Eco-Labeling Initiatives

1. Eco-Labeling Initiatives Dan Kovalsky 4/25/2007

2. What is an eco-label? • A label on a product that expresses one or more environmental or energy concepts.

3. Why labels? • Global economy • Rational Choice Theory • Ingrained psychological effects

4. Global Economy • Through advances in transportation, communications, and trade agreements over the past several decades, global trade is a part of the modern economy.

5. Rational Choice Theory • Rational choice theory postulates that, given relevant information, consumers have the ability to weigh the available choices and rank products according to their preferences. They will then select their purchase based upon these rankings.

6. Rational Choice Theory • Without labels, consumers have more difficulty taking into account environmental and energy concerns when ranking products. Either they will not take into account those concerns at all, or run the risk of making an inefficient choice due to a faulty assumption about the environmental or energy impacts of a product.

7. Rational Choice Theory • The Ashridge Business School study: • 69 percent of Tesco shoppers said the impact on the climate of the food they bought was important, but they didn’t act on these concerns because there was no information about it on the products' packaging.

8. Ingrained psychological effect • There is hope that constant exposure to labels which explain the energy or carbon footprint of products will have a lasting subconscious impact on consumers.

9. Types of Labels • Energy efficiency labels • “Food miles” • Carbon foot-printing

10. Energy-efficiency Labels • Energy efficiency labels list the rate of energy used to accomplish a particular task. • Examples of energy efficiency labels include those on appliances, fuel-efficiency of cars, and florescent light bulbs.

11. An energy efficiency label from the EU.

12. “Food Miles” • At the most basic level, “food miles” calculates the distance traveled by a food product, or a product’s components, to reach the point of sales. • “Food miles” is one way for consumers to prefer locally-produced foods over distantly-produced, often air-transported foods.

13. Carbon Foot-printing • Carbon footprint is a measure of the carbon – a greenhouse gas – emitted into the atmosphere as a result of some product, mechanism, or activity.

14. Carbon offsetting • Carbon offsetting is the process of reducing or neutralizing the net carbon emissions of an individual or other entity by other actions. The intended purpose of this reduction is to combat global warming. • Offsetting is often coupled with carbon foot-printing to determine how much carbon must be offset.

15. Qualities of a good eco-label • Gains the attention of shoppers. • Well-presented information that does not burden or delay shoppers. • Information that comes from a trustworthy source. • Information is communicated to people in language and terms they can understand. • Labels must compensate for the lack of expert scientific knowledge in the majority of the populace.

16. Types of Labeling Initiatives • Mandatory Labeling Requirements • Eco-labels are sometimes mandated by a governmental body or trade association. • Voluntary Private Initiatives • Corporations have recently, and increasing numbers, planned or set internal goals and standards for eco-labeling. • Certification Programs • Non-profit organizations and occasionally government agencies set standards for eco-labels. • Examples include Fair Trade, Quality Assurance International, and USDA Organic.

17. Precedents in the United States • The United States seems to lack the political will to mandate eco-labels, and American corporations of most industries lack incentives to initiate their own voluntary schemes. But there are precedents on the state level and within certain industries. • While eco-labeling has less momentum and sophistication in the United States, there is great potential because of the nation’s wealth and incredible levels of consumption.

18. Energy Star • Energy Star is a certification program of the US Environmental Protection Agency and the US Department of Energy.

19. Energy Star • Appliances and building materials with an “Energy Star” label meet federal standards of high energy efficiency. By designing products which meet this standard, companies reap the benefit of getting this designation on their products which are more desirable to some audiences than are those without.

20. Automobile Emissions Stickers • EPA has long mandated fuel economy stickers on new automobiles sold in the US, but the stickers contained only minimal information. • The fuel economy figures were also much higher than what drivers actually experienced.

21. Automobile Emissions Stickers • Starting with the 2008 year models, new automobiles sold in the US will have re-designed EPA emissions stickers. These stickers will display fuel costs more prominently and compare each vehicle’s fuel economy to the rest of its class. The redesign is expected to aid car buyers in selecting more fuel efficient cars by highlighting the annual fuel costs and incorporating those costs into the total cost of the vehicle.

22. Automobile Emissions Stickers • Notably, the new stickers are not associated with any new fuel economy standards for automakers – fleets are free to be as inefficient as they were before the new stickers.

23. The EPA Sticker

24. California Stickers • California is poised to require labels detailing average carbon emissions on all new cars sold in the state, starting with the 2009 models. The California Air Resources Board is expected to approve the stickers in June 2007. • The stickers will include an estimate of the annual carbon emissions of that vehicle. The information will likely be incorporated with EPA’s fuel economy and exhaust-emission labels.

26. Proposed Cloned Food Labels • The California legislature is voting on a bill that would require foods from cloned livestock to be labeled as such. • California as an early adopter?

