Executive summary - European Commission
Environmental Impacts of Significant
Natural Resource Trade Flows into
the EU
METROECONOMICA
Economic and Environmental Consultants
Report to DG ENV
ED 05444
Issue Number 6
Date 27th October 2008
AEA Energy & Environment
Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
Title
Environmental Impacts of Significant Natural
Resource Trade Flows into the EU (Issue 6)
Customer
European Commission (DG Environment)
Customer reference
070402/2006/452909/MAR/G4
Confidentiality,
copyright and
reproduction
This report has been prepared by AEA Energy &
Environment under contract with European
Commission (DG ENV).
(AEA/ED05444/Issue 6)
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Reference number
ED05444
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Author
Name
Judith Bates (AEA Energy and
Environment)
Nick Dale (Metroeconomica)
Approved by
Name
Phil Dolley (AEA Energy and
Environment)
Signature
Date
AEA Energy & Environment
30/10/08
Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
(AEA/ED05444/Issue 6)
Executive Summary
Introduction
European and other major economies depend on natural resources for their prosperity, but
current patterns of increasing resource use are causing environmental pressures and
environmental degradation globally. In order to tackle this issue the European Commission
has developed a “Thematic Strategy on the Sustainable Use of Natural Resources1” with the
overall objective of decoupling economic growth from environmental degradation through
improved resource efficiency and reduced environmental impact of resource use. As for
most developed regions, the EU is highly dependent on resources coming from outside
Europe, and as such is in effect exporting environmental impacts.
Product prioritisation studies based on life cycle analysis (LCA) techniques are often used to
help identify which aspects of consumption are particularly damaging to the environment.
However, knowledge of the environmental impacts taking place at the very early stages of
the product lifecycle (i.e. raw material production and primary processing) is often relatively
limited, particularly as impacts often occur outside those major economies where such LCA
studies are typically conducted. Improving this information is essential to ensuring that such
prioritisation studies deliver accurate assessments.
This study completed for DG Environment (DG ENV), European Commission, by AEA
Energy and Environment and Metroeconomica, seeks to help address this issue by reviewing
the literature to identify the environmental impacts which occur outside the EU from a
number of highly significant trade flows of raw materials and processed materials into the
EU. The literature review provided useful insights into the types of environmental impacts
associated with commodities, including impacts on biodiversity which are difficult to
characterise quantitatively in an LCA study.
The study also suggests a simple methodology for using information on these environmental
impacts to identify those resource trade flows which have a more significant environmental
impact, and makes suggestions for policy developments that could help to reduce these
impacts.
Study Methodology
The study:
i.
ii.
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1
Selected a set of 40 commodity trade flows, spread across four sectors (agricultural
food and non-food commodities, metals and minerals and fossil fuels) on the basis of
the significance of volume and value of imports and likely significance of potential
environmental impacts (based on expert judgement and results from previous
studies).
Compiled trade data on the commodities identifying the main countries exporting to
the EU.
Conducted a literature review to identify environmental impacts from production,
wherever possible gathering country specific information (for main exporting
countries) as well as generic information. The literature was also used to identify
areas where information on environmental impacts is lacking.
Using information gained from the literature review and expert judgement, assigned a
score (from zero to three) to reflect the severity of potential impacts for each of the 40
flows in four policy areas: climate change, biodiversity, human health and natural
resources.
COM(2005) 670 final. ‘Thematic Strategy on the sustainable use of Natural Resources’
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Used the ratings together with data on the significance of the trade flow to identify
which of the commodities studied had the most significant environmental impacts in
their source countries overall.
Use data on transport modes and transport distances to examine environmental
impacts of transporting commodities to the EU.
While existing LCA studies of commodities were examined in the literature review, the focus
was on supplementing this information by identifying additional information sources and
ensuring that all potential environmental impacts (including those such as biodiversity which
may be difficult to characterise in LCA data) were covered. The use of a simple rating
system which did not require quantitative data, but relied on guidelines meant that enough
information was available on all of the commodities to rate them in the four policy areas. The
emphasis on gathering country specific as well as generic information highlighted how and
why the severity of particular environmental impacts can vary significantly between countries.
Reasons for variations include:
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Availability of natural resources necessary to sustain commodity production
(e.g. in areas where rainfall is not sufficient to support cotton production, there are
severe impacts on water resources affecting both biodiversity and the local
people);
Patterns of existing land use and existing ecosystems; whenever land use
change is required for commodity production, impacts on biodiversity are very
dependent on the existing land use;
Production mode and method: smaller scale production can reduce
environmental impacts for some commodities (e.g. by preventing large areas of
monoculture), but may also increase impacts due to less efficient production
methods, or poorer regulation (e.g. small scale gold mining);
Level and quality of environmental regulation; regulation of extraction and
production activities and regulation of use of e.g. herbicides and pesticides in
agricultural production may vary significantly between countries. Good regulation
and proper monitoring of impacts can lessen the severity of impacts.
