Alternative proteins may be the best investment to slow climate change

A new report reveals that with 25% of global GHG emissions caused by the food value chain, switching to alternative proteins could be the most capital-efficient and high-impact solution to tackling the climate crisis – and more 30% of consumers are ready to make the switch.

In recent years, growing global concerns about food security and the climate change impact of conventional livestock-centric agriculture – as well as skyrocketing price increases for animal products during the pandemic – have all fueled sales, funding, and public interest in alternative proteins. With 25% of global greenhouse gas emissions caused by the food value chain, switching to alternative proteins could be the most capital-efficient and high-impact solution to tackling the climate crisis. It is projected to represent at least 11% of all meat, seafood, eggs and dairy products consumed globally by 2035. Alternative proteins will save three times the emissions for every dollar invested against the next best tool in the box: decarbonization.
cement
— according to a new report by Boston Consulting Group (BCG) and impact investor blue horizon.

The next report The untapped climate opportunity in alternative proteins

(July 18), presents the results of a survey of more than 3,700 consumers in seven countries (China, France, Germany, Spainthe United Arab Emiratesthe UK and the United States), about their reasons for trying alternative proteins and the inhibitors that keep them from buying even more. Three-quarters of survey respondents cited healthier eating as their main motivation for switching to alternative proteins, while more than 30% of consumers would completely change their diet to alternative proteins if they thought it would have a major positive impact on the climate.

Consumers in all markets surveyed have a positive view of alternative protein: 76% are aware of the category and around nine in ten said they like at least some of the alternative protein products they have tried. While consumers in China and Germany are the most willing to pay near parity with protein equivalents, none of the consumers surveyed are willing to pay a premium for protein alternatives that match meat in taste, texture and nutrition – a price premium requires added value, beyond the possible climatic benefits.

“Almost one in three people in the world is food insecure. Coupled with the impact of ongoing geopolitical crises on the supply chain and food prices, the pressure on the global food system is immense,” says
Ben Morac, Managing Director and Partner of BCG. “Moving away from animal-based protein will lead to shorter, more resilient and potentially more local supply chains. Widespread adoption of alternative proteins can eliminate the risk of supply chain disruptions and play a critical role in addressing climate change, with consumers playing a key role in propelling this transition.

Acceleration of financing

Capital invested in alternative proteins grew at an annual rate of 124%, from $1 billion in 2019 to $5 billion in 2021, with investments in fermentation and animal cell companies such as Aleph Farms and
Opalia
open the way. Investment in alternative proteins is increasingly global.
Middle EastEuropean funders – which tend to focus on investments in animal cells – accounted for 11% of global investments in alternative proteins last year, while APAC investments, fueled by agreements with factories, increased by 92%.

For investors, a key finding of the report is that plant protein investments are more CAPEX efficient in reducing carbon dioxide and methane emissions than in any other industry. Penetration of the vegetable protein market, as planned in the Food for thought I base case, would save 0.85 gigatonnes of emissions by 2035 – a savings potential equivalent to decarbonizing the majority of the aviation industry. Investing in plant proteins saves the most emissions per capital invested – at least twice as efficient as investing in cement, the iron,
steel, chemical products Where
transportation.

Significant advances in the regulation of alternative proteins

As the report points out, sensible and effective regulation is imperative to ensure that the rapid innovation and growth of the alternative protein market provides customers with safe, healthy and transparent foods. There has been a worldwide acceleration to provide regulatory approval for fermentation and animal cell-based products. In 2015, Israel led the way by announcing that its new food safety regulatory framework would apply to alternative proteins. And in its latest five-year plan, released in January 2022, China recognized the need to “expand beyond traditional crops, livestock and poultry into more abundant biological resources” and incorporated meat-based of animal cells and other alternative proteins in its offer. food security strategy.

Everyone has a stake in accelerating protein transformation and the broader transition to a sustainable food system. The report highlights the need for action in five areas:

  • Support farmers

  • Ensuring a level political and regulatory playing field between conventional and alternative proteins

  • Channel capital to transformative businesses

  • Resource optimization and waste recovery

  • Continue to build consumer acceptance

“The products consumers see on the shelves today will be followed by a wave of cleaner, healthier and tastier protein alternatives as technology enables increased innovation,” says the CEO of Blue Horizon. Bjorn Witte. “We have seen the rapid development of these technologies in our own portfolio as well as across the food technology industry as a whole, leading to an overall better range of consumer products. This is great news for today’s consumers. but we are only at the beginning, really. Future generations will greatly benefit from the demonstrable impact this will have on the environment, as our analysis of climate data shows.

“This is the second report from BCG and Blue Horizon confirming that protein processing is the most effective way to avoid emissions and drive the impact of capital employed (IoCE). If we achieve 11% market penetration by 2035, which is our goal, we could save more carbon emissions than by decarbonizing 95% of the aviation sector. The positive impact is absolutely huge, and the secular drivers have never been stronger – now is the time to invest.

And yet… while the global food system – and the meat sector in particular – is unsustainable in its current form, it completely replaces the use of animals as food technology. As Vice President of Sustainability for Aleph Farms Dr. Lee Recht
recently pointed out, for the greatest and fastest environmental impact, we need to take care of how we grow our food; and more sustainable models will likely involve the coexistence between traditional (if better produced) and alternative proteins.

Learn more about the main findings of the BCG/Blue Horizon report
here.

Teresa H. Sadler