Novel Foods and Alternative Proteins Have a Big Role to Play in Decarbonization

While climate change has become a very real challenge facing all of humanity, governments and businesses continue to struggle to figure out how to best address it. Some of the main decarbonization strategies include reducing fossil fuel emissions by switching to electric cards, making the building industry more efficient, and reducing emissions from livestock and other animal-based proteins.

But which one is the best? And which is the most cost-effective for achieving this goal?

According to a new report, Untapped Climate Opportunity in Alternative Proteins, from investor Blue Horizon and Boston Consulting Group (BCG), alternative proteins could save 3 times the emissions per dollar invested compared to other new strategies, such as decarbonizing cement.

Highlights:

• New research suggests alternative proteins could save 3 times the emissions per dollar invested compared to other strategies.
• Consumers’ attitudes and perceptions towards novel foods and alternative proteins appear to be changing and they are eating more of them.
• Investors and governments are heavily investing in alternative protein novel foods.

Finding the most efficient decarbonization investment

As one can see from Figure 1, greenhouse gas emissions from animal-based proteins drastically outweigh those from other protein sources. In fact, according to the UN’s Food and Agricultural Organization (FAO) meat and dairy account for around 14.5% of global greenhouse gas emissions alone. This is roughly equal to the transportation sector.

Figure 1. Greenhouse Gas Emissions per 100g of Protein

According to this report investing in the alternative protein novel foods segment has the highest CO₂ equivalent (CO2e) savings per dollar of invested capital of any sector. Researchers suggest that the emission savings can be transformed into a financial gain when measured in terms of the market value of avoided CO2e emissions per dollar invested in mitigation efforts. Blue Horizon has coined the term “impact on capital employed” (IoCE). They estimate that given an estimated emissions value of $50-80 per ton of CO2e, a total addressable market transformation would yield emission savings worth $303-484 billion.

According to the report the subsequent IoCE of $221-354 billion per trillion dollars of financed capital is at least three times greater than any other comparable cost reduction investments achievable in other high-emitting sectors of the economy, such as transportation and construction (Figure 2).

Figure 2. Plant-Based Proteins Decarbonization Potential Compared to Other Sectors

Are consumers ready for alternative protein novel foods?

While this report makes a strong argument for why alternative proteins are an efficient decarbonization strategy, the question remains, are consumers interested in switching?

This report further surveyed more than 3,700 consumers concerning their reasons for trying alternative proteins and what factors may be preventing them from buying more. This survey was conducted in seven countries: China, France, Germany, Spain, the United Kingdom, the United States, and the United Arab Emirates.

Approximately 75% of respondents said that having a healthier diet is the primary motivator for them to start consuming alternative proteins.

31% of respondents consider the impact on climate as a primary reason to fully switch their diet to alternative protein novel foods.

However, this survey also found that price remains a sticking point in all markets. Consumers are not prepared to pay a premium for a product that offers only taste parity with animal-based products.

With that said consumers’ attitudes and perceptions towards novel foods and alternative proteins appear to be changing. More consumers now want to be part of the solution to climate change and are willing to try new products to meet that goal.

Are investors ready to fund alternative protein novel foods?

Capital invested in alternative proteins rose from $1 billion in 2019 to $5 billion in 2021, or approximately an annual rate of 124%, according to the Good Food Institute.

Furthermore, investments in animal-cell and fermentation-based companies have been rapidly expanding. From 2019 to 2021 animal-cell-based companies rose more than 425%, from $50 million to $1.4 billion. In the same period, fermentation-based companies rose more than 137%, from $300 million to $1.7 billion.

The alternative protein and novel foods market has even seen traditional food companies investing with corporations participating in about 60% of funding rounds.

Lastly, governments have also been supporting the industry with sizable investments. In the United States, the National Institute of Food and Agriculture recently invested $7.8 million in 17 novel foods and innovative manufacturing technology grants. The UK is supporting alternative protein research and innovation, through its partnership with UK Research and Innovation (UKRI) with an investment of over £120 million in research across the food system. The Dutch government pledged to invest €60 million in the cell-based agriculture sector, and the Government of Canada has invested over $1.4 million in plant-based food production.

What does the future hold for alternative protein novel foods?

A pan-European survey, by ProVeg International in partnership with Innova Market Insights, the University of Copenhagen, and Ghent University indicates a rapid change in food consumption in favor of alternative proteins. The survey was conducted in 10 European countries (Austria, Denmark, France, Germany, Italy, Netherlands, Poland, Romania, Spain, UK) with roughly 7,500 respondents. Key findings from this survey include:

• 46% of respondents stated that they have already reduced their meat consumption significantly.
• 40% of European consumers intended to consume less meat in the near future.
• 30% of consumers stated that they intend to reduce their dairy consumption.
• 73% of flexitarians state they have substantially reduced their meat consumption.
• Nearly 30% of Europeans said that they plan to consume substantially more plant-based dairy and meat products.

Current market forecast models indicate that alternative proteins could represent roughly 11% of all protein consumption by 2035. This number could be as high as 22%, some researchers believe, if technology continues to reduce the costs of products and they become more widely available, and investors and governments continue to look favorably on this unique sector.

This matches additional results from the pan-European survey which found that:

• 50% of respondents perceive plant-based options as being too expensive.
• 45% think that there are not enough plant-based choices on the market.

Ultimately, the future success of alternative proteins and novel foods is up to the consumers. If consumers desire more of these products and believe that they are healthier for themselves and the planet and are willing to potentially pay a premium, they are assured to see major growth in the coming years.

[1] https://www.fao.org/home/en/

[2] https://www.bcg.com/publications/2022/combating-climate-crisis-with-alternative-protein

[3] IBID

[4] https://plantbasednews.org/lifestyle/food/europeans-eating-less-meat-research/

[5] https://www.bcg.com/publications/2022/combating-climate-crisis-with-alternative-protein

[6] https://plantbasednews.org/lifestyle/food/europeans-eating-less-meat-research/