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Winds of change: Tackling the impact of the beef industry on climate change
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Global beef and dairy consumption is on the rise  and it generates more greenhouse gas (GHG) emissions than all the world’s cars, threatening long-term climate targets. Cattle are responsible for 9% of all human-induced greenhouse gas emissions, or 4.7 gigatonnes a year (source: FAO).

As government, investor and consumer pressure grows to address agriculture’s contribution to climate change, we explore possible solutions to be adopted by industry, policymakers and consumers.

24%

of total global greenhouse gas emissions come from agriculture and land use of which...

Source: EPA via IPCC, Barclays Research

25%

comes from cattle meat production.

Source: IPCC, Barclays Research

Where’s the beef: Why cattle emissions are particularly bad news

The bulk of emissions generated by cattle (and other ruminants) is methane. Although it is shorter-lived than CO2, methane traps over 84 times more heat in the atmosphere over a 20-year period and 28 times more over 100 years (source: IPCC).

Where’s the beef: Why cattle emissions are particularly bad news

Source: DSM, Barclays Research.

The average cow emits 500L of methane every day, globally that results in 50% more GHG emissions than 1 billion cars on the road today
The average cow emits 500L of methane every day

Source: DSM, Barclays Research. Based on avg, car emissions of 130g CO2/km x 50km per day x 250 days p.a.

A growing appetite – a rising threat

Population growth and ‘westernisation’ of diets means that consumer demand for meat and dairy is likely to increase. Over the next 30 years, all else being equal, we estimate beef production could add another 15% to today’s methane emissions.

How much greenhouse gas does meat production generate?
Five top categories where Generation Z influences family spending

Source: FAO

Ambitious emissions targets

Independent analysts have suggested the agricultural sector needs to reduce its GHG emissions by 90% by 2050 to help keep global warming below the 2oC limit set by the Paris UN Agreement in 2015 (Source: European Commission Global Energy and Climate Outlook 2018).

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Putting meat on the bones: Finding a solution

We have identified four main solutions to help deliver the 90% reduction in cattle-related emissions by 2050:

Industry: Change feeding systems

Switching from grazing to more intensive feeding systems can lead both to better yields and to lower emissions intensity per unit of cattle.

Potential GHG reduction: -2.1* gigatonnes

Five top categories where Generation Z influences family spending

Industry: Introduce methane inhibitors

Certain feed additives have been shown to curb cows’ methane emissions by up to 30% and free up more energy for muscle/milk production.

Potential GHG reduction: -0.9* gigatonnes

Five top categories where Generation Z influences family spending

Policy: Afforestation & other measures

Other measures such as returning pasture to forest, select breeding and genetic engineering will be essential to reach the 2050 target.

Potential GHG reduction: -3* gigatonnes

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Consumer: Reduce global beef consumption

Getting consumers to switch 1kg of protein consumption from beef to pork or chicken could reduce the associated C02e output by 88%.

Potential GHG reduction: -0.7* gigatonnes

Five top categories where Generation Z influences family spending

*Source: Barclays Research; Gleam; Global Energy and Climate Outlook 2018. See Winds of Change: the next environmental debate published, 11 February 2019 for full assumptions. GHG reduction figures are indicative only.

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Following the herd: The need for collective action across the value chain

Farmers, agricultural producers, food companies, restaurant chains, consumers and policymakers all have a critical role to play to curb cattle-related emissions.

But action will require clear economic incentives as well as environmental dividends. For farmers, feeding solutions that both raise yields and reduce emissions may be compelling. Producers and retailers could enjoy premium pricing for ‘climate friendly’ meat and dairy. A meat tax could be an effective tool to influence consumer behaviour.

For large-scale change to take place, legislation is imperative, in our view. Clear methane-reduction targets, the inclusion of livestock in carbon-trading markets and incentivising landowners to return pasture to forest, all now demand urgent consideration.

Read the full report

Authorised clients of Barclays Investment Bank can log in to Barclays Live to read the full report Winds of change: the next environmental debate by the Sustainable & Thematic Investing team in Equity Research.

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About the analysts

Sebastian Satz is a Director within Barclays' European Chemicals Equity Research team and has been analyzing chemical companies for more than a decade. He joined Barclays in 2016 from HSBC where he held a similar position after having started his career as a small & midcap analyst. Sebastian graduated with a triple Masters degree in International Management from ESCP Europe and is a CFA charterholder.

Cezara Lozneanu has been part of the Barclays Chemicals team since July 2018. She joined from Marakon, a strategy consulting boutique where she worked on developing strategies for organic growth and commercial optimisation across the healthcare and insurance markets. In 2016, Cezara graduated from University of Cambridge where she read Natural Sciences (Chemistry) and Management studies.

Benjamin M. Theurer is a Director and Head of the Mexico Equity Research office. He covers the Latin America Cement & Construction and Latin America Consumer sectors and co-covers Mexico Infrastructure. Prior to joining Barclays in 2011, Benjamin worked at DWS Investments, the Frankfurt-based asset management branch of Deutsche Bank, as a buy-side analyst and deputy fund manager for Latin American equities.

Since 2008 Benjamin has focused on the infrastructure, industrials, and materials sectors. He holds a master's degree in International Economics (Mag.rer.soc.oec) from a joint program at the University of Innsbruck (Austria) and Universidad Complutense de Madrid (Spain).

 

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