It is a well-known fact that by outsourcing manufacturing to emerging economies like China, developed countries have relocated the consequent carbon emissions and other pollutions to developing countries. For example, according to calculations by Tao Wang and Jim Watson of the Tyndall Centre for Climate Change Research at the University of Sussex, 23 percent of China`s emissions were due to net exports in 2004. A 2012 report by an influential committee of British Members of Parliament found that even though U.K.`s territorial carbon emissions have been decreasing since 1990, its consumption based emissions have increased, which means that the U.K. is contributing to a net increase in global warming. As we live on the same planet and no one can outsource the carbon emissions to the moon, it is obvious that such relocation and outsourcing of pollution is not a solution to challenges like global warming.

　　A more recent academic paper published in the prestigious PNAS (Proceedings of the National Academy of Sciences) by nine researchers from three countries (China, United States and United Kingdom) put a different spin on this issue: What goes around come back around -- relocating production and pollution does not necessarily relieve the Western consumers from the environmental impacts of air pollution. The paper analyzed the impact of trade-related Chinese air pollutant emissions and found that in 2006, 36 percent of anthropogenic sulfur dioxide, 27 percent of nitrogen oxides, 22 percent of carbon monoxide, and 17 percent of black carbon emitted in China were associated with production of goods for export. Combined with atmospheric chemical transport model, an analysis on U.S. air quality shows that Chinese air pollution related to export production contributes, at a maximum on a daily basis, 12-24 percent of sulfate pollution over the western United States.

　　All this highlights the need to adopt consumption-based accounting, as well as the need for policy space for developing countries to address such issues in a proactive way. Currently, such policy space is often restrained due to international trade rules. The following is one example.

　　In 2007, realizing the pressure on resources created by the rapid increase in exports of energy intensive products including steel, cement and coke, the Chinese government first reduced tax rebates, then further imposed export tariffs/quotas on such products. This voluntary "border tax adjustment" measure originated from advice from the State Environment Protection Agency. It significantly lowered the exports of the targeted products -- 40 percent for certain categories of products. However, these environmental measures were challenged at the WTO as illegal by the United States and the EU, and the Chinese government was forced to scrap some of them after a WTO ruling. It is a sad example of trade rules trumping environmental concerns. With growing scientific evidence like the aforementioned paper regarding how trade plays a crucial role in trans-boundary pollutions, it is high time to question some of the existing trade rules and have a concerted international effort to better align trade with environmental integrity.

　　China is a microcosm of the world with rich regions that already have similar consumption level to the West and rural hinterlands which need more development. Another lesson for the Chinese government is to prevent a similar outsourcing of pollution from rich regions to poor regions.

　　To give it fair credit, the Chinese government has applied the principle of "common but differentiated responsibility" in its emission reduction goal of the 12th Five Year Plan. Rich regions like Shanghai and Guangdong have to reduce their carbon emission intensity by 20 percent between 2011-2015, while poor regions like Guizhou and Ningxia only have to reduce it by 10 percent. However, with the current production based accounting, the easy way out for the richer regions is to relocate emission-intensive industries to poorer regions in order to achieve the local targets. Needless to say, this will help very little. It may even further exacerbate the environmental inequality between the poor and rich regions.

　　One particular recent concern is that in order to address the serious air pollution issue in big cities, many local governments are proposing or are already planning to replace coal with gas. Currently the best efficiency for coal gasification is around 60 percent and the best rate of efficiency for gas-steam combined cycle power plants is around 55 percent, so overall efficiency is 60 percent x 55 percent, which makes only 33 percent, far lower than the 45 percent efficiency of coal-fired plants which can be achieved today with super-critical or super-super-critical technology.

　　Therefore, coal gasification may reduce the local pollution in big cities, but it would increase China`s overall coal usage and consequent total pollution, and some of this pollution would come back to the big cities. Also, coal gasification is a water intensive process. Many currently planned gasification utilities are located in regions with a shortage of water like Inner Mongolia, which may further exacerbate the pressure on water supplies in these areas.

　　Consumers have a responsibility for the goods they consume and the related pollution, no matter where the production happens. Both internationally and domestically, consumption-based accounting should be important to shape future development and environment policies.

　　The author, Dr. Jiajun Dale Wen, is a non-resident fellow of the Chongyang Institute for Financial Studies, Renmin University of China.（来源：中国网）