The principal disadvantage of the approach is the subjective nature of the rating. Apart from
climate change where quantitative data was available from life cycle databases and studies
for most of the commodities, the rating is based on expert judgement. The project team
made use of sector experts in helping to compile ratings, and is confident that ratings have
been assigned as consistently as possible within each sector, it is less confident that ratings
for a particular impact category are consistent between sectors.
Apart from the challenges of assigning ratings consistently across all commodities, the main
problem encountered was a lack of information and data on which to base the ratings in
some cases. In general:
•
•
•
More information and more quantitative data were found on environmental impacts of
metals, minerals and fossil fuels, than for the other commodities.
More information was also generally available for commodity production in developed
countries as environmental reporting at both the national and company level is more
developed than in developing and transition countries.
More comprehensive and comparable data was generally available for climate
change, than biodiversity and natural resources, partly because these are much wider
in definition.
Recommendations for Improving Methodology
In general, establishing a firmer basis to policy prioritisation between significant natural
resource trade flows requires a redoubling of efforts to establish a more comprehensive
understanding of their impacts, in particular on biodiversity, human health and natural
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resources. This would be achieved through a coordinated policy of data gathering and a
more coordinated collation of results from the many and varied current research projects
(something which this project is contributing towards).
Key recommendations for improving the methodology adopted in this study are to:
•
•
•
•
•
Refine the guidelines used for assessing rankings, involving a wider range of both
sector experts and ‘impact’ experts, e.g. impacts in biodiversity and human heath.
Include more quantitative criteria in the guidelines.
Ensure review of the ratings by a range of sector experts and ‘impact experts’;
consider including experts from producer countries. The study has highlighted a
number of countries which supply a range of commodities, where it would be
particularly useful to make links with appropriate experts. This might also help in
provision of more country specific data. Development of a database of expertise
within this project provides a basis for further inclusion of experts in this context.
Examine sources of quantitative data (e.g. time series on crop areas held by
organisation such as the FAO, occupational health statistics) which could potentially
be used to give a more quantitative basis for the ratings for biodiversity, human health
and natural resources.
Consider replacing the ‘natural resources’ impact category with two or three more
narrowly and clearly defined different impact categories.
Environmental Impacts of the Commodities Studies
Ratings for the 40 commodities are shown in Table E1. For each of the sectors examined,
there are often some generic environmental impacts, which are applicable to all or many of
the commodities. This is most clearly so in the ‘fossil fuels’ category, where oil and gas
production are often closely linked so have similar types of impacts. For minerals and
metals, there are a large number of common impacts e.g. there are large volumes of waste,
acid drainage can lead to water pollution and fugitive dust can cause health problems.
Processing of the mineral ores into metals tends to increase global warming significantly due
to the energy intensity of the processing and brings additional air and water pollution issues.
The pattern of impacts for agricultural commodities tended to vary between commodities
more than for fossil fuels and minerals and metals, although this may partly reflect the more
diverse nature of the commodities studied. Where cultivation of a commodity results in land
use change (e.g. because the crop area is expanding, or it being displaced into previously
uncultivated areas) then there can be significant impacts on climate change due to the
carbon releases associated with clearing and cultivating land, and on biodiversity as habitats
are destroyed.
The variations shown in the severity of the impacts for commodities within each of the four
commodity groups highlight the need for caution in generalising about the main impacts of
the sectors, apart from perhaps fossil fuels. This partly reflects the fact that a mixture of raw
materials and processed materials were selected for study in each sector. For example in
the non-food commodities, leather, cotton fabrics and bioethanol, and in the food
commodities, meat and milk can be regarded as processed materials as grass and feedstuffs
are processed by the animal into a useful product.
Overall Environmental Impact
The overall environmental impact of each commodity was derived by summing the ratings for
climate change, biodiversity, human health and natural resources. The ranking of the
commodities based on this overall environmental impact is shown as the first column in
Table E2. These overall environmental impact ratings were then multiplied by the total
volume of EU imports to assess the trade flows likely to have the highest overall impacts in
source countries (shown in the second column in Table E2). So for example, while wheat is
one of the agricultural commodities with a lower overall environmental impact, very large
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amounts are imported, so that the impact of the wheat trade flow is higher than for trade
flows of many other commodities.
