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Investments in alternative proteins may have the biggest impact on climate change

Have you ever tried cell harvested salmon? Mealworm protein? Fungi-based whole-cut “meat”? Cheese built with biology? Or microbe oil?

For every dollar invested into alternative plant-based proteins, more greenhouse gas (GHG) emissions are saved than when investments are made into other green opportunities, finds the latest Food For Thought report by a global consultancy firm, Boston Consulting Group (BCG).

They project that by 2035, 11 percent of all meat, egg, and dairy products sold will be alternative, up from the current 2 percent. With some help from technologies, regulators, and investors like FootPrint Coalition, BCG forecasts that alternative proteins could command 22 percent of the global market within this timeframe.

BCG and Blue Horizon surveyed more than 3,700 people in the UK, US, China, France, Germany, Spain, and the United Arab Emirates. They found that 30 percent of consumers would switch to alternative protein products if they had a “major impact on climate”, 75 percent said health is a primary motivator to making the switch, and about 90 percent of people said they liked at least some of the alternative protein products they had tried, according to CleanTechnica,

Animal agriculture is the largest greenhouse gas (GHG) emitter within the food system, and is responsible for 15 percent of global emissions, roughly matching total emissions from the transportation sector. Meat and dairy production takes over the majority of farmland, weighing in at 83 percent. This sector also accounts for 60 percent of agriculture’s GHG emissions. Meat consumption in Europe and North America is expected to peak in 2025. However, conventional meat consumption is expected to fall.

If we remain on track with BCG’s projection of 11 percent alternative by 2025, we will see a reduction of 0.85 gigaton carbon dioxide emissions worldwide by 2030. The group says this is equal to decarbonizing 95 percent of the aviation industry, making it one of the largest yielding shifts in comparison to other solutions.

Investing in this sector has one of the biggest impacts on decarbonization when assessed in terms of the market value of avoided C02 emissions per dollar invested in mitigation efforts.

This is called the impact of capital employed. But how exactly does that impact compare to other sectors of green tech? Let’s run some numbers.

According to BCG investments in alternative proteins produce an impact of capital employed that is “magnitudes” more than corresponding decarbonization investments in other high-emitting sectors of the economy, such as transportation or buildings. For example, the report finds that scaling up the production of meat and dairy alternatives affords 3 times more GHG reductions compared with investment in green cement technology, 7 times more than green buildings, and 11 times more than zero-emission cars.

The proof is in the investments: investment in alternative proteins has jumped from $1 billion in 2019 to $5 billion in 2021, rising at an annual rate of 124 percent, Good Food Institute reports. Why? Because in order to reach net-zero goals, the entire food system, which accounts for 26 percent of current GHG emissions, must be remodeled.

Protein transformation is one key puzzle piece in a much bigger picture. As these new technologies and processes that help address such critical issues such as taste, health, and cost accumulate value, long-standing practices like animal slaughtering and meat packing, will decline. Every stakeholder in the industry’s value chain is likely to feel the impact of that decline, whether positive or negative. Many will find that opportunity lies in the sustainable food system.

With a focus on solutions to the climate crisis, the overall growth in alternative protein investments is consistent with a broader focus on sustainable investing globally, which is expanding 3 to 5 times faster than traditional investing.

Major investments have taken place in the world of plant-based and cell-based alternatives. According to CleanTechnica, in 2020, corporations participated in about 60 percent of alternative protein funding rounds. Plant-based specific proteins aren't the only alternative on the up and up. Investment in fermentation-based and animal-cell-based companies, two newer technologies, is soaring.

From 2019 to 2021, the former rose more than 137 percent, from $300 million to $1.7 billion, and the latter rose more than 425 percent, from $50 million to $1.4 billion.

The trends show in FootPrint Coalition's portfolio.

The FPC portfolio company, Wildtype, makes filets of delicious fishes from cells harvested in petri dishes. The company uses the same type of fermenters that brew beer to make sushi-grade salmon. Their mission? To feed folks the fish they want, without plastics, chemicals, or environmental degradation.

In line with reducing marine environmental degradation, Ÿnsect is pioneering large-scale production of mealworm protein in controlled environments for use as an alternative fishmeal and fish oil source. The global fishery output allocated to feed livestock and pets is approximately 22 percent. Ÿnsect has a mission to convert food waste into premium protein to feed livestock, pets, and people.

Another example is MyForest Foods, where mycelium of fungi is used as a replicant of the fiber-like network of muscle tissues in animals to create healthy whole cut meat and mushroom-based bacon. MyForest Foods wants to replace livestock farming, a massive environmental threat, with planet-friendly meat alternatives grown through natural processes.

Next on the list is Nobell, an FPC portfolio company with a line of cheeses that, despite coming from plants, taste like the real thing. Nobell has developed a genetic engineering technology that uses soybeans to make casein, the protein that gives cheese its ooey-gooey-perfect-cheese pull cheesiness. 114 gallons of water is needed just to make one gallon of milk, causing a growing strain on the planet. At Nobell, the perfect grilled cheese or slice of pizza doesn’t have to come at that cost.

The portfolio's impact extends beyond proteins.

After all, you need something to cook all of that delicious meat and cheese in. That’s where Zero-Acre Farms comes in. Zero-Acre Farms is a portfolio company that makes better (and heart-healthy) cooking oils that are better for the planet. How do they do it? By optimizing and harvesting microbes that make oil naturally. Cooking oils like palm oil are a major contributor to deforestation. In order to palm off a rather oily dilemma, Zer–Acre farms created an oil with a much lower footprint than traditional oils like sunflower, grape, and rice.

Companies like these are delivering such high returns on emissions because of how much GHG is emitted using traditional methods. Beef, for example, results in 6-to-30 times more emissions than tofu. Plant-based meat on the other hand, produces 30 to 90 percent less than traditional meat. Nonetheless, emissions aren’t the only thing swaying consumers, the report finds. In order to ensure success, active consumer education around the health and nutrition, taste, and safety of these products must be a top priority.

It doesn’t end there. Five target areas investors must explore when considering the industry include supporting farmers, ensuring a level policy and regulatory playing field between conventional and alternative proteins, directing capital toward transformative ventures, optimizing resources and waste recovery, and continuing to build consumer acceptance.

We are facing existential threats from the climate emergency, unprecedented public health crises, world hunger, and biodiversity loss.

The Plant-Based Treaty, a grassroots campaign designed to put food systems at the forefront of combating the climate crisis argues that at the heart of all of these issues sits our food system. In order to solve these issues, a compassionate, healthy, climate-friendly food system must be apart of the solution.

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