27. Other US Precedents • Leadership in Energy and Environmental Design • USDA Organic certification • Fair Trade coffee certifications • Non-governmental organization (NGO) organic certifications • NGO sustainability certifications

28. TESCO – A voluntary private initiative. • TESCO, the largest retailer in the United Kingdom, committed itself to putting a new type of carbon-count label on every one of its 70,000 products.

29. The UK’s Walmart?

30. TESCO • The labels are planned to include indirect greenhouse emissions given off during its production and processing. • “So that shoppers can compare carbon costs in the same way they can compare salt content and calorie counts.”

31. Airplane symbols – voluntary private initiatives. • All food products at TESCO that were air-freighted into the UK will carry an airplane symbol. • Marks & Spencer, another supermarket chain, is planning a similar symbol on their air-freighted products.

32. Airplane Symbols • Not a new concept: a few decades ago, fresh beans flown to Britain from Kenya were labeled with an aircraft symbol. But that was done to denote freshness, essentially boasting that "they come from afar but they got here fast". Now they will underscore the ridiculous energy expenditures now commonplace due to cheap fossil fuels.

33. Airplane Symbols • 1 kg of kiwi flown from New Zealand to Europe discharges 5 kg of carbon; carrying 100 grams of beans from Kenya to London by air releases at least 340 grams of carbon dioxide into the atmosphere. • TESCO has pledged to fly in less than 1% of its products compared with the current 2%-3%.

34. Difficulties in Eco-labeling • Accurate calculation of impact • Where in the product’s history do we draw a line?

35. Where do we draw the line? • Exactly what emissions should be counted? Indirect emissions are far more difficult to calculate than direct emissions, which may be as simple as a sensor on a smokestack or tailpipe. • Should supermarkets include the electricity used to refrigerate products in their stores?

36. Where do we draw the line? • What about the fuel in the tractors on a farm thousands of miles away? • What about the fuel in the cars the farmworkers drive to get to work? • What if the electricity used is non-renewable, rather than fossil-fuel?

37. “Food miles” simplicity • Because it only measures the distance and weight of the food, “food miles” does not take into account the complete embodied energy of a product. • For example, a product grown outdoors in a warm country and imported by air may the same carbon footprint as a product grown out-of-season, locally, in a heated greenhouse.

38. Calculation Expenses • Related to the question of where to draw the line in calculating energy and carbon footprints is the potential expense in calculating them for every single product made.

39. Calculation Expenses • One solution would be to only mandate the calculations for products which are sold in quantities above a specific threshold, or have a value over a different threshold.

40. Skepticism towards science • With many Americans still doubting the existence of climate change, will they even care? Even those who acknowledge the existence of climate change: will they sense a strong enough connection between the energy and carbon associated with their purchases and climate change?

41. Potential impact on less-developed nations’ economies • Some argue that even if flying food in from the developing world produces more emissions, it should be permitted to an extent to boost to trade and development in the exporting countries. • Protectionist and anti-globalization arguments.

42. Untested effectiveness – will anyone care? • Price • Brand loyalty • Marketing

43. Psychological effect? • There has not been an opportunity to test it on a large scale, but a widespread eco-labeling regime could have powerful, beneficial subconscious effects on consumers.

44. Improvements in Efficiency • Greater efficiency in manufacturing, distribution, and packaging • Labeling requirements, or even expectations, force manufacturers, distributors, and marketers to re-consider their practices and may convince them to change for the better.

45. Sources (I) • Regulatory Announcement: EPA Issues New Test Methods for Fuel Economy Window Stickers, http://www.epa.gov/fueleconomy/420f06069.htm (December, 2006). • Motivating Home Energy Action - A Handbook of What Works,http://www.greenhouse.gov.au/local/motivating/info.html (April, 2000). • Aaron C. Davis, Calif. bill requires cloned food labels,http://news.yahoo.com/s/ap/20070417/ap_on_sc/cloned_food (Apr 17, 2007). • John Scott, Rational Choice Theory, Understanding Contemporary Society: Theories of The Present, (G. Browning, A. Halcli, and F. Webster, eds., Sage Publications 2000).

46. Sources (II) • You’ve checked the price and calorie count, now here’s the carbon cost: Supermarket giant to introduce emission labels Tesco promises 'green consumption revolution, The Guardian (January 19, 2007). • State set to require auto emission labels, Los Angeles Times (February 24, 2007). • Kenya: Targeting EU Flower Market, Africa News (March 2, 2007). • Adam, David, G2: Ethical living: Emission impossible?, The Guardian (January 25, 2007). • Rigby, Elizabeth and Harvey, Fiona, Leahy loses sleep over Tesco 'carbon calorie counters' plan, Financial Times (January 20, 2007).

47. Sources (III) • http://www.weathervane.rff.org/ • http://www.energystar.gov/ • http://www.usgbc.org/DisplayPage.aspx?CategoryID=19