Session 3A presentation from the 7th Strategic Dialogue of the Carbon Market Platform, 4-5 October 2022

1. The potential role of carbon pricing in food
systems: context, issues and options
Jane Ellis, Hugo Valin
Strategic Dialogue of the G7’s Carbon Market Platform
Berlin, 4-5 October 2022
Environment Directorate,
Trade and Agriculture Directorate

2. ► Background
► Carbon pricing and just transition issues in food systems
► What are countries doing to reduce emissions from their food
systems?
Outline

3. ► Ensuring adequate food
supply is crucial … and a
sensitive issue
► Direct and indirect GHG
emissions from food systems
have increased 10% between
1990-2015
► … but will need to decrease
(or be offset) in order to
contribute to net zero
Importance of GHG emissions from food systems

4. GHG emissions are spread across the supply chain
but large variations between different foods …
Beef
(beef herd)
99kg CO2eq/kg
food
Peas
0.98kg
CO2eq/kg food
Barley
1.18kg
CO2eq/kg food
(mainly
CH4, N2O)
(mainly
CO2)
GHG emissions per kg of food
Source: Based on data from Poore & Nemecek, 2018

5. … as well as within a given food, leading to technical
challenges in implementing C pricing
Source: OECD, Agricultural Policy Monitoring and Evaluation 2022
► C pricing in food systems little
used at present
► Significant technical challenges
of establishing accurate C
pricing signals without
very high transaction costs
► Other technical issues:
addressing GHG leakage
GHG/kg food

6. Demand-side changes can lead to just transition
issues

7. ► Significant political barriers, particularly in the short term
► Addressing GHG emissions from food systems could lead to
positive benefits
– Reduced deforestation, improved health, reduced water footprint
► Worthwhile exploring potential of different C pricing tools in food
system in the longer term …
► … while being conscious of extremely different country contexts
Despite these challenges we need to move forward

8. ► OECD monitors every year support policies in 54 countries
(OECD + EU27 +11 emerging economies)
► agricultural policy changes across the world
► monetary transfers to the agricultural sector
► Edition 2022: Focus on climate change mitigation
► Out of 54 countries, only 16 had some form of
GHG emissions reduction target for agriculture
► Agricultural markets are still facing important price
distortions due to public policies
► USD 611 billion / year of producer support in agriculture
(USD 293 billion / year directly from government budgets)
for the period 2019-21
What are countries doing on agriculture GHG emissions?
Report available on oe.cd/monitoring

9. Source: OECD, Agricultural Policy Monitoring and Evaluation 2022
GHG/kg food
Current policies provide significant support to high-emitting
products
► Sectors receive direct support through:
► Market price support (mostly trade protection)
► Sector-specific subsidies
► Leads to increase of country production and
national GHG emissions
► Need to rethink current forms of support for
climate policy objective
USD 32 billion
USD 23 billion
USD 56 billion
USD 44 billion
Sector specific
support (2019-21)

10. Specific measures help to reduce GHG emissions from food
systems
Dedicated agricultural support, grants, preferential credits
► EU Greening payments in CAP pillar 1 and Rural development fund in pillar 2, Canada Nature Climate Solution fund
Japan Direct payments directed to mitigation activities, US USDA $2.8 bn Climate-Smart program
Environmental regulations
► Nitrogen regulations, cross-compliance for direct payments (EU countries)
R&D and knowledge transfer
► EU Horizon programme, US USDA Climate Hubs, Canada On-Farm Climate Action Fund
► Global Research Alliance on Agricultural Greenhouse Gases (65 countries)
Demand side policies
► Public procurements: school meal programs
► Product certification and labelling
► Consumer campaigns: Meat-free days
► Food loss and waste reduction initiatives

11. Emission pricing instruments are not yet applied to agriculture at
a large scale
“Polluter pays”
► Emission taxes – only applied in rare cases and to specific sources
(e.g. fossil fuel in Norway)
► Emission trading schemes (ETS) – also not (yet) applied to agriculture
(discussed in New Zealand)
“Beneficiary pays”
► Abatement subsidies/auctions: Australia Emissions Reduction Fund, Japan J-credit scheme
► Carbon offsets: agriculture projects eligible, for instance in Korea ETS, state-level ETS in the
US, Low Carbon Label in France, as well as with CDM

12. Four action pillars for climate change mitigation in agriculture
> Remove environmentally harmful subsidies and
reorient support
> Reforming support to sectors with highest
emission intensity
> Increase support to R&D and knowledge transfer
> Boost innovation on climate-friendly technologies,
also with public-private partnerships
1. Phase out policy measures
exacerbating climate change
3. Invest in innovation
and knowledge transfer
> Implement an effective pricing system for food
GHG emissions (not necessarily polluter-pays)
> Unlock carbon sequestration in land and soil
> Measure, report and verify
> Encourage consumption shifts towards lower
emission intensity products
> Reduce overconsumption, food waste and
losses
2. Apply adequate mitigation incentives to
trigger action
4. Shift to more
sustainable consumption patterns

13. THANK YOU!
Jane.ellis@oecd.org
Hugo.Valin@oecd.org

14. • OECD (2022), Agricultural Policy Monitoring and Evaluation 2022: Reforming Agricultural Policies for
Climate Change Mitigation, OECD Publishing, Paris. https://doi.org/10.1787/7f4542bf-en
• Poore, J. and Nemecek, T. (2018), Reducing food's environmental impacts through producers and
consumers, Science 360(6392), 987--992. https://doi.org/10.1126/science.aaq0216
References