Counting the Carbon Emissions from Agricultural Products:
Technical Complexities and Trade Implications
Ronald Steenblik & Evodkia Möisé
This Policy Brief serves as a background paper for the October 2010 seminar, “Carbon Standards in Agricultural Production
and Trade,” organized by the International Food & Agricultural Trade Policy Council (IPC) with support from Sao Paulo’s
Federation of Industries (FIESP). Ronald Steenblik and Evdokia Möisé are both Senior Trade Policy Analysts with the
Organisation for Economic Co-operation and Development (OECD). The views expressed by the authors are theirs alone and
neither reflect those of the OECD or its members, nor of the IPC or the FIESP
Carbon footprints plate.1 This kind of accounting for “food miles” led
eventually to the labeling of food products on that basis
1. The production, processing, transport and by one of the U.K.’s largest retailers. This practice soon
storage of agricultural products, like most human came under sharp criticism, however, from researchers
activities, gives rise to emissions of greenhouse gases and food-exporting countries, who pointed out that the
(GHGs). These GHG emissions include carbon dioxide bulk of GHG emissions created along the food-supply
(CO2) emitted through the combustion of fossil energy chain have their origins in the production phases, and
at various stages in the life-cycle of a product: in the much of the rest by processing. Moreover, how the
production of agri-chemicals and soil amendments; products are transported – i.e., by what mode (road, rail,
by farm machinery during field preparation, planting, water or air) – can matter more than the actual distances
cultivation and harvesting; by vehicles used to transport over which they travel.
the intermediate and final products; by the factories that
process the products; and in the production of electricity 3. The result of such criticisms was not the
used to keep the products refrigerated, if necessary. cessation of attempts to differentiate food products
They also include nitric oxide (N2O) released from the by their carbon emissions, but quite the opposite: the
soil as a result of applying nitrogenous fertilizer; and flourishing of new, more sophisticated ways of doing
changes in soil carbon resulting from farm practices the accounting. Today there are dozens of private
that result in either a net release to the atmosphere and public organizations around the world trying to
(through oxidation) of carbon, or its sequestration measure the life-cycle impacts of consumer products,
(e.g., through storage by root biomass). Products of particularly foods and beverages, and particularly their
livestock, especially from ruminant animals, also GHG emissions. These carbon accountants draw to
release methane (CH4) from enteric digestion, and N2O varying degrees on their own measured data and on data
from decomposing manure. stored in life-cycle inventories. The data are then run
through spreadsheet-based life-cycle assessment (LCA)
2. In 1994, a British researcher, Andrea Paxton, models, to generate an estimated “carbon footprint”,
wrote a paper highlighting the emissions associated usually expressed in grams of CO2-equivalent per
with transporting food ingredients, tracing the distance functional unit (e.g., kilograms or liters) of the product.
that they typically travel from the farm gate to the dinner
1
Paxton, A. The Food Miles Report: the Dangers of
Long Distance Food Transport, Safe Alliance: London, 1994.
4. Initially, it was mainly the private sector Grenelle 2 Law would have required retailers to display
that sponsored these life-cycle assessments. Many information on the environmental footprint — generally,
companies found they could use LCA to help identify the life-cycle GHG emissions of a product and some
points in their supply chains, or “hot spots”, where other environmental impacts, such as water use — of
reductions in energy consumption, and hence in GHG a wide array of consumer products, including food,
emissions, could be realized easily. LCAs provide beverages and apparel. Due to recent amendments, the
information to companies, which enables them to scheme will now start in July 2011 with a voluntary trial
trim costs, and helps them to improve their corporate phase of at least one year, after which a final decision
image. Those retailers who have gone the extra step on how to implement the environmental display
of labeling the carbon footprints of the products they framework will be taken.
