۱- Introduction

۲- Materials and methods

۳- Agricultural GHG emissions in the EU

۴- GHG tax and market dynamics of carbon leakage

۵- Results and discussion

۶- Conclusion

References

Abstract

Greenhouse gas emission (GHGE) taxes on food products have recently been proposed as means to help reduce agricultural emissions. Numerous authors have calculated potential GHGE reductions in case such a tax was implemented in certain countries or regions. They did however assume a reduced production of GHGE-intense foods equal to the decline in demand induced by the tax. This omits however possible increases of net-exports that might offset such a demand reduction. Herein, the market dynamic behind this so-called “emission leakage” is explained and its effect quantified for a greenhouse gas tax in the European Union. We use the European Forest and Agricultural Sector Optimization Model for the quantitative analysis and simulate a greenhouse gas tax on all food products, based on their individual emission levels. The partial equilibrium model covers all world regions and hence the tax’s effects on international trade of agricultural commodities can be examined. It was found that 43% of the greenhouse gas reduction indicted by a domestic consumption reduction is lost through emission leakage. This already includes the mitigating effects of a production shift from inefficient to efficient producers that is another consequence of increased exports from the European Union. A greenhouse gas emission tax on food products is hence much less efficient than previously proposed, if it is not introduced globally or trade is not restricted.

Introduction

Agriculture largely contributes to greenhouse gas emission (GHGE) and therefore climate change. In 2010, an estimated 24% of all anthropogenic GHGE were directly linked to agriculture and forestry – most of which emerge during deforestation, enteric fermentation in livestock as well as manure management and application or the energy use during agricultural activities. Further emissions can be attributed indirectly to the agriculture and forestry sector. They involve the production and transport of agricultural inputs such as fertilizers and crop protection products. Considering that deforestation is mostly carried out to increase pastures or cropland, it follows that over a quarter of global GHGE stem from agricultural activities (IPCC, 2014). Moreover, because large shares of the world’s crop production are used as animal feed, livestock is the largest GHG emitter within agriculture. An estimated 18% of all global GHGE are linked to livestock (Steinfeld et al., 2006). Ruminant animals including cattle, sheep, and goats release most GHGE especially from enteric fermentation (methane), but also due to a lower feed conversion efficiency and the large amounts of manure they produce (mostly methane and nitrous oxide). On average, beef, mutton, and goat meats are by far the foods with the highest specific GHGE followed by pork. The GHGE released during meat production are multiple times higher per-calorie than the emissions of vegetal foods. Numerous authors have elaborated on this with similar results, e.g. (Audsley et al., 2009; Cederberg et al., 2013; de Vries and de Boer, 2010; Gonzalez et al., 2011; Lesschen et al., 2011; Meier and Christen, 2013). Given the importance of agricultural GHGE, numerous studies have explored possible emission abatement options.