Sweet success? How the sugar tax will impact Britain’s low-carbon commitments

Many of us will have made a healthy New Year's resolution, often tailored to running off a Christmas dinner or two and reducing the amount of sugar in our diets. In light of the UK's upcoming sugar tax, what impact could a sugar-reduced diet have on the environment and the sustainability of big food retailers?

At a Food and Drink Federation (FDF) event at the back end of 2016, the Federation’s chair Nick Vermont suggested that there was “no conflict between running a food business in the UK today and being environmentally sustainable”.

Vermont, who is also the regional chief executive of food company McCain, went on to claim that successful business models and environmental responsibilities were “absolutely linked and synced”. A look at some of the largest food and drink producers – the likes of Coca-Cola, Nestlé and Mondelez – does seem to suggest that Vermont’s claim is true, with all of the big food and beverage brands placing an impressive emphasis on corporate responsibility and sustainability.

But while these companies are apparently striving to make the planet a better place, many of the items that they produce should be consumed in moderation due to their high sugar contents. Rising obesity levels in the US and the UK in particular suggest that moderation isn’t something that people with steady-incomes excel at.

In response to Britain’s spiralling obesity levles – we currently hold claim to having the third-highest rate of excess weight in western Europe – the Government has confirmed the formation of a sugar tax. Set to begin in April 2018, the tax will place a levy on high-sugar drinks. Two tax bands will be enforced, one for sugar content above 5g per 100ml and a higher band for 8g of sugar per 100ml. Analysis from the Office for Budgetary Responsibility has suggested that these bands will be levied at 18p and 24p per litre.

Products from Coca-Cola, Pepsi and Lucozade would all fall into the higher band. While these brands will surely be keen to lower sugar amounts to bypass the upcoming levy (as well as to keep away from any negative media backlash) the sugar tax will likely change the state of play for the UK’s sugar industry.

Figures from two years ago reveal that 2.3 million tonnes of refined sugar was supplied to the UK market. Of this, two thirds came from sugar beet processed by the UK’s biggest sugar producer, British Sugar. Around 0.7 million tonnes was sourced from sugar cane refined by Tate & Lyle Sugars and the remainder was imported.

Low sugar, low-carbon?

While low in emissions intensity, sugary food and drink items are relatively resource-intensive at every stage in the supply chain, with production degrading the land and transportation leading to empty lorry journeys and a rise in emissions. The fact that transport and refining represents 45-61% of the total emissions of cane sugar consumed in the European Union – which ranges from 610gCO2e/kg for German sugar to 1040gCO2e/kg for US beet sugar – highlights that the UK’s flourishing homegrown sugar quota is helping to keep sugar transportation to a minimum.

But this doesn’t disguise the fact that the UK consumes more refined sugar than it produces. The aforementioned 2.3 million tonnes of refined sugar is a Government figure, and equates to a supply of 35kg of sugar for each UK resident annually. By comparison, the UK’s Scientific Advisory Committee on Nutrition (SACN) sets sugar consumption guidelines at 11kg annually.

Conservation organisation WWF has placed sugar near the top of causes for biodiversity loss, claiming that it may cause more damage than any other crop. The construction of plantations have destroyed habitats, while intensive water irrigation and the use of chemicals is creating swathes of polluted wastewater. In fact, it is estimated that around six million hectares of soil is lost globally every year due to intensive sugar cultivation. Add to this the fact that much of the world’s sugar cane crops go through a burning process before harvesting and it becomes apparent that sugar causes more damage than just to your teeth.

So, when the sugar tax is introduced, what impact will it have on the environment? Surprisingly, some analysts suggest that a move away from sugary snacks to more healthy and nutritious diets may do wonders to waistlines but could likely lead to an increase in emissions. Studies of French dietary data have found that diets with higher nutritional quality usually have higher carbon footprints. The data, some of which is set out in the below table, revealed that food with a high sugar content usually had a low embedded carbon footprint compared to high nutritional foods.

However, separate research submitted to BMC Public Health found that combining a sugar tax with a food-based emissions tax has the potential to reduced UK food-related emissions by 18,537 KtCO2e, while also producing £3.4bn for the UK economy and averting 1,249 deaths annually. Researchers from Oxford University came to this conclusion based on models that included various combinations of a £2.86-per-tonne carbon tax; a 20% tax on sugary drinks and subsidised purchasing of low-emitting foods. All scenarios predicted a reduction in emissions of between 16.5 and 18.9 million tonnes of carbon dioxide per year. The two scenarios that did not include subsidies for low-emission food generated revenues of £3bn and £3.4bn, the higher figure being due to the additional sugary drink tax.

