Agriculture Programme • Energy and Climate Change Programme

Carbon Concerns: How Standards and Labelling Initiatives Must Not Limit Agricultural Trade From Developing Countries

by James MacGregor

ICTSD-IPC Platform on Climate Change, Agriculture and Trade Series • Issue Brief 3

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Carbon Concerns: How Standards and Labelling Initiatives Must Not Limit Agricultural Trade From Developing Countries PDF • 1.71 MB

The existence of standards particularly in food and agricultural produce has expanded rapidly over the last 20 years. Such standards have not only resulted in improved quality of products, but have also allowed greater efficiency by helping producers and other agents in the supply chain access information about what customers want and expect.

These standards can result from public legislation, for example through the EU Food Laws. Or, where specific legislation is missing, it is common for vocal consumer concerns to be turned into labels or standards. A raft of carbon labelling initiatives has hit the market since 2007. Most of these are private voluntary standard (PVS) that are initiated, implemented, and maintained by retailers.

These standards could be expected to benefit many people in developed consumer societies. Governments would benefit from a widespread carbon standard, which would raise consumer (voter) awareness of the carbon implications of their purchases. If governments were ever to find themselves in a position to compel their electorates to emit less carbon in order to comply with international agreements, the required legislation would be easier to implement if the historic data, which such a management system would generate, were in place. In addition, consumers may be more open to such moves if they have already made some movement towards a preference for low carbon products themselves.

Consumers who express concern over the carbon emissions would also benefit from having additional information that allows them to make an informed choice. Retailers would be able to collect the market premium that consumers are willing to pay on low carbon goods, and they would also have an incentive to create supply chain management systems that address carbon issues before it becomes a legal requirement. Early adoption of such systems may well produce first-mover advantage over competitors in the longer-term.

There are a number of difficulties associated with these standards, however. Much of the demand for carbon standards stems from the fear that producers in developed countries will simply outsource their production to developing countries that are not burdened with emission caps. There is often the assumption that imported food and agriculture goods will automatically have a higher carbon footprint due to greater transport emissions. This assumption can often be inaccurate, however, as developing countries often rely on less carbon intensive methods of agriculture by using less fertiliser, mechanisation, and energy for heating. To calculate the true carbon cost of a good, those setting standards might rely on Life Cycle Analysis to gain a more exact measurement. So far, however, methods for fully verifying and monitoring carbon emissions are not fully reliable. They also place an expensive additional burden on producers, who might be expected to pay for this verification.

The second concern is based on the idea of ‘ecological space’ — the concept of measuring and comparing countries’ current or historical greenhouse gas emissions and calculating each country’s share of the total additional emissions that the planet can sustain without serious disruption to climate. The relatively low contribution of emissions from developing countries (less than 15 percent of historical carbon emissions) and the fact that they currently emit far less per capita than developed nations (the poorest are just 2 percent of those in the US) would allow them the ecological space for non-restrictive economic development. When reducing demand for imports (particularly in agriculture) from developing countries, we place the burden of reducing emissions unfairly on to those least responsible for them. This would be contrary to the UN climate change convention’s recognition of global inequity in responsibility for dealing with climate change. The carbon issue needs to be seen in light of the Kyoto Protocol’s identification of clear and differentiated responsibilities for developed and developing nations.

The third concern is that carbon standards could result in a trade-off between environmental and development concerns. Agricultural trade and a move away from subsistence style of farming have been promoted in developing countries for many reasons including boosting incomes, encouraging investment in infrastructure and education, improving access to export markets, and creating a source of foreign exchange. Where agricultural development provides high benefits, cutting off demand for these imports for the sake of environmental concerns comes with a high cost to poverty reduction and economic and social development goals.

This paper looks at the existing types of carbon standards and makes the following policy recommendations:

• Carbon footprints can play a role in reducing carbon dioxide emissions in the food systems. Whether this is a problem for developing country exports is unclear.

• It is important to clarify the roles of private standards and public legislation in addressing carbon concerns in the food system.

• It is critical to learn from successes in the sustainable food trade between developing country producers and consumers in the developed nations. These successes should be scaled up and the principles that underlie those successes should be identified and understood.

• Analysis of carbon emissions provides a lens through which one can analyse broader issues affecting sustainable development in agricultural sectors in developing countries.

• Consumer-facing carbon labels and carbon private voluntary standards are unable to limit emissions effectively without appropriately priced environmental externalities.

• The potential for private sector buyers to insist on contractual reductions in carbon for a product harbour the greatest potential for actual carbon reductions in the food system.