Counting carbon in the marketplace Product Carbon Foot-printing

1. Counting carbon in the marketplace Product Carbon Foot-printing Dale Andrew OECD Trade and Agriculture Directorate WTO Information Session Geneva 17 February 2010

2. What is a product carbon footprint (PCF)? • Information about the total amount of GHGs emitted during the life cycle of a good or service • Grams CO2-eq. per unit of product • Display of this information on packaging and websites – with other CC-related information • Different from measurement of emissions “at source” • Different from corporate and project level assessments Source: Risø DTU, Technical University of Denmark

3. Life-cycle analysis • Dominant method for calculating the sum of GHG emissions from activities along the entire life cycle of a product • From “Cradle-to-grave” or “Farm-to-fork” or “Field-to-Wheel” Source: www.zespri.com • PCF activities engages all value chain actors – in terms of data provision and GHG reduction efforts

4. The carbon footprint of a New Zealand kiwi fruit (eaten in Paris) • Data source: www.zespri.com • Total footprint: 1.74 kg CO2 Eq. per 1 kg of fruit • No generally accepted methodology: the quality of calculations differs greatly and there is ample scope for interpretation

5. What can PCF be used for? • Help prioritise GHG reduction efforts along the entire supply chain Zespri Kiwifruit is focusing reduction efforts at the orchard, packhouse, coolstore and transport stages • Compare footprints of “similar” productsdelivered by different supply chains to inform consumer choice and sourcing . Broccoli imported to Sweden from Ecuador have lower PCF than those imported from Spain due to higher CO efficiency of production, transport • Compare the footprint of similar products with different attributes

6. What can PCF be used for? • Basis for designating products as “carbon neutral” through off-setting what emissions cannot be reduced • e.g. the “Stop Climate Change” scheme in Germany • Help consumers reduce their “personal” carbon footprint • “% of daily allowance” • Help demonstrate corporate commitment to climate-change mitigation (often as part of Corporate Social Responsibility programme) • to customers (product differentiation, green marketing) • to (institutional) investors • to lawmakers (threatening to introduce harsh regulatory measures)

7. Will product carbon information influence consumer, buyer and investor behaviour? • 72% of EU consumers support mandatory carbon labelling • Eco labelling is important for 47% of EU consumers; 26% never read labels • 48% of EU consumers mistrust producers’ environmental claims • Environmental concerns rank after quality and price in purchasing decisions What sells a beer in Japan?

8. PCF schemes – spread and coverage • First schemes appeared in 2007 • Small number of products footprinted to date • Typically, between 1 and 70 products per scheme • Usually, scheme users apply footprint to selected products • Mostly food and drinks, but varied product coverage and announced intentions to grow • Bananas, orange juice, carpets, bank accounts, cell phones …. • Country coverage (as of 4Q 2009): Canada, France, Germany, Japan, Korea, Sweden, Switzerland, Thailand, United Kingdom, United States

9. PCF schemes – standards and scope • Use of publicised standards • Only about half of the schemes examined in study for the OECD rely on published methodologies; • quality and completeness of this documentation vary greatly • Most complete standard is the PAS 2050 (used by other schemes) • Scope of product GHG assessments • Most involve “full” life cycle analysis, but precise boundary of the GHG calculation is often not clearly specified • Most do not discriminate against products transported over long distances. However, some ignore short-distance transport. • Meaningful comparison of PCFs across schemes: not possible

10. Carbon footprinting schemes International Organisation for Standardisation (ISO) Agency for the Environment and Energy Management (ADEME), France World Resources Institute (WRI) Casino, France Migros, Switzerland Leclerc, France KRAV and Svenskt Sigill, Sweden Blauer Engel (Blue Angel), Germany TÜV Nord, Germany Korea Thailand Patagonia Clothes, US European Ecolabel (Eco-Flower) PAS 2050, UK Ministry of Economy, Trade and Industry, Japan

11. Japon’s Carbon Footprint System • In 2009, the Japanese Government launched the trial of a voluntary carbon footprint system for products • During trial period, several retail products were sold with labels indicating their estimated life-cycle GHG emissions • At same time, the Government has been engaging in consultations with major stakeholders and encouraging affected industries to develop rules for conducting LCA for product categories • At end-2009, METI was considering establishing a 3rd party audit system. • Meanwhile is working closely with ISO and following developments in other programmes (e.g. PAS 2050)

