The Climate Change Committee (CCC) commissioned Ricardo Energy & Environment to undertake research and analysis to improve the Committee’s understanding of the trade policy options available to the UK to address the risk of carbon leakage in the agriculture and land use sector and to reduce UK demand for imported products of deforestation.
2. Key messages
- Trade measures have the potential to reduce the risk of carbon leakage in the agriculture and land use sector. Policies that consider other environmental factors alongside GHG emissions are valuable in addressing concerns around the sustainability of agricultural imports. Examples include minimum standards (with or without due diligence), tariff reductions and sustainable import guarantees.
- However, assessing the emissions intensity of production for agri-food commodities can be complex. Accurately measuring emissions from individual farms is difficult given the impact of factors such as land type and farming practices on realised emission levels. This increases the complexity of applying policies that involve carbon pricing or minimum standards to many agricultural commodities.
- Detailed, transparent and evidence-based methodologies are key for ensuring that measures affecting the price or content of imports are compliant with WTO rules.
- Trade measures also have the potential to address UK demand for imported products of deforestation. Policies should be expanded to consider aspects of legal deforestation as well as illegal deforestation to address the UK’s overall deforestation footprint.
- Consumer engagement on the sustainability or deforestation risk associated with agricultural products or forest commodities is a good complement for supply-focused policies.
- Using trade measures to address carbon leakage in agriculture or the demand for imported products of deforestation risks instances of resource shuffling, where the measures only redirect higher-emission or lower-integrity exported products toward other countries with less stringent regulation or fewer measures rather than reducing the amount produced. The risk of resource shuffling can be mitigated through international coordination on policies, particularly between consumer countries with large shares of the global market.