Carbon Labels & Taxes on Food Could Cut the UK’s National Emissions by 5%

A new study reveals that a combination of carbon labels and taxes on highly polluting foods would reduce emissions by the equivalent of 4.7% of the UK’s overall emissions.

Showcasing carbon footprints on product labels and taxing high-emission foods in supermarkets could collectively achieve a 10% reduction in the climate impact of shopping baskets in the UK, equivalent to nearly 5% of the country’s total emissions, according to a new study.

Researchers at Italy’s University of Trento and the UK’s University of Exeter explored how to best minimise the planetary impact of food – which accounts for nearly a third of global emissions – while maximising the returns for society.

They designed a simulated online supermarket and asked around 5,000 Brits what they typically buy, and whether they would change their food choices if carbon labels and/or taxes were introduced.

The findings show that displaying a product’s carbon footprint led to a 5.6% decrease in the emissions associated with the average food basket, which is equivalent to 2.7% of the UK’s emissions.

Meanwhile, a tax of £60 per tonne of CO2e on the most carbon-intensive products was nearly twice as effective, lowering basket emissions by 10% – however, this comes at an annual cost of £79 per person.

Reducing the tax rate to £28 per tonne of CO2e and combining the measure with carbon labelling would achieve a roughly 10% reduction, too – tantamount to 4.7% of national emissions – and would only cost £34 per person each year.

Even that cost, though, would be more than offset by the social benefits of lower GHG emissions and increased revenues for the public sector, the researchers argue.

Meat in the spotlight

The study, published in the Journal of Environmental Economics and Management, highlighted disparities in the impact of carbon labels across consumer groups. Young people increase their demand for fruits, vegetables, starches and poultry, while older respondents show only a slight increase in snack, beverage and fish consumption.

Richer households cut back on cheese, beef and lamb more than lower-income households, who instead bulk up their beverage purchases. And individuals buying larger amounts of meat lower their overall demand twice as much (-14%) compared to those who eat less meat (-7%). The latter group, meanwhile, seems more willing to reduce cheese purchases (-4%).

“We find that households with a diet rich in meat are also those that tend to react more to the display of carbon labels, suggesting that more information to this group about the emission impacts of their food choices can lead to significant margins of improvement,” said Carlo Fezzi, an associate professor at the University of Trento and co-author of the study.

“The carbon tax is the most effective measure in reducing emissions across income levels and dietary profiles, although it produces sizeable losses in consumer welfare that are regressive with income. Nonetheless, these regressive impacts of taxes can be counteracted by a lump-sum redistribution of the tax revenues back to households,” the research states.

Beef and lamb are two of the most heavily polluting foods, and are the hardest hit, with a combination of carbon labels and taxes slashing demand by 26%. Pork purchases see a near-3% decrease, while poultry (whose emissions are much lower than beef but still significantly high) would actually increase by around 3%.

Declines are also experienced by dairy products like cheese (-6%) and milk and yoghurt (-3%). These animal products will likely be replaced by less carbon-intensive alternatives, such as plant-based meat and dairy, which fall under the study’s “other food” category alongside ready meals. Pairing carbon labels with taxes raises demand for these foods by nearly 10%.

“These findings suggest that substitution between products is likely to occur between higher-carbon and lower-carbon foods that serve similar purposes in the consumers’ diet, as, for example, substituting between different kinds of meat, rather than from meat to vegetables, which would require a change in the consumer’s dietary habits,” the authors write.

Combining carbon labels with taxes can ‘eliminate inequalities’

Unsurprisingly, meat-rich households have the largest carbon emissions, at 4.78 tonnes of CO2e per person per year – that’s nearly double the footprint of the average household. Meat-reduced and pescetarian homes, meanwhile, have much smaller and similar annual carbon footprints (around 1.5 tonnes of CO2e per person), while vegetarians and vegans have the smallest impact, at just one tonne of CO2e.

For carbon labelling, the greatest potential remains with households that have meat-rich diets, resulting in a 6.4% reduction in emissions. According to the researchers, this denotes that these consumers “are sensitive to environmental issues and, when stimulated by policy interventions, are willing to decrease their consumption of carbon-intensive goods”.

Displaying carbon footprints on food labels has a limited impact on pescetarian or meat-free households. This is because they have limited possibilities to replace high-emission foods with greener alternatives, given that their diet is already lower-impact, and they’re more likely to be climate-conscious and better informed, which would make the information from carbon labels potentially redundant.

Carbon taxes achieved reductions larger than labels across all dietary profiles, led by heavy meat-eating households (-13%), followed by those that consume less meat (-7.5%), and those that are pescetarian and vegetarian (-1.1%). “Perhaps surprisingly, we find an increase in the levels of emissions among vegan households,” the study notes, though it doesn’t explain why that’s the case.

The research reveals that the carbon tax results in per capita losses of more than £180 per year for households with meat-rich diets. But that impact significantly decreases for other dietary groups: households eating less meat would face an annual cost of £30 per person, falling to £10 for vegetarians and to virtually no loss for vegans.

When combining the two policy measures, welfare losses are roughly halved for all groups. If a tax rebate is introduced, all dietary demographics witness a small welfare increase, barring heavy meat-eaters – even for the latter, though, the welfare loss is slashed by 40% compared to a scenario without reimbursement.

Calculating the overall net social benefits, the researchers find that a tax-only system would render a monetary gain of £6 per person per year, while a scenario with just carbon labelling would put that figure at £8. Implementing the two together, however, raises this to £13.

“Introducing carbon taxes is not without challenges, as these measures have generally limited public acceptance and tend to burden especially the less-wealthy households,” said lead author Marco Tomasi from the University of Trento.

“Our study shows that redistributing the tax revenues on a per capita basis would effectively eliminate the inequalities associated with the implementation of the tax, thus increasing the equity of the policy.”