sell (sometimes only for own-label products) have
done so to promote a “green” identity or in response
Biofuel sustainability standards and low-carbon
to consumers’ demands for such information. Other
fuel standards
companies may have been motivated to establish an
emissions baseline for their operations, in anticipation 7. In parallel with the emergence of product
of the introduction of carbon-reduction requirements or carbon footprints, similar attempts have been undertaken
to earn salable carbon credits. to estimate the life-cycle GHG emissions of a particular
subset of products of agriculture: liquid biofuels. These
5. Lately, governments have also taken an interest
are fuels that, for the moment, are produced largely
in carbon-footprint labeling. The trail-blazer in this
from the fermentation of sugars or starches derived
area was The Carbon Trust, a not-for-profit company
from food crops (ethanol), or from plant oils, animal
created in 2001 by the UK government to accelerate
fats, and waste food grease (biodiesel and bio-jet).
the transition to a low-carbon economy. In 2007 the
corporation formed a subsidiary, The Carbon Trust 8. The history of LCAs for biofuels can be traced
Footprinting Company, to help firms measure the carbon back to the 1990s, when life-cycle assessments were
emissions associated with their products and to provide used to answer questions relating to the net energy
them with a label, The Carbon Reduction Label, for balances of biofuels. Analysts subsequently found that,
displaying those products’ carbon footprints. (The label by tracking energy flows through the production cycle,
also demonstrates a commitment by the product owner they could also produce estimates of the associated CO2
to reduce that footprint every two years.) The standards emissions. These emissions were then compared with
behind the Carbon Reduction Label, set out in Publicly estimates of emissions generated over the life-cycles of
Available Specification 2050 (PAS 2050), launched competing petroleum products.
in October 2008, were developed by the Carbon
Trust in conjunction with two government bodies, the 9. Initially, the results of the LCAs for biofuels
British Standards Institute and the UK Department for mainly fed into debates over the merits of government
Environment, Food and Rural Affairs (Defra). PAS 2050 support for biofuel production and use. Since biofuels
has since gained international recognition in a numberwere generally more expensive to produce than petroleum
of countries, and has influenced the development of fuels, their markets were dependent on government
similar publicly supported standards and schemes in intervention, typically in the form of reductions in
Japan, France and at the International Organization for
fuel-excise taxes and, over time, through regulations
Standardization (ISO). requiring minimum volumes used in road-transport
fuels. Although a strong rationale for government
6. The proposed scheme in France is the most support for biofuels was to provide an additional
ambitious considered to date. Originally planned to income source for farmers, or rural communities more
come into force on 1 January 2011, Article 85 of the generally, policy makers were also keen to promote
biofuels as a means of reducing petroleum imports, the conversion of high-carbon soils for growing biofuel
urban air pollution or GHG emissions. feedstocks. Unlike food-safety standards, however,
sustainability standards do not determine whether or
10. In the late 2000s, LCAs of biofuels were not biofuels can be imported, but only whether they can
elevated from the realm of academia to become the count towards mandatory-use quotas and can qualify
core basis of public policy. This change came about as for tax-reductions or subsidies.
a result of growing concern by environmentalists over
the potential adverse effects — from direct land-use 13. Instead of, and in some cases in addition to,
change in particular — associated with the production biofuel sustainability standards, several jurisdictions in
of biofuel feedstock. While some advocated eliminating OECD countries have adopted so-called “low-carbon
the subsidies and regulations driving demand for fuel standards” (LCFSs). This idea was developed by
biofuels, many others (including a number of leading academics in California who proposed the LCFS as a
environmental groups) suggested that sustainability more cost-effective, and flexible, alternative to mandated
standards for biofuels, based in part on their life-cycle and subsidized biofuels use. On 23 January 2007
environmental impact, would adequately address these California’s Governor Arnold Schwarzenegger signed
problems. an Executive Order that “require[d] fuel providers to
ensure that the mix of fuel they sell into the California
11. Anticipating the development of multiple, market meets, on average, a declining standard for
mandatory government regulations around the GHG emissions measured in CO -equivalent” grams
2
world, in 2007 a group of interested individuals and per unit of fuel energy sold. Regulations to implement
organizations formed the Round Table on Sustainable California’s LCFS were developed over the course of
Biofuels, to develop an international reference standard the following two years, and will start to go into effect
for biofuels that addresses their life-cycle greenhouse- in 2011. They require that the carbon intensity of road
gas emissions, other environmental impacts and social transport fuels used in California must be reduced
impacts. Meanwhile, several governments, starting by an average of 10% by the year 2020. Other U.S.
