Stimulating carbon efficient supply chains : carbon labels and voluntary public private partnerships

Abstract

This thesis looks at the potential of labeling products with life cycle greenhouse gas emission information as a bottom-up, complementary alternative to carbon cap and trade systems. By improving the transparency of product carbon footprint information, a market for low carbon intensity products can be created. The conduct of such product life cycle assessments often allows companies to uncover cost effective emission reduction opportunities typically in the order of 10%-20%. Society benefits both from the increased supply chain efficiency of these companies as well as the heightened awareness of climate change among consumers as companies communicate these information to them. An examination of the history of the development of the nutritional label and various eco-labels in the U.S. highlights the importance of timely government intervention in setting guidelines and standards to prevent companies from misleading consumers with unsubstantiated product health or environmental claims. Case studies of current carbon labeling initiatives worldwide demonstrate the benefits of government affiliation in building credibility during their early stages. This affiliation helps in attracting the participation of large established companies who provide strong reinforcing effects that are crucial to the growth and success of new initiatives. There is still lack of consensus about the ideal format for a carbon label. A seal of approval type label could be ideal to attract companies in the initial stages which can later be succeeded by an information disclosure based format as more consumers start to understand the meaning of product carbon footprints in the future.

(cont.) Voluntary public private partnerships have been used extensively by the U.S. Environmental Protection Agency to reduce greenhouse gas emissions. These partnerships can serve as a potential model for a future carbon labeling initiative in the U.S. The SmartWay Transport Partnership is highlighted as a successful program both in terms of membership growth and emissions saved. System Dynamics modeling is applied as a tool to aid in understanding how the structure of such programs is critical to their success and is demonstrated as a method to potentially quantify the benefits of these programs prior to their actual implementation.