Balanced scorecard

Yet there is a link between consumer options for food and the impact that these will have on the environment. FDF’s director of food safety, science and sustainability and chief scientific officer Helen Munday believes food sourcing and supply chains for producers have become multifaceted beasts that can create something of a juggling act between affordability and sustainability.

“Companies have to do a balance of scorecards”, Munday tells edie. “Sustainability is important, but quality is key and companies won’t do anything on sustainability if it is detrimental to the quality of the product; they have to juggle all of these things.

“There’s a lot of emphasis on reformulation of fats and sugars and companies will need to think about reducing nutrients and replacing it with a protein source. But what happens if new products are flown in and imported to improve quality? Sustainability impact falls as a result.

“Big companies will have nutritionists, sustainability teams, and commercial departments all looking at prices, water consumption and other factors. Finance needs to discuss with procurement to develop a joint decision which is informed of all the elements.”

Retailers like M&S and Tesco and producers like Nestlé and Mondelez can – and have – worked to strengthen supply chains that not only aim to create quality ingredients, but do so in a sustainable manner.

The Fairtrade organisation acts as a huge driver in this regard. Companies have been pushing this agenda independently as well. As of 2016, more than 76,000 cocoa farmers have seen a significant increase in their income and cocoa yield by partnering with Mondelez – which has also boosted sustainable farming practices in developing countries.

Yet a large part of a chocolate bars attraction to the average consumer is the amount of sugar it is able to pack in. According to the Oral Health Foundation, a 100g Mars Bar contains 68.1g of sugar while Snickers packs in 54.5g. Chocolate will be exempt from the sugar tax, as products are still viewed as “treats” and aren’t commonly consumed on a daily basis in the same way that fizzy drinks are. Yet if the initial sugar tax proves a success, companies in the confectionary sphere may have to adapt to not only ensure that sugar content is lowered, but that it is also sourced ethically.

While Fairtrade covers more than 1,200 cocoa producers across 74 countries, Bonsucro, the global sugarcane platform, has 450 members in 41 countries and represents just 4.4% of all sugarcane production. Fortunately, Fairtrade works with over 62,000 sugar cane small holders in 17 countries, but more needs to be done to enhance the farming practices across the globe.

Biofuel potential

Drinks producers are already working to lower sugar content in anticipation of the tax. But what would a sugar tax mean to company like British Sugar? It produces more than one million tonnes of sugar in the UK and an additional 500,000 tonnes of animal feed from sugar beet pulp. It’s latest sustainability report reveals that 6,802,000 tonnes of CO2e emitted was from its sugar business. Two-thirds of this was generated from the use of bagasse – a dry pulp biomass residue created from the extraction of juice from the canes.

When the sugar tax is implemented, British Sugar may have to turn to biomass as a means to account for a diminishing demand from businesses. With a low carbon footprint, sugar cane also benefits from being the most effective crop species for biomass production – producing more dry matter per hectare than any other crop.

According to the International Energy Association, major producers of sugar cane are also major producers – or at least developing – of bio-electricity from bagasse power plants. If demand for sugar falls are a result of the tax, production levels of bagasse – the fibrous matter that remains after sugarcane or sorghum stalks are crushed – could open-up new avenues.

This may prove an attractive avenue for sugar companies already introduced to bagasse and anaerobic digestion (AD), but for others, the UK market isn’t the most attractive for this form of exploration. In May 2016, the UK Government proposed to completely cut Feed-in Tariff (FiT) schemes for large AD plants and “severely” reduce subsidies for small and medium-scale plants. If the biofuels market shrinks as a result, bagasse production costs could increase over time.

As with every UK outlook, there is also the looming question surrounding Brexit. British Sugar has claimed that support from the EU has helped Britain’s beet sugar farmers cope with the “rollercoaster ride of white sugar prices” over the past 10 years. Although the share of the market for beet sugar has been stuck at 40% through this support, legislation from Brussels has abolished a “sugar cane monopoly” in the UK through import caps entering the Union.

Whether or not the tax will reduce sugar consumption to the point where the UK produces more than it consumes is still anyone’s guess. But with trade deals and access to the single market currently being negotiated, Prime Minister Theresa May’s plan for the UK to “have its cake and eat it” may cause the sugar industry to adapt, and potentially open a new market for low-carbon energy.

Matt Mace

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