Carbon Footprint May Deepen Latin America
Trade Vulnerability

Photo: confusedbee, Flickr

The emerging role of the carbon footprint as a tool for climate change mitigation for developed countries in line with their international commitments is increasing in importance, but its possible consequences for trade in Latin America are a long way from being fully understood and resolved.

The carbon footprint refers to the amount of carbon dioxide (CO 2) emitted during the life-cycle of a product along the supply chain, and sometimes including end-of-life recovery and disposal.

Overall, the region lacks consensus on the benefits of the carbon footprint, with some concerned about the possible hindrance to trade, while others see it as an opportunity.

Since Latin America and the Caribbean has an export matrix heavily dependent on environmentally sensitive products, and thus would be affected by measures taken that discriminate products based on their carbon footprint, Latin American countries are concerned that the "carbon content" of goods may result in "protectionism".

This is especially worrisome, since developing countries are hardly responsible for the vast majority of historical carbon emissions and emit far less per capita than developed nations.

In addition, LAC has a wide range of products that are destined for the markets currently discussed in carbon footprint laws. For example, of Argentina's total global exports in 2008, 1,8 % correspond to vehicles to France, and of Brazil's total global exports in 2009, 0.6% correspond to coffee exports to Germany.

These types of products are already included in the carbon footprint product families proposed by France and coffee in the products considered in Germany. Therefore, countries could incur increased cost or suffer from decreased international demand if their products are considered higher in carbon intensity at comparable prices. Other vulnerable sectors identified from the LAC region include textiles, salmon, frozen foods and flowers.

Carbon footprint progress in the LAC region to date consists of greater understanding and awareness, the creation of national carbon footprint inventories, increased regulations and reduction goals, as well as calculation methodologies.

As such, some Latin American countries are beginning to inventory certain sectors and products in order to develop strategies for commerce. For instance, Brazil's inventories focus on a sectoral and national level, while Chile aims to achieve carbon neutrality in its agriculture production and is currently determining the carbon footprint for some agriculture products (such as wine) and livestock production. Its focus is on a life-cycle analysis which includes animals and their waste; production emissions; and post-production emissions. The Chilean plan includes calculating neutrality with offsets from carbon removal from forests and in soil capture.

Costa Rica, which long ago agreed to become a Carbon Neutral country, currently incorporates work on the carbon footprint in its tourism sector as part of its strategy.

Uruguay has taken a proactive stance towards possible "climate protectionism" and has created working groups to calculate the footprint of key export groups such as meat, dairy and rice. The calculations for Uruguay also include carbon sequestration, like Chile, a methodology not currently included in the mainstream standards (PAS 2050, EU, ISO, etc.) currently in place.

Outside the region, several countries have adopted measures that require information on a product's carbon footprint and voluntary labels are developing throughout the private sector. 

The Carbon Trust and UK's PAS 2050 and PAS 2060 are voluntary measures focusing on a CO 2  label, for example. France has developed the Grenelle 2 law, which focuses on 16 product families and will enter into force in July 2011 in a year-long experimental phase, and become obligatory in the next few years. The European Union has created an Eco-label for cleaner development and aims to harmonize country initiatives, beginning with methodologies. The ISO 14067-1 and 14067-2 aim to standardize the carbon footprint of products, but consensus among countries participating in its creation remains difficult. Additional draft legislation is also under consideration in other developed countries (Germany, Japan, USA, New Zealand).

Further issues make the carbon footprint a complex issue, including multi-criteria labels and other information to possibly include, such as water and biodiversity/environment footprints. The initiatives are concerned with sending a clear simple message and avoid variable clutter. So far, the initiatives seem compatible with current bilateral and regional trade agreements and norms of the World Trade Organization (WTO).  

Part of the difficulty in adopting the carbon footprint as a tool to mitigate climate change lies in the fact that there is not a standardized methodology to calculate the carbon footprint and a plethora of standards, private initiatives and methodologies exist throughout the globe.

In order to respond to the already amassing mix of methodologies for the carbon footprint, it is important for Latin America and the Caribbean to develop a regional collective approach, with active participation in carbon footprint standard setting and an exchange of methodological progress already made throughout the region.

An opportunity exists for the region, which currently considers carbon sequestration in the calculation of their carbon footprint, to share this methodology with the other standards forums. In addition, through bi-lateral and bi-regional mechanisms, such as trade agreements, the LAC region can introduce their carbon footprint concerns to their regional and EU counterparts. Moreover, the carbon footprint's linkage to innovation, research and development and technology transfer are essential considerations, since without them the LAC region is hindered in its ability to reduce its emissions. The long-term sustainability of exports in the region will depend on a coordinated regional approach, as well as a dramatic cultural shift in production and consumption patterns. Without such measures and active participation in the carbon footprint debate, trade concerns will not diminish and the region will remain vulnerable.


Carbon Footprint and the Vulnerability of International Trade Seminar, held 2-3 September 2010,
CEPAL- Program, presentations, videos and photos of the seminar available on ECLAC's webpage: www.eclac.cl/id.asp?id=40559

Summary of the Carbon Footprint and the Vulnerability of International Trade Seminar: www.iisd.ca/larc/climate/iscf2/