Table E1 Impact Ratings for Commodities
Agricultural Food Products
Bananas
Bovine meat
Cocoa
Coffee
Crustaceans
Fish, fresh, chilled, frozen
Maize
Milk products
Rice
Soybeans
Sugar
Tea
Wheat and wheat flour
Non-food agricultural products
Bioethanol
Cotton lint
Cotton fabrics, woven
Leather
Natural rubber
Palm oil
Tobacco
Wood, simply worked
Chemical wood pulp
Minerals and metals
Aggregates
Aluminium
Bauxite and other aluminium ores
Cadmium
Cement
Copper ores and concentrates
Gold
Iron and steel
Iron ores and concentrates
Mercury
Phosphate rock
Zinc ore and concentrates
Fossil fuels
Coal
Crude petroleum
Gas, natural and manufactured
Liquefied propane and butane gas
Petroleum oils other than crude
Synthetic rubber
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Climate
Change
Bio-diversity
Human
Health
Natural
Resources
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Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
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Table E2 Assessment of Relative Overall Environmental Impact
Environmental impacts only considered
Rank
Commodity
Food Agricultural Commodities
1
Crustaceans
2=
Bananas
2=
Bovine meat
2=
Rice
2=
Soybean
6
Fish, fresh, chilled, frozen
7=
Coffee
7=
Tea
9
Maize
10
Milk products
10 =
Sugar
10 =
Wheat and wheat flour
13
Cocoa
Non Food Agricultural Commodities
1
Cotton
1=
Cotton fabrics, woven
3
Tobacco
4
Palm oil
5=
Chemical wood pulp
5=
Bioethanol
7
Leather
8
Natural Rubber
9
Wood
Metals and Minerals2
1
Gold
2
Aluminium
3
Cement
4
Iron and Steel
5=
Copper ores and concentrates
5=
Zinc ore and concentrates
5=
Mercury
8=
Aggregates
8=
Bauxite and other aluminium ores
8=
Iron ores and concentrates
8=
Phosphate rock
12
Cadmium
Fossil Fuels
1
Synthetic Rubber
2
Liquefied propane and butane
2=
Petroleum oils other than crude
4
Coal
5
Natural Gas
6
Crude petroleum
Environmental impacts & EU import volume
considered
Rank
Commodity
1
2
3
4
5
6
7
8
9
10
11
12
13
Soybean
Wheat and wheat flour
Bananas
Maize
Coffee
Sugar
Crustaceans
Rice
Cocoa
Fish, fresh, chilled, frozen
Tea
Milk Products
Bovine Meat
1
2
3
4
5
6
7
8
9
Wood
Chemical Wood Pulp
Palm Oil
Natural Rubber
Tobacco
Cotton fabrics, woven
Cotton
Leather
Bioethanol
1
2
3
4
5
6
7
8
9
10
11
Iron Ores and Concentrates
Iron and Steel
Cement
Aggregates
Bauxite and other aluminium ores
Aluminium
Phosphate Rock
Copper Ores and Concentrates
Zinc Ore and Concentrates
Cadmium
Mercury
1
2
3
4
5
6
Crude petroleum
Coal
Natural Gas
Petroleum oils other than crude
Liquefied propane and butane
Synthetic Rubber
2
Gold has been excluded from the ranking for “environmental impacts and EU import volume" due to insufficient
data on EU imports.
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Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
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The need for caution regarding the use of ratings for environmental impacts, particularly due
to variations in data availability and quality, and the difficulties of comparing impacts across
commodities has been noted earlier. Using this methodology the trade flows with highest
overall environmental impact scores are those that have scored relatively highly in most
impact categories and not those trade flows that may have a very high impact in only one or
two impact categories. Moreover, the scoring on which the analysis is based is for source
countries with the most significant impacts and therefore overall scores may not reflect
impacts in all source countries. For these reasons the analysis here is necessarily tentative
and simply intended to contribute to discussion on priority resource flows given these
constraints. It is only concerned with assessing environmental impacts outside the EC;
including the impacts from activities which happen inside the EU such as further processing,
incorporation into products, use and disposal is likely to give a different ranking.
Environmental Impacts of Transporting Commodities to the EU
The impact of transport of commodities from the country of origin to the EU was examined by
combining information on transport mode for the top three exporting countries, with typical
distances for the appropriate sea or road/rail journey and lifecycle data on the impacts of
road, rail, ship and air transport. Figure E1 shows the climate change impacts from
transport on both a per tonne of commodity basis and for total imports from the top three
exporting countries. Commodities with a higher climate change impact from transport are
bovine meat, as a substantial proportion (75%) arrives by air; cotton, as almost 80% comes
by road, and leather as about 40% comes by road and 40% by air. In terms of total transport
impacts iron ore and coal dominate due to the much larger volumes of these commodities.
