Tracking greenhouse gas emissions to support the green transition
By Roberto Astolfi (Roberto.ASTOLFI@oecd.org), Statistics and Data Directorate (OECD)
Climate action is high on policy agendas. Many countries have announced ambitious targets to reduce greenhouse gas emissions, including reaching ‘net zero’ by 2050. The OECD is developing a measurement agenda and indicators to help countries in their green transition, for instance by tracking progress in reducing greenhouse gas emissions over time.
At present, most OECD countries report greenhouse gas emissions data annually, with a delay of between one and two years. However, policy makers who are taking decisions on environmental policies in a fast-changing world need up-to-date information. OECD products which examine climate change policies, such as the country Economic Surveys, also need more up-to-date estimates of greenhouse gas emissions.
Our new quarterly estimates provide more timely information on greenhouse gas emissions for the OECD. They include greenhouse gas emissions from productive activities, which can be broken down by type of economic activity, and emissions from household consumption activities. The estimates are extended for six quarters beyond the latest annual data point by extrapolating using sub-annual indicators that are economically plausible and correlated with annual emissions (see Methods note).
Greenhouse gas emissions lag GDP growth
Over the period 2011 to 2019, greenhouse gas emissions fell somewhat in the OECD, while gross domestic product (GDP) grew steadily (Figure 1). In early 2020, there was an almost simultaneous drop in GDP and greenhouse gas emissions due to the initial impact of COVID-19. This was followed by a rebound in both series, but greenhouse gases rose less rapidly than GDP during the recovery in Q3 2020. They continued to rise at a slightly slower pace than GDP in 2021 and the first half of 2022.
Energy producers led reductions in emissions before COVID-19…
In the nine years before the onset of the COVID-19 pandemic, the main reduction in greenhouse gas emissions by OECD producers came from energy (electricity and gas) and water producers (Figure 2). Emissions rose over this period for wholesale and retail, transportation and storage, services and other activities; and showed little change for agriculture, mining, manufacturing and construction.
… but the picture is unclear since the pandemic
In the first half of 2020, emissions fell across all groups of productive activities due to the COVID-19 pandemic and associated restrictions. Since then, the previous long-term trends appear to have resumed, except in the case of energy and water producers. However, given the volatility in the quarterly emissions estimates for energy and water producers, and the fact that the latest annual data point for most economies is 2020, these estimates should be interpreted with caution.
How has the OECD produced quarterly estimates?
The new quarterly estimates track emissions of CO2 and other greenhouse gases that are released into the atmosphere, as they are compiled for the Air Emissions Accounts (AEAs) of the System of Environmental-Economic Accounting (SEEA). The SEEA approach is consistent with the international standards for compiling the national accounts and producing macroeconomic statistics such as GDP, so using this approach makes it easier to monitor the impact of the economy on the environment.
As there are no direct measures of quarterly greenhouse gas emissions, the OECD estimates the quarterly path of emissions indirectly using related indicators and regression techniques (see Methods note). This approach is often used for other official statistics. In this case, the regression model produces results by interpolation of existing annual data and extrapolation beyond the latest annual data point, currently up to Q2 2022.
The selection of sub-annual (monthly and quarterly) indicators for the regression models is based on economic plausibility and their correlation with annual greenhouse gas emissions. The sub-annual indicators include value added by industrial production and trade turnover, energy generation by type of energy, and estimates of CO2 emissions from air transport. In a few cases where there is no plausible indicator, mathematical functions are used. The sub-annual indicators are seasonally adjusted before being used in the models, allowing comparison of results for consecutive quarters.
What are other international organisations doing?
The work published today by the OECD is the result of a coordinated effort with other international organisations: the statistical office of the European Union (Eurostat), the International Monetary Fund (IMF), the United Nations Statistical Division (UNSD) and the International Energy Agency (IEA).
Eurostat and the IMF have already published results. Eurostat publishes quarterly estimates of greenhouse gas emissions by economic activity without seasonal adjustment for European Union countries. The IMF publishes experimental quarterly estimates of greenhouse gas emissions for the world and selected groups of countries. The IMF’s estimates are seasonally adjusted and include breakdowns by greenhouse gas type and by industry and households.