in Europe, began developing draft sustainability jurisdictions are also contemplating adopting a LCFS.
standards for biofuels expected to be consumed in Meanwhile, Canada’s Province of British Colombia’s
their countries. Switzerland was the first to implement LCFS went into effect at the beginning of 2010. And,
such a standard, which went into effect officially in under the EU’s Fuel Quality Directive, fuel suppliers
July 2008. The following year, the European Union are required to report the life-cycle GHG emissions of
adopted its “Directive 2009/28/EC of 23 April 2009 the fuel that they supply, and to reduce those emissions
on the promotion of the use of energy from renewable from 2011 onwards, achieving a 10% reduction in life-
sources”, which establishes, among other sustainability cycle GHG emissions by the end of 2020.
criteria, standards relating to the life-cycle emissions of
renewable fuels (to be enforced from 5 December 2010
onwards). And in February 2010 the U.S. Environmental Possible trade implications
Protection Agency established standards relating to the
14. Carbon-footprint standards, biofuel-
life-cycle emissions of renewable fuels that can qualify
sustainability standards and low-carbon fuel standards all
against federal blending mandates (to be implemented
pertain to the consequences of processes and production
from 2011 onwards).
methods that do not affect the characteristics of the
12. These sustainability standards usually aim product (non-product-related PPMs for short). Non-
to: increase the probability that the life-cycle GHG product-related PPMs have been an issue in international
emissions of biofuels are significantly lower than the trade law for more than two decades. The concern here
petroleum fuels they displace; protect tropical forests is not with the consistency of such standards with WTO
and other areas of high biodiversity; and discourage rules — which cannot be assessed generically and
would depend on the particulars of an individual case of products could be measured with a precise device,
— but their trade implications, which hinge on how the or by direct observation, then meeting GHG-related
standards are designed and implemented. Simply put, product standards would be a relatively simple process,
when regulations or their implementation are arbitrary leading to few disagreements. But estimating life-cycle
or insufficiently predictable and transparent, they are emissions is as much art as science. Consider:
likely to cause substantial problems for exporters.
The OECD 2005 Guiding Principles for Regulatory • As is intrinsic to all LCA models, those used
Quality and Performance emphasize the importance by importers to estimate the life-cycle emissions of
of transparent regulations, systematic assessments to different products, including imported products not
ensure the effectiveness and continuing relevance of produced domestically, involve the application of
regulations, and of the reduction of regulatory barriers expert judgment, not always entirely scientifically
to trade and investment arising from divergent and based. In the case of LCAs for biofuels, the life-
duplicative requirements. cycle assessment (LCA) models are typically
run by government staff, and data inputs to the
15. Carbon standards included in public and models approved by the government applying the
private schemes differ significantly in terms of their regulations. It is not uncommon for the officially
coverage of environmental and social impacts, as well as approved LCA models of different countries to
the criteria and thresholds used to assess sustainability. yield different results for the same feedstock-
Servicing multiple markets becomes very difficult as a biofuel combination produced under the same
result of these differences, in particular for developing conditions. This can result from differences in
country suppliers. In the case of fuel regulation, the system boundaries (i.e., what stages in the life-cycle
required levels of life-cycle GHG reductions for are counted), parameter assumptions, and data.4
transport fuels generally (in the case of LCFSs), or
biofuels in particular, can vary considerably. Qualifying • As with all computable models, the results
biofuels in Switzerland, for example, must be able to of LCA models are sensitive to their data inputs.
