Rural Products to Urban Markets: Low Carbon Distribution, Logistics

& Smart Technologies

Low Carbon Distribution & Logistics

Policy & Market Trends & Drivers

Traci Lewis, Sustain-Live www.sustainlive.org

Low Carbon Drivers: Climate Change• One of the Greatest Threats Facing world

today: 40% more Co2 than before ind. revolution, highest level seen in 800,000 years. Global average temperatures continue to rise.

• Climate Change Act 2008 & Carbon budget framework: legally binding to reduce the UK’s greenhouse gas emissions 80% below base year levels by 2050.

• Carbon budgets: legally binding limits on the amount of emissions that may be produced, beginning in 2008. 2023–27, requires emissions to be reduced by 50% below 1990 levels.

• How? Energy efficiency across all sectors; oil and gas in cars, replaced by electricity, sustainable bioenergy, or hydrogen.

Market Trends & Drivers: Policy & Partnership• Govt: Lack of cohesive policy• City & Regional: Localism Act

(2010), Local Enterprise Partnerships (LEPs) (2011), City Deals (2013), Growth Deals (2015), • Sustainable Procurement: School

Food Plan (2013), A Plan for Public Procurement (2014), Hospital Food Standards Panel• Local & Community: Transition

Towns, Social Enterprises, New Economic Foundation (NEF)

Trends & Drivers: Funding • Short Supply Chain & Innovation in

line with policy goals• RDPE 2014 – 2020: EAFRD, rural

businesses; farming & forestry productivity, environment, economic growth • Growth Programme (£177m): Rural

businesses: start-ups, business development, food processing < 40% of projects bet. £35K - £155K• LEADER (£138m): June 2015, via

West England LEP.

Policy Drivers & Trends: Air PollutionPolicy: Action on Air Quality 2014-15: report House of Commons' Environmental Audit Committee (EAC)Health: 5. 3% UK deaths 2010 due to long-term exposure to pollution, road transport is the main cause of pollution Pollution: Road transport: 42% carbon monoxide, 46% nitrogen oxides; 26% particulate matter (PM) in England

Low Carbon Emission Zones (LEZ)• LEZs : Control vehicle emissions, but few UK LA

have introduced them. Based on European emission standards relating to PM affect on health. Barriers include their perceived cost and a lack of guidance and support from Government.

• EAC: Recommends national framework with common metrics & national vehicle certification scheme for vehicles, without delay

• London's LEZ: 2008 – charges for vehicles that fail to meet emissions standards. A more stringent Ultra Low Emission Zone on a limited number of routes is set to come into force in 2020.

• Bristol & Exeter City Councils agree with need for a national LEZ framework. Bristol probably 3-5 years.

Policy Drivers & Trends: Diesel VehiclesClimate Change: More diesel cars now on roads - in response to EC CO2 emissions targets of 130g/km by 2015 and 95g/km by 2021 – as they more fuel-efficient than petrol counterpartsPollution: Transport for London noted that diesel vehicles produce 22x particulate matter (PM), 4x Nitrous Dioxide (Nox) as petrol vehiclesFuture: Government should consider subsidising diesel vehicle owners to retrofit their engines or a national diesel vehicle scrappage scheme. (Re: EAC Air Policy Report recommendations)

Policy Drivers & Trends: Low Carbon Vehicles• Future: New technologies eg. electric,

hydrogen fuel-cell or other alternative-fuel vehicles

• Market: Currently undeveloped for ‘ultra low emission vehicles’ (ULEV) - low public awareness, despite recent sales increase from low base.

• Grants: Office for Low Emission Vehicles (OLEV) offering grants towards the upfront costs of buying electric vehicles (£200m between 2015 and 2020). Also developing public awareness and strategy for a national infrastructure of charging points.

• Government: Aims for the entire UK car fleet to have zero exhaust-pipe emission by 2050.

Energy

• Energy Costs: ¼ UK food & drink manufacturers planning job cuts / employment freeze, due to spiralling energy costs (8 April, nPower survey, The Grocer)• Govt. Electricity market reform

companies face recovery action from heavy energy use from suppliers: £0.4 MWH up to £10 MWH 2020• Energy management needs to be a

top business priority

UK Food Transport System

• Food System GHG emissions: 18% of total UK emissions, 30% if inc. land-use change abroad

• Transport: single largest energy user in the food system, 3.5% of UK total GHG emissions. Also: HGV damage to roads & verges, noise and air pollution, congestion.

• Main UK transport GHG: HGVs (29%), consumer cars (23%), sea transport (15%), air transport (12%) & overseas HGVs (12%). A quarter of UK HGV movements relate to food transport.

• Food air miles: 1992 and 2010, food air miles increased by 262%, although they have recently stabilised; customer car travel increased by 31% and urban kilometres – a measure of congestion – by 26%.

• Why? Out of town grocery stores, increased demand for overseas goods and more transport between businesses as more processing and packaging of food takes place.

Food miles - Riverford Case Study

• How food travels is as important as how far it travels

• Every km relative GHG are: 1 deep sea, 2 short sea, 6.5 HGV, 40 – 100 airfreight (40-50x sea)

• Transport: 21% of their carbon footprint (15% ship, 6% road)

• Achieved by: no airfreight, ship rather than road, lorries always full and backloaded, encourage seasonal eating, regional UK farms & France.

• Do weekly carbon calculations p/box to understand use & communicate to customers.

Market Drivers & Trends: Local & Organic• Economic: Supports viability of independent

outlets; £132 million turnover p/yr; over 2,600 jobs; 2,000 supply chain businesses, £718 million turnover a year, employing 34,000 people (Ref. CPRE Local Food Webs Study)

• Freshness: Local = seasonal• Energy: should require less energy to produce • Less Packaging: than food needing protection

during long-distance journeys • Diversity: Supports farming diverse scale & type;

genetic diversity in traditional & rare breeds; heirloom & heritage varieties not suited to large-scale processing and distribution systems.

• Cultural: Identity, community, celebration• Food Miles: 34% shoppers see cutting food miles

as a key reason to buy local – make sure it meets their expectations!

Market & Consumer Trends: Retailers

Changing Habits: Large out of town supermarkets decreaseBig Supermarkets: Closing stores and/or reducing floor areaDiscounters: Aldi – ‘quality, low prices’ overtakes Waitrose to become Britain's sixth largest supermarket (5.3% market share) Online & High Street: Increase in online ordering (growth area) and use of ‘local’ convenience storesNew Players? Eg. Amazonfresh

Market Drivers & Trends: Food Trends• Ethical & Organic: Recent Organic report -

back to pre 2009 levels (Soil Association)• Diets: Vegetarian, Vegan, gluten-free, Paleo,

Flexatarian, Meat free monday• Trends: Holistic Wellness (not diet fads),

Transparency (‘Clean is new Green’), High Protein, Value, Speciality, ‘at-home gourmand’ (Mintel 2015 trends) • Allergen Laws: Transparency, ingredients –

opportunity?• Restaurants: Provenance, unusual products

& varieties, ‘with a story’.

A few conclusions..

• Fuel & Energy costs - current & future - need to be understood and managed effectively• Try to anticipate legislation changes

to ensure no nasty suprises• New RDPE could provide

opportunities for investment in better distribution and logistics• Day 2: Will explore some of these

here in depth eg. electric vehicles – any other requests?

Policy & Market Drivers, Trends: SWOT Analysis

How can you ensure these trends and drivers help your business remain innovative and competitive