Crude oil and wood are also significant; in the case of crude oil, this again is due to the
volume of imports, and in the case of wood due to a relatively high volume and relatively high
impact per tonne.
A full comparison of climate change impacts from transport of the commodities with impacts
from production of the commodities could not be made, as quantitative data on the climate
change impacts of all commodities was not available. However for those commodities where
a comparison could be made, there were several - typically those with a very low to low
climate change impact - where the impacts from transport were of the same magnitude or in
some cases larger than impacts from commodity production.
Recommendations for Policy Development
From a review of the current policy framework on trade flows of commodities the study
identified four key areas for future policy development
(1) Further promotion of policies influencing patterns of consumption in the EU: We
suggest there is great potential in further developing policies that aim to reduce impacts in
source countries of natural resource trade flows through addressing volume and nature of
trade flows to EU. Such policies would be aimed at encouraging demand in the EU of
products with lower environmental impacts and the sourcing of products from those locations
with lower impacts. This should include supporting: (i) sustainable production certifications
schemes and eco-labelling across an expanding range of imported commodities, e.g. the
development of certification for “green” metals, (ii) eco-design of products based on
minimisation of resource use and environmental impacts of source materials (“Design for
Sustainability”), (iii) innovation designed to reduce physical flows of natural resources (e.g.
development of product service systems concept) and (iv) sustainable procurement policies.
(2) Further promotion of policies aimed at reducing environmental impact in source
countries: The range of environmental programmes in source countries generally address
specific impact categories (climate change etc.) rather than being focused on the production
of particular commodities. However, there is potential to target further specific commodities
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Cement
Copper Ore
Iron and Steel
Iron Ore
Phosphate rock
Zinc Ore
Refined oil products
vii
Rubber
Aluminium
Bauxite and alumina
Cement
Copper Ore
Iron and Steel
Iron Ore
Phosphate rock
Zinc Ore
Fossil fuels
Fossil fuels
Coal
Crude oil
Aggregates
Coal
Crude oil
Refined oil products
Rubber
(AEA/ED05444/Issue 6)
Minerals and metals
Bauxite and alumina
Wood
Wood Pulp (Chemical)
Minerals and metals
Aluminium
Palm oil
Tobacco
Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
Aggregates
Leather
Natural Rubber
Figure E1: Global warning impacts from transport of commodities to EU
Wood Pulp (Chemical)
Cotton
Cotton Fabrics
400
Wood
Tea
Wheat
350
Tobacco
Sugar
300
Palm oil
Rice
250
Natural Rubber
Milk Products
200
Non-food products
Leather
Fish
Maize
Soybean
Non-food products
Cotton Fabrics
Coffee
Fish - crustaceans
150
Cotton
Cocoa
100
Wheat
Bananas
Bovine meat
50
Tea
0
Sugar
kg CO2 eq/t delivered
Food products
Soybean
Average GHG emissions (kg CO2 eq) per tonne for transport of commodity from top 3
exporting countries
Rice
12
Milk Products
10
Fish
Maize
8
Fish - crustaceans
6
Coffee
4
Cocoa
2
0
Bananas
Bovine meat
Food products
Total GHG emissions (kg CO2 eq) for transport of commodity from top 3 exporting
countries
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Executive Summary Environmental Impacts of Natural Resource Trade Flows into EU
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or sectors, This should include supporting: (i) take up of existing sustainable production
certification in source countries and development of new schemes for different commodities
(linked to support for demand for certificated products in EU stated above), (ii) sustainable
production schemes in commodity dependent developing countries, (iii) capacity building in
source countries in development of environmental standards and enforcement, (iv)
technology transfer (v) further development of the concept of biodiversity offsets in source
countries, with EU importers taking some responsibility for addressing residual impacts
(3) Investigation of scope for reducing environmental impact in source countries
through trade policies: Direct trade policies as a means of promoting specific sustainable
production objectives in import source countries are limited by WTO agreements for trade
liberalisation. However, there is some scope for further regulation of trade to have
environmental benefits, particularly in production standards and product sourcing for the food
and non-food agricultural sectors.
(4) Finally, we suggest that there is a need for a full assessment of policy options for
addressing impacts of natural resource trade flows: This project has focused chiefly on
environmental impacts in source countries of significant natural resource trade flows into the
EU. Policy recommendations given here are based on initial scoping of policies of relevance
to addressing these impacts. Therefore, we recommend that thorough policy analysis is
necessary to assess the potential of specific policy recommendations in the context of
specific priority resource trade flows. This would not only include assessing the effectiveness
of a recommended policy in tackling the specified environmental impacts but also the wider
socio-economic costs and benefits in source countries of implementing policies.
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