The Untapped Climate Opportunity in Alternative Proteins

Climate change is one of the biggest threats facing our planet today. With greenhouse gas emissions continuing to rise, it is imperative that we find innovative solutions to reduce emissions and mitigate the impacts of climate change. One promising solution is the development of alternative proteins, which could offer a significant and untapped opportunity for climate financing.

Alternative proteins, which include plant-based proteins, cultured meat, and fermentation-based have the potential to reduce greenhouse gas emissions from animal agriculture drastically. Animal agriculture is responsible for a significant portion of global greenhouse gas emissions, with estimates ranging from 14.5% to 51% of all emissions. By developing alternative proteins, we could significantly reduce these emissions and help to mitigate the impacts of climate change.

The numbers speak for themselves. According to a report from RethinkX ^[1], a think tank focused on technology-driven disruption, alternative proteins could capture up to 10% of the global meat market by 2035. This shift would result in a reduction of up to 2.4 gigatons of greenhouse gas emissions annually, equivalent to taking 527 million cars off the road. Furthermore, the report suggests that this shift could save up to $1.4 trillion in environmental costs by 2050.

Biodiversity and Animal Agriculture

The animal agriculture industry significantly impacts biodiversity, which refers to the variety of living organisms and ecosystems on Earth. A recent paper published in Nature^[2] mentions if we continue the same level of meat production and consumption, then 17,000 species are under threat of extinction.

Here are some key ways animal agriculture affects biodiversity:

1) Habitat loss and fragmentation: The expansion of animal agriculture often leads to converting natural ecosystems, such as forests and grasslands, into agricultural land. This results in the destruction of habitats for many plant and animal species, which can lead to their decline or extinction. Fragmentation of habitats can also occur when natural ecosystems are broken into smaller patches, reducing genetic diversity and increasing vulnerability to environmental stressors.

2) Soil degradation: Animal agriculture significantly contributes to soil degradation, negatively impacting plant and animal species that depend on healthy soils for survival. Soil degradation can lead to reduced soil fertility, erosion, and desertification, which can result in the loss of habitat for many species.

3) Water pollution: Animal agriculture is a significant source of water pollution, mainly through the runoff of excess nutrients and antibiotics from animal waste. This can lead to the degradation of aquatic ecosystems and the loss of aquatic species.

4) Introduction of invasive species: The transportation of livestock and their feed across borders can lead to the introduction of invasive species that can compete with native species for resources and disrupt ecosystems.

5) Climate change: Animal agriculture significantly contributes to greenhouse gas emissions, which contribute to climate change. Climate change can significantly impact biodiversity, including changes in temperature and precipitation patterns that can negatively impact the survival of many species.

Cattle ranching is the most significant cause of deforestation in the Amazon, accounting for around 80% of the destruction.^[3] This activity is primarily driven by the global demand for meat, leading to the clearing of vast areas of land to make space for cattle ranching. In Brazil, cattle ranching has been the leading cause of deforestation since at least the 1970s, with government figures attributing 38% of deforestation from 1966-1975 to large-scale cattle ranching. Today, the figure is closer to 70%.^[4] 

Alternative Proteins as a Climate Financing Opportunity

These numbers highlight the significant potential of alternative proteins as a climate financing opportunity. By investing in developing and scaling alternative proteins, we could reduce greenhouse gas emissions, create economic opportunities, and contribute to sustainable development.

In addition to the environmental benefits, alternative proteins offer other potential advantages. Plant-based proteins, for example, can be produced with significantly less land, water, and other resources than traditional animal agriculture. This can help to reduce pressure on natural resources and promote more sustainable food production. Cultured meat, meanwhile, could offer a more humane and sustainable alternative to traditional meat production, potentially reducing animal suffering and improving animal welfare.

Additionally, over 60% of all emerging infectious diseases worldwide have zoonotic origin.^[5] Livestock production is one of the most significant contributors to the spread of zoonotic diseases.

In the BCG report, Food for Thought: The Protein Transformation,^[6] the environmental impact of alternative meat and dairy is compared with animal-derived meat.

• The shift to alternative beef, pork, chicken, and egg alternatives will save more than 1 gigaton (Gt) of CO2e by 2035—or about 0.85 Gt CO2e in 2030. This is equal to decarbonizing most aviation or shipping industries, or about 22% of the building industry. The following graph clearly shows how much investment in plant-based meat reduces emissions compared to other sectors.^[7]

• Producing animal alternatives emits 30% to 90% fewer GHGs than conventional meat, fish, dairy, and egg production. 

• Cultured meat requires up to 78% less water than beef, and plant-based meat requires 99 percent less water than conventional meat.

We need to shift the narrative around food and sustainability. This means emphasizing the positive benefits of alternative proteins, including their potential to reduce greenhouse gas emissions and reduce/eliminate animal suffering, while also acknowledging the challenges and limitations of these technologies.

Investment Gap

According to the BCG report, Food for Thought: The Protein Transformation:

• Almost 30 million tons of bioreactor capacity for microorganisms and animal cells will also be needed in the base case, requiring up to $30 billion in investment capital.

• The extrusion capacity needed for plant-based proteins will require up to $28 billion in investment.

Just alone in APAC (Asia-Pacific), according to a report published by the PwC, Rabobank, and Temasek^[8] – $750 billion in additional funding is needed by 2030 to meet the rising protein demands.

In conclusion, alternative proteins offer a significant and untapped climate financing opportunity. By investing in developing and scaling these technologies, we can reduce greenhouse gas emissions and mitigate the impacts of climate change but also create economic opportunities and contribute to sustainable development. To fully realize the potential of alternative proteins, we need to address the challenges and limitations of these technologies and shift the narrative around food and sustainability toward a more positive and inclusive vision of the future.

 

Important reference links:

Dawn of the Climavores
https://www.kearney.com/consumer-retail/article/-/insights/dawn-of-the-climavores

Food systems account for more than one-third of global greenhouse gas emissions
https://www.fao.org/news/story/en/item/1379373/icode/

Climate-friendly foods: are alternative proteins the way forward?
https://www.weforum.org/agenda/2022/07/protein-diet-vegan-climate-food-system-decarbonization

Food system impacts on biodiversity loss
https://www.chathamhouse.org/2021/02/food-system-impacts-biodiversity-loss

The way we eat could lead to habitat loss for 17,000 species by 2050
https://www.vox.com/future-perfect/22287498/meat-wildlife-biodiversity-species-plantbased

Factory farms are an ideal breeding ground for the next pandemic
https://www.vox.com/2020/10/21/21363990/factory-farms-next-swine-influenza-pandemic

 
Article by Sagar Tandon, Partner at Beyond Impact.

Sagar was involved in setting up 2 funds – Gray Matters Capital, edLABS & Australian Govt. DFAT backed impact fund. Led investments in 18 early-stage ventures. Mentor at Good Food Institute India & APAC, Founders Institute Food APAC and Fashion for Good, Netherlands.