demonstrate a minimum 40% reduction in life-cycle Generally, those data are much better elaborated for
GHG emissions compared with fossil fuels, whereas developed countries and temperate crops.5 Data for
the EU threshold is a 35% reduction, and in the United some regions of the world, notably Africa, are very
States it is a 20% reduction2. Moreover, in Switzerland limited, forcing analysts to make broad and often
and the United States existing domestic producers are inappropriate generalizations, or to fall back on
automatically assumed to meet the minimum standards, “default” values. This is problematic since variables
regardless of their actual GHG emissions. Countries of affecting actual farm-level emissions can vary
course enjoy the sovereign right to establish their own greatly over short differences, and crop yields and
domestic environmental standards. The issue for trade is fertilizer application rates can vary from one year to
that heterogeneity among standards can narrow options 4 More recently, one of the researchers who first
or increase costs for exporters otherwise capable of drew attention to the problem of iLUC, has extended his analysis
supplying several markets at once. to argue that all GHG changes associated with the substitution of
biofuels for fossil fuels are indirect. If his argument proves cor-
rect, then the logic intrinsic in the application of LCA to biofuels
16. The larger concerns relate to what trade — which ignores emissions from combustion on the argument
experts call “conformity assessment”: the steps that they are recycled in the growth of the feedstock biomass is
involved in determining, directly or indirectly, that a itself flawed. See See T.D. Searchinger “Biofuels and the need
for additional carbon”, Environ. Res. Lett. 5, 024007, 2010 (doi:
process, product, or service meets the relevant standard 10.1088/1748-9326/5/2/024007).
and fulfills its requirements.3 If the life-cycle emissions 5
See P. Brenton, G. Edwards-Jones, and M.F.
Jensen, “Can Carbon Labeling Be Development Friendly? Rec-
2
Higher threshold apply to “advanced biofuels” ommendations on How to Improve Emerging Schemes”, Eco-
(50%) and cellulosic ethanol (60%).
nomic Premise (World Bank), No. 27, August 2010.
3
ISO/IEC Guide 2:2004.
the next. A further complication is that estimates of diversion of existing crops to biofuels in one area could
key parameters are dependent on the overall context raise crop prices, thus encouraging the expansion of
of relative prices of inputs and outputs, which can agriculture elsewhere (Searchinger et al., 2008; Fargione
change in response to new market conditions. And et al., 2008). If that expansion took place through the
very different results can be obtained depending on clearing of forests or the plowing up of carbon-rich
whether the analyst assumes that the agricultural soils, a huge carbon “debt” would be created that could
products (or biofuel feedstocks) are produced take decades or even centuries to pay off through the
under marginal or average conditions prevalent in substitution of biofuels for fossil fuels. Accounting for
the geographic area for which the emissions are such indirect land-use change (iLUC) effects is now
being estimated. Thus, even with identical system required in California’s low-carbon fuel standard and in
boundaries, results may still vary significantly. the U.S. EPA’s Renewable Fuels Standard, and is being
considered in the context of the EU’s biofuels standard.
• The cost of providing the data for complying
may be high for small and medium-size enterprises19. Importantly, the policy interest in the indirect
(SMEs). In a recent conference of France’s land-use effects of biofuels is closely linked with the
National Association for Foreign Trade in Frozenfact that biofuel use is being stimulated by public
policies, generally in the name of reducing carbon
Food Products, for example, trade associations for
SMEs expressed concerns about France’s proposed emissions from transport. (Apart from the influence of
good-nutrition campaigns, and food subsidies aimed
environmental indications scheme, noting that they
at people on low incomes, the demand for non-biofuel
“may not have the resources to carry out detailed
environmental impact analyses themselves and agricultural commodities is largely market-driven.) Yet,
at the margin, the indirect land-use effects of consuming
would therefore be allocated reference data based
on conservative levels which may be penalising a product derived from a given quantity of grain or
in a competitive environment.”6 Similar concernsoilseeds should be the same for, say, corn whiskey as
have been expressed by exporters of biofuels to for corn-derived fuel ethanol.7 But iLUC factors are
countries with biofuels sustainability or low-carbon
being applied only to the latter and not to the former.
