We’d all like to be better stewards of the environment, but when was the last time you drank a soda or any carbonated drink for that matter?
Lately, we have been exploring the secondary effects that a renewed focus on greenhouse gas emissions may have in the real economy. One such impact is the re-pricing of traditionally cheap inputs to processes, like carbon dioxide.
Carbon Dioxide in the Beverage Industry
Carbon dioxide is widely used for food grade beverage production, as a high-pressure addition to the water component of soda. It is estimated that beverage companies use more than 66 million tons of CO2 per year to carbonate beverages and make them fizzy; that equates to .001 percent of our national carbon dioxide emissions.
Carbon dioxide is a greenhouse gas, and regulations like the cap-and-trade (LCFS) system in California and the pending regulations on fossil fuel power plants will put cost pressure on carbon intensive processes like this one. Companies that rely heavily on these types of processes may be forced to push prices up, and we will all feel the effects of this cost in our everyday lives. Coca-Cola CEO James Quincey has already conveyed that pricing in 2022 is set to increase in order to offset commodity costs.
Beverage Industry Solutions
Soda companies often justify their use of carbon dioxide by pointing out that they are not the only ones who use it so heavily. Other industries such as food processing, pesticide manufacturing, and dry cleaning also rely on CO2. Another argument that is often made by soda companies in defense of their carbon use is that they are the only CO2 producers investing in renewable energy sources to offset their emissions.
In 2012, EPA distinguished Coca-Cola as a Top Partner due to their efforts of on-site renewable energy generation by use of the landfill-gas-to-energy system. This system supplies most energy needs and generates on average 48 kWh of on-site biomass, helping to eliminate a substantial amount of CO2 emissions. In 2020, PepsiCo attempted to proactively deal with this issue as well. Realizing they could do little about carbon dioxide emissions from their products, they instead turned to greenwashing their production processes. They claimed use of 100% renewable energy for electricity, with a set target of reducing emissions by 2.5 MMT by 2040. More recently, Coca-Cola grabbed headlines with news that its U.K facilities will offset 100% of electricity used via renewable energy purchases, or roughly 160 million metric tonnes per annum.
While these efforts are a move in the positive direction, they ignore the fact that soda companies produce more single-use plastics than most other industries and actively source carbon dioxide, which will be directly released from their beverages every year. While many companies, such as Coca-Cola, are making an effort to distribute 100% recyclable plastic products, there is still a major issue on the amount of material actually being recycled. Out of all plastic waste, only 9% is recycled. Coca-Cola, PepsiCo and Nestlé have all ranked as top plastic polluters for the last three years and have yet to make substantial strides in mitigating this issue. Thus, CO2 utilization is not the only issue beverage companies face, but also their heavy use of plastic.
So, while soda companies are shedding light on other industries’ high use of carbon, and their efforts to reduce emissions, both of these arguments are short-sighted strategies for dealing with ultimate CO2 emissions. They will likely become contentious points as the cost pressures associated with increased regulation drive up demand (and related price) for CO2.
Total global carbon dioxide emissions in 2020 were roughly 34.8 billion metric tonnes, of which the US was responsible for 4.6 billion metric tonnes; soda companies are responsible for a negligible percentage of this figure. This may keep them out of focus as far as major contributors are concerned, but we suspect they will feel the impact from incremental regulation that seeks to raise the price for emissions and inputs to their products.
Andrew Schaper is a professional engineer and principal of Schaper Energy Consulting. His practice focuses on advisory in oil and gas, sustainable energy and carbon strategies.