Rural Products to Urban Markets: Low Carbon Distribution, Logistics & Smart Technologies

Low Carbon Distribution & Logistics Policy & Market Trends & Drivers Traci Lewis, Sustain-Live

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 Carbon budgets: legally binding limits on the amount of emissions that may be produced, beginning in –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 Pollution Policy: Action on Air Quality : report House of Commons' Environmental Audit Committee (EAC)report 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 Bristol & Exeter City Councils agree with need for a national LEZ framework. Bristol probably 3-5 years.

Policy Drivers & Trends: Diesel Vehicles Climate 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 counterparts Pollution: Transport for London noted that diesel vehicles produce 22x particulate matter (PM), 4x Nitrous Dioxide (Nox) as petrol vehicles Future: 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 decrease Big Supermarkets: Closing stores and/or reducing floor area Discounters: 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 stores New 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