fuel standards. On the other hand, GHG emissions (i.e., changes in
carbon stocks) caused by land-use change are often
17. The imprecision intrinsic to LCA-model accounted for differently in biofuel LCAs than for
results is likely one reason why retailers who have food LCAs. The PAS 2050 methodology, for example,
adopted product carbon footprint labeling, such as requires that emissions from all land-use changes that
Casino and Leclerc in France, have been reluctant to occurred after 1990 be included in the carbon footprint
compare footprints of similar products produced by of an agricultural product; in the EU’s sustainability
competing brands. Casino has so far only labeled the standard for biofuels, by contrast, emissions caused by
carbon footprint of its own house brands, and Leclerc direct land-use change are not counted if the land-use
displays a generic carbon-footprint number on all the change occurred before January 2008.
shelf (price) tags for a given product, such as milk or
canned beans. 20. These data and computational uncertainties
cannot but affect the market prospects of concerned
18. In the case of biofuels, an additional factor products. If consumers respond to carbon footprint
has been introduced in some countries’ policies that labels, then an under-estimated carbon footprint
creates even more imprecision in the life-cycle GHG may erroneously give the suppliers of that product a
estimates. In February 2008, two papers published in
the prestigious journal, Science, pointed out that the 7 Harry de Gorter and David R. Just, “Why Sustain-
ability Standards for Biofuel Production Make Little Economic
6
www.bordbia.ie/industryservices/alerts/Pages/ Sense”, Policy Analysis (Cato Institute), No. 647 October 7,
ConcernsoverenvironmentalimpactlabellinginFrance.aspx. 2009.
small market advantage and actually lead to greater 22. Sustainability standards are likely here to
GHG emissions. Over-estimating emissions will have stay. How can standard setters minimize potential
the opposite effect. To avoid misleading consumer trade conflicts while ensuring that carbon emissions
information, retailers could be more explicit about the reductions are real? Continuing international efforts
uncertainty of LCA results by displaying the range of towards developing comparable approaches to life-cycle
values for each generic item, and explaining separately assessment, and improving data, particularly relevant
(e.g., in brochures) what factors give rise to that to developing countries, is clearly vital. Research
uncertainty. Alternatively, consumer information about aimed at better understanding the effects of agriculture
the differences in life-cycle emissions among products, on GHG emissions, and the effects of climate-change
could be indicated by broad (color-coded) bands — motivated policies on agricultural production patterns
for example, green for the lowest values, yellow and and practices, is also needed.
orange for in-between, and red for the worst — just as
is done to indicate the energy efficiency of electrical 23. In the case of biofuels, some environmental
appliances. Whether consumer comprehension of the groups have suggested radical changes in policies,
information would thereby be improved has yet to be including — e.g., requiring that only biofuels made
tested. from true waste products, or produced from land of low
biodiversity value that will not support the growing
21. Impacts arising from uncertainties in LCA of food crops, should be certified as “sustainably
calculations’ are even more significant in the case of produced”. Such an approach would buy time — time
biofuels, where a small difference in the estimated to improve analytical tools and databases. Ultimately,
life-cycle emissions — if that difference would put it however, as more and more countries adopt limits on
on either side of the minimum threshold value — can GHG emissions, their governments will be compelled
decide whether the supplier is able to benefit from a to address emissions from agriculture, and that will
price premium or subsidies, or not. In the case of a low- mean that some form of accounting will be required.
carbon fuel standard, the assigned emissions determine The precedents created, and the lessons learned, from
a market premium that is proportional to how much these initial forays into carbon-related standards, will
lower its determined life-cycle GHG emissions are thus be of utmost importance in shaping future policies
compared with its corresponding petroleum fuel — that aimed at reducing agriculture’s carbon footprint.
is to say, every percentage-point improvement is worth
real money.
The International Food & Agricultural Trade Policy Council promotes a more open and equitable
global food system by pursuing pragmatic trade and development policies in food and agriculture to
meet the world’s growing needs. IPC convenes influential policy makers, agribusiness executives, farm
leaders, and academics from developed and developing countries to clarify complex issues, build
consensus, and advocate policies to decision-makers. More information on the organization and its
membership can be found on our website: www.agritrade.org.
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