a long period of economic stability which helps to attain a long-term low unemployment rate. Low inflation in a country like Germany also helps them to become more competitive within the Eurozone, which also helps create employment and reduce unemployment.
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