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Service Sector Not Off the Hook When It Comes to Greenhouse Gas Emissions

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The furls of gas that billow from smokestacks on power plants and other heavy industries are a visible source of the greenhouse gas emissions warming our world. But the economy is filled with invisible releases of carbon dioxide and other climate-change-inducing gases that lurk behind everyday products and services. New research shows that the service sector--such as banking, hospitals, computers and retail stores, among other businesses--is responsible for more than one third of industrial greenhouse gas emissions in the U.S.

Industrial ecologist Sangwon Suh of the University of Minnesota compiled a database on 480 products and services that lists 1,344 environmental impacts, including the emission of the ubiquitous carbon dioxide along with 43 other greenhouse gases, including methane, nitrous oxide and 13 different hexofluorocarbons. He then measured the total direct emissions associated with the making of a product; for example, the amount of coal burned to generate a kilowatt of electricity and how much carbon dioxide was released in the process. But he also measured all the infrastructural greenhouse gas emissions that support the product's fabrication; for example, the amount of carbon dioxide emitted while mining the coal, treating it and transporting it to the power plant. "What has been missing here is what is behind the service sector. For instance, a bank needs a building structure, which needs cement and steel, which directly or indirectly produce greenhouse gas emissions," Suh explains. "This equation leads us to calculate the entire supply chain in the U.S."

Some economists, such as Theodore Panayotou of Harvard University, have argued that as countries develop and shift to a service-oriented economy their overall environmental impact will decline. But Suh's analysis finds that the service sector, which accounts for more than 60 percent of the U.S. gross domestic product, pumps out 37.6 percent of overall greenhouse gas emissions in the country, or nearly 1.7 billion tons of carbon dioxide equivalent. In fact, retailers rank second only to electric utilities in terms of total associated greenhouse gas emissions followed by restaurants and hospitals. "We should look into the supply chain and promote innovations there, not just look at the bad guys like coal plants and steel mills," Suh says. "If we look at the entire supply chain then there are more options available, such as substitution."

In other words, the shift to a service economy will not simply allow countries to grow out of the environmental crisis of global warming. Instead, Suh suggests, various products and services should include labeling that clearly details the greenhouse gas emissions associated with that item. Already some European countries as well as South Korea and Japan have instituted such eco-labeling. And now Suh has turned his attention to the question of efficiency--producing more goods with less materials and waste--to examine whether it might provide a natural way out of such pollution. "So far, we show that consumption volume increase is much faster than the efficiency increase," he warns, "leading to an increase in the absolute volume of greenhouse gas emissions." And that is another increase we cannot afford.

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