What will it take to transform the agricultural industry?

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Electric Vehicles, Renewables, Hydrogen, Biofuels – technologies that all facilitate the decarbonisation of global energy. But what about the agri-food system – responsible for around a quarter of global emissions? Decarbonising the food supply chain is perhaps one of the biggest challenges we face in the attempt to achieve the Paris Agreement. 

Over the next 30 years, a growing and increasingly wealthy population means we need to produce 50% more food, while also helping 2.5 billion people escape from malnutrition and cutting ~13Gt of carbon emissions.  As it stands, global agriculture emissions are expected to grow 16% by 2050. 

Livestock is the primary source of emissions in the agri-food industry. And so, it’s perhaps no surprise that a lot of attention has been focused on alternative meat products as a way to reduce the carbon intensity of food production. Plant-based burgers can indeed produce 90% lower greenhouse gas emissions than the traditional beef equivalent. Our own surveys have shown that ~30% of consumers across North America, Europe and Asia are eating less red meat and more plant-based protein, and so it is certainly part of the answer. However, despite strong demand for these products, alternative proteins still represent <1% of the global meat market – the biggest contributor to global agri emissions. Even alternative milk products are only ~9% of the total milk market, despite having been commercial products for over 15 years. It’s therefore hard to see that plant-based proteins alone will lead the agri-food sector to net zero emissions. 

It is significantly more difficult to modify behaviours across an industry reliant on 500 million individual farmers, compared to the auto industry with fewer than 20 major global brands

So, what are other scalable options that could revolutionise the agri-food industry in the same way that the electric vehicle is changing the autos sector?

On the chemicals side, green ammonia could be transformational for the fertilizer industry.  Synthetic fertilizers currently account for 13% of agricultural greenhouse gas emissions. Yet they have also been instrumental in improving yields over the last 60 years, and thus reducing the need for incremental land to be converted for agricultural use. A greener alternative could be made using green ammonia. Ammonia is a gas widely used in the production of agricultural fertilisers. Green ammonia, specifically, is 100% renewable and carbon-free and can be made by using hydrogen (for example, from water electrolysis) and nitrogen separated from the air. Next, this is fed into the Haber process (or Haber-Bosch), which is powered by sustainable electricity. During this process, the hydrogen and nitrogen react at a high pressure and temperature to produce ammonia. Producing green ammonia via electrolysis currently comes at 2-4x the cost of conventional grey equivalents, but costs are likely to fall over time. Yara, CF industries and OCI are all developing green ammonia projects.  

From an industrials and tech perspective, precision agriculture optimises the use of fertilisers and pesticides, thus reducing the negative impact that these products can have on the environment. It also optimises irrigation, and provides real-time information about temperature or soil conditions and sunlight, for example.

These solutions should also look to capitalise on the advantageous properties of the agriculture sector. Whilst it is a big GHG emitter, it can also remove carbon dioxide from the air. Sequestering carbon in farmland can be achieved through practices such as agroforestry, cover crops and silvopasture. Using 50% of the world’s agricultural land to sequester carbon could eliminate ~6% of global CO2e emissions – or a quarter of those coming from the agri-food industry. In addition to creating a positive impact on the environment, carbon sequestration also provides famers with an incremental revenue stream by selling carbon credits to emitters wanting or needing to reduce their own carbon footprints. The number of companies committing to net zero targets is continuing to rise, with over 1,000 businesses already having or committing to have science-based targets for emissions reduction. Against this backdrop, demand for carbon offsets is likely to be buoyant for some time. 

As we have seen with the energy transition, moving to a low-carbon system requires technological advancement but also policy support. Regulation has so far had a limited impact on the carbon intensity of the agri-food sector. Admittedly, it is significantly more difficult to modify behaviours across an industry reliant on 500 million individual farmers, compared to the auto industry with fewer than 20 major global brands. 

However, we are starting to see more action. The EU has led the way with its Farm to Fork strategy, whilst the UK is moving to a system of compensating farmers for the adoption of sustainable farming practices. The EU Taxonomy, with its clear metrics for defining ‘green’, could also drive investment in technologies such as green fertilizer. From a holistic perspective, later this year the UN will hold its Food Systems Summit with the aim to "launch bold new actions to transform the way the world produces and consumes food". This has the potential to mobilise both the public and private sector in the same way that COP26 did for climate change. 

Jessica Alsford is Global Head of Sustainability Research at Morgan Stanley