Exergy-Based Responsibility Allocation of Climate Change

Climate change as a serious environmental issue has been subjected to many management studies. Yet the issue of allocating global responsibilities to emission reduction in a reasonable way is an unconcluded challenge. Two main groups of responsibility allocation systems are production-based responsibilities (PBR) and consumption-based responsibilities (CBR). PBR takes territorial emissions within borders into account that is applied to global policy makings by the Intergovernmental Panel on Climate Change (IPCC). In contrast, CBR considers the emission transfers through international trade and allocates the responsibilities based on the goods and services being consumed by each country. Both two methods are discouraged by some logics. The PBR does not consider the effects of indirect emissions of imported materials/services. By contrast, in the CBR the consumer is the only one being charged for the emission costs, ignoring the profitability of the emissions for the producers, thus lowering incentives of exporters toward greener production (usually developing nations). Moreover, the calculation of the embodied emissions in the CBR method requires massive interindustry and intercountry trade data. This research aims at defining and applying a new less data-intensive method for the calculation of embodied carbon loads on streams on the one hand and sharing environmental responsibilities (SBRs) among producers and consumers on the other hand. The method is based on thermodynamic quantities to internalize the external environmental damages using the exergy concept. The main notion of the new method is that the traceable exergy destruction could be representative of environmental burdens. Therefore, shared responsibilities motivate net importers (i.e., developed nations) to buy from greener producers and simultaneously push net exporters (i.e., developing nations) toward greener production to reduce their responsibilities. In this study, the global model is simplified into three country categories: developed countries, BRIICS, and rest of the world. The emission transfers are calculated using international trade statistics and are applied to the developed shared responsibility accounting model. Shared responsibilities lie between PBR and CBR. However, derived SBR recommends higher contribution of producers to reduce emissions.