12. France: Casino et E. Leclerc schemes • Complex environmental legislation part of which is to provide genuine, objective and complete envt’l information • “l’affichage environmental” or environmental indications • Gov’t (ADEME) has been supporting private-sector initiatives • Sharing reference for developing a database to support CFP and environmental impacts of products and services Casino Carbon Index – on Casino-brand products (goal all 3K ) CCI label: CO₂ equivalent emitted/100 gr; absolute scale on carbon intensity ; and the improvements achievable with recycling E. Leclerc with Greenext: entire food range – 20K references (all food) Focusses info’ on total CO₂ ; family’s average weekly CO₂ budget Le bilan CO₂ de mes courses est de: 13,35 kg equ. CO₂ This info on CO₂ appears on the price label on shelves & on receipt

13. Verified Sustainable Ethanol Initiative • One private CFP label for a biofuel: SEKAB’s Verified Sustainable Ethanol Initiative (VSEI) • Amongst its criteria, one calls for 85% reduction in CO2 compared with petrol (on a field-to-wheel basis) • Other criteria relate to protection of environment or labour • Scheme developed in consensus with Brazilian ethanol industry • 7 sugar-cane mills were certified ; criteria excluded cane sourced by the plants from out-growers (1/3 of their supply) • SEKAB pays for the audits (by 3rd party): first audit showed reductions in GHG emissions of 77-81% (not 85%). Ethanol still marketed as ‘verified sustainable’

14. ISSUES…

15. PCF Schemes – conformity assessment • All operators (auto-)certify products to their “own” standard • And few schemes live up to consumers’ preference for 3rd party verification of PCFs (and other climate claims) • Independent, 3rd party verification of the PCFs (4 schemes) • Verification by scheme operator (6 schemes) • Self-verification by scheme user (3 proprietary schemes) • A general lack of clarity and transparency on CA

16. PCF Schemes: communicating the information Actual values displayed Carbon-free claim

17. ISSUE: FORMER LAND-USE Contribution of key variables to the CO footprint of sugar cane (kg CO2e/t sugar cane) delivered to refinery Baseline calculated according to PAS 2050 Former land use: tropical dry forest. 1896

18. Issue: Shipping • There is a significant range of emission factors being used to calculate shipping emissions: • e.g. For both cargo and container ships generally there is a factor three difference between reported high and low carbon emission factors across major carbon footprint studies.

19. Issue: Allocation (Milk) • Allocation % for GHG emissions between milk and meat • MilkMeat • Biophysical 85% 15% • Biophysical + system separation 86% 14% • Economic 90-94% 6-10% • System expansion* 60% 40%

20. Issue: Soil Carbon • Excluded from PAS2050 at this point, not sure how ISO14067 will treat it • Difficult and costly to measure • Lack of data • But important to note: Soil carbon can be, in certain circumstances, a contributor to emissions Example (g-CO2-e m–2 year–1) emissions (SC) (tot. orchard exc. SC) organic orchard 568 305 integrated orchard 729 298

21. The Trading Environment Wal-Mart Tesco Marks and Spencer Casino Migros • Standards • Labels • Government Programmes • Retailers • NGOs PAS2050 WRI/WBCSD Thailand South Korea ISO European Commission Netherlands USA Chile China Germany Greenpeace Sweden French legislation New Zealand Japan

22. Currently developing countries are:

23. Concluding observations • Rising number of PCF schemes, but still on a small scale. No clear trend on approach, coverage. • What started as private voluntary standard with little involvement of national governments and international organisations seems to be evolving • Great diversity in PCF approaches: this is not unusual as standards emerge • PCF does not appear to create market access barriers for producers in developing or distant countries - thanks to use of LCA ; not “food miles” • But data on developing countries is poor –leading to use of ‘default’ values for certain criteria • Cost and capacity issues may pose questions for developing countries if PCF is adopted on wider scale

24. Some useful links on CPF France: ADEME: www2.ademe.fr/servlet/KBaseShow?sort=1&cid=96&m=3&catid=23735 E.Leclerc: www.jeconomisemaplanete.fr/actu.php Casino: www.produits-casino.fr/developpement-durable/dd_accueil.html Japan: JEMAI: www.jemai.or.jp/english/carbonfootprint.cfm Verified Sustainable Ethanol Initiative (VSEI) and SEKAB:  VSEI:  www.sustainableethanolinitiative.com/default.asp?id=1062 SEKAB: www.sekab.com/default.asp?id=1484 New Zealand Centre for Life Cycle Management for Food and Fibre: mclarens@landcareresearch.co.nz Climate Centre at Risø, Technical University of Denmark, Simon Bolwig, sibo@risoe.dtu.dk UK : www.carbontrust.co.uk

25. OECD Trade and Agriculture www.oecd.org/trade Click on : “environment & trade” Contact ronald.steenblik@oecd.org dale.andrew@oecd.org