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.
Source: EPA via IPCC, Barclays Research
Source: IPCC, Barclays Research
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).
Source: DSM, Barclays Research.
Source: DSM, Barclays Research. Based on avg, car emissions of 130g CO2/km x 50km per day x 250 days p.a.
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.
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).
Our analysts argue there are limitations to online’s market share of the food retail sector. Brick and mortar stores must focus on productivity and convenience to generate a true omni-channel experience for customers.
An expanded Impact Series study finds that tilting portfolios in favour of high ESG bonds can generate positive returns across various markets, geographies and sectors.
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.
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.