Consumption vs territorial emissions

TL;DR

Territorial emissions count CO2 released within a country's borders. Consumption-based emissions count the CO2 embedded in everything a country's residents actually use, including imports. The gap between the two reveals who's outsourcing their pollution.

What it means (plain English)

When Germany imports steel from India, the CO2 from smelting that steel shows up in India's territorial emissions — not Germany's. But the steel ends up in a German car bought by a German consumer. Consumption-based accounting assigns that carbon to Germany.

Neither measure is "wrong." They answer different questions (the Global Carbon Project publishes both series annually):

• Territorial: Who is physically emitting? Useful for regulation.
• Consumption-based: Whose demand is driving emissions? Useful for responsibility.

The difference matters because wealthy nations have spent decades shifting carbon-intensive production offshore while congratulating themselves on falling domestic emissions.

Common misconception

"Europe has decarbonized faster than developing countries." By territorial accounting, partly true. By consumption-based accounting, the picture is far less flattering. A significant share of Europe's apparent progress comes from importing goods whose carbon cost was paid elsewhere.

Headline translation

When you read: "Country X cut emissions 30% since 1990," translate it as: "Country X cut emissions within its borders — check whether its consumption footprint tells the same story."

A concrete example

The UK's territorial emissions fell roughly 40% between 1990 and 2020. Its consumption-based emissions fell too — but by considerably less. The gap is the carbon embedded in imported goods: electronics from China, chemicals from South Asia, materials from everywhere. The production moved; the demand didn't.

If you only remember one thing...

Territorial emissions measure where smokestacks are. Consumption-based emissions measure whose lifestyle those smokestacks serve. Any serious climate accounting needs both.