It is widely believed that the biggest contribution of trade to climate change is from transport-related greenhouse gas (GHG) emissions. Indeed, as reported in the Asia-Pacific Trade and Investment Report 2021: Accelerating Climate-smart Trade and Investment for Sustainable Development, transportation is a source of 10 per cent of GHG emissions in the Asia-Pacific region. As such, you often hear the argument that you should “buy local” to save the planet. Some proponents go as far as to suggest that food products should include mandatory food miles labelling, implying that fewer miles equate to lower transport-based emissions and are therefore better for the planet.
This is highly misleading.
Food production contributes up to 26 per cent of global carbon emissions. Transportation typically constitutes only a fraction of the GHG emissions from food products – the bulk of emissions actually come from food choices themselves. For example, the production of 1 kg of beef is estimated to cause 60 kg of CO2 equivalent GHG emissions (out of which, only 0.3 kg is due to transportation – the bulk is due to methane emissions through belching (39 kg) and forest loss due to pasture size increases (16 kg)). Dark chocolate is nearly as bad as beef when it comes to land-use change – the production of 1 kg of dark chocolate contributes to 14 kg of CO2 equivalent GHG emissions due to forest loss. Poultry (a non-ruminant animal) produces nearly 10 times less total GHG emissions per kg than beef. A kilo of nuts, on the other hand, is almost carbon neutral, as emissions from growth, transport and retail are nearly offset by carbon storage in the wood of the nut trees. And that’s considering the impact on GHG emissions alone – beef farming also stresses water supply, contributes to deforestation, loss of biodiversity and heart disease.
Besides the hard choice of beef versus chicken (as discussed in a previous blog), one should also consider the production processes. In a landmark case of United Kingdom (UK) lamb vs New Zealand (NZ) lamb, UK food miles proponents strongly argued that UK buyers should prefer UK lamb because it didn’t have to travel halfway around the world and therefore was better for the environment (in terms of GHG emissions). Yet, as analysis has shown, even when considering the transportation-related emissions, UK lamb contributed to four times more emissions than NZ lamb. The same study shows that NZ products in the UK, inclusive of transportation, had half the emissions for dairy, and two thirds of emissions for apples when compared to their counterparts of UK origin. The difference in emissions largely came down to the fact that most of NZ’s agricultural systems required fewer fertilizers (which are highly energy intensive products); and animals grazed outside the whole year rather than relying on brought-in feed typical in colder climates.
For non-food products, consider a relatively homogeneous, yet highly energy intensive product: aluminium. In New Zealand, the Tiwai Point Aluminium Smelter uses 13 per cent of the country’s electricity, however, all of it is generated through a dedicated hydropower plant, which produces more than 300,000 tons of aluminium annually, of which 90 per cent is exported. On the other hand, aluminium smelted in China primarily relies on electricity generated from coal-powered plants. Chinese aluminium smelting operations produce nearly as much CO2 emissions as Australia as a whole.
Going back to food, there is a trend to promote products to climate change conscious consumers with “CO2 per calorie equivalent” labelling. Some research indicates that many consumers may be willing to change their eating habits to help reduce the negative environmental impact. A survey of 10,000 consumers in Europe, for example, revealed that two thirds of the respondents supported carbon labelling of products. Looking ahead, carbon pricing and border adjustment taxes will likely start with carbon-intensive manufactured products, such as steel, concrete and aluminium. Agricultural products may follow. As many countries in the Asia-Pacific region rely heavily on agricultural exports, this may entail significant implications for agricultural exporters. Australia, Indonesia, Malaysia and New Zealand are likely to be particularly affected. It is worth noting, however, that the region as a whole is a net importer of CO2 equivalent emissions embedded in agricultural products (see figure). As such, for most of the economies in the region, it may be worthwhile to implement carbon tariffs as part of their trade-related climate action, particularly on high emissions to calorie ratio foods, such as beef.
The relationship between trade and climate change is very complex. The recently released Asia-Pacific Trade and Investment Report 2021: Accelerating Climate-smart Trade and Investment for Sustainable Development includes more analysis.
