‘Blindspot’ over methane emissions puts dairy and beef sectors at risk, say investors

Methane is a potent greenhouses gas, with 80 times the warming power of CO2 during the first 20 years it enters the atmosphere. But because it’s relatively short-lived, stopping methane emissions now can have an immediate impact on rising temperatures.

At COP26 in Glasgow, more than 100 countries signed up to the Global Methane Pledge, promising to reduce global methane emissions 30% by 2030. A year later, John Kerry, the U.S. special envoy for climate, announced at COP27, opens new tab that the United States would invest $20 billion to reduce methane emissions.

But according to FAIRR, opens new tab, an investor initiative that focuses on the food sector, most methane reduction efforts, including legislation passed by the EU last month, still revolve around the energy sector. While 38% of the problem, opens new tab globally is down to oil and gas companies, this is edged by agriculture, at about 40%, opens new tab.

Yet it is an issue that regulators around the world are only slowly starting to get to grips with, with only 16 countries having targets to reduce methane in agriculture.

It’s also a blind spot for beef and dairy producers, though the cattle sector is responsible for over 70% of agricultural methane emissions, says FAIRR.

While 82% of the world’s 60 largest protein producers have made their Scope 1 and 2 emissions public, only five companies , opens new tabhave chosen to publish their methane emissions, and just three have established specific targets for reducing methane emissions.

Yet there was an important development for the dairy sector at COP28 last year, when a half dozen brands, including Bel Group, Nestle, Danone, General Mills, Kraft Heinz and Lactalis USA, signed up to the Dairy Methane Action Alliance, opens new tab (DMAA), committing to report on their annual methane emissions and to create a public action plan to drive them down by the end of this year. Clover Sonoma and Starbucks joined the alliance in April.

EDF and sustainability nonprofit Ceres have pledged to hold the companies accountable as their plans are implemented.

“Companies are starting to see that this is really about business continuity and supply chain resiliency and risk,” says Anderson of EDF. “We know that cattle ranchers and dairy farmers are on the frontline of climate impacts that are already here – drought, flooding, wildfires (all) create stress in livestock and impact productivity.”

EDF confirmed, however, that membership of the alliance doesn’t require companies to set specific targets for reducing methane, something that some NGOs say is critical to holding them to account.

While Danone in January 2023 became the first major food company to adopt a specific target to reduce methane, by 30% from its fresh milk production by 2030, Nestle was heavily criticised in a report from the Changing Markets Foundation (CMF), Net-Zero Integrity: Nestle's methane blind spot, opens new tab, for failing to adopt a similar target.

The company's methane emissions from its dairy operations alone are estimated to be 8.74 million tonnes of CO2 equivalent (CO2e), twice the emissions of Switzerland’s entire livestock sector.

Asked about the report, Owen Bethell, an environmental impact lead at Nestle, told The Ethical Corporation that although the company does not have a specific target for methane, it has, for the first time, produced figures showing that it has cut its methane footprint by 15.3% since 2018.

These were reported in accordance with the Forest, Land and Agriculture (FLAG) approach, opens new tab, guidance by the Science Based Targets initiative on how companies in land-intensive sectors should seek to reduce emissions in line with the Paris Agreement.

“That addresses some of the points made by CMF, which is that we need greater transparency on this issue, and companies need to show the progress they are making,” says Bethell.

Bethall said Nestle’s methane reductions had been achieved by encouraging better farm practices and “showing dairy farmers how they can boost their incomes and reduce their emissions at the same time”. Along with many of its competitors, Nestle is also looking at replacing dairy with plant-based derivatives in some product formulations.

Asked why the company won’t commit to a set methane target, Bethell said: “The actions taken are having an impact, and so having loads of additional targets and layers to it, doesn't really make sense to us ... it's already built in.”

Alma Castrejon-Davila, a senior campaigner at CMF, acknowledges that Nestle has made progress, but in the absence of a methane target, “we still don't know if their plans are very serious. It's important for us to see how these emissions are being reduced and drive more accountability to the sector. This is something that we are missing from Nestle.”

Methane is a byproduct of fermentation as bacteria in the cow's stomach turns grass into energy, explains Duncan Williams, principal in food and regenerative agriculture at the sustainability non-profit Forum for the Future. The rougher the fibre, such as straw and hay, the harder it is to break down, and the more methane the microbes produce during fermentation.

While enteric methane, or cow burps, are responsible for 90% of the problem, cow dung is a problem too. While this slurry can be reincorporated back into the soil when there is a well-managed ratio of cows to land, says Williams, the slurry lagoons used in more industrial-style operations allow the fermentation process to continue, and also release huge amounts of ammonia, which is detrimental to air quality.

According to FAIRR, 55% of companies on its index are converting manure and effluents into biogas through anaerobic digestion, an approach that not only cuts methane emissions, but harnesses them for power generation.

Last year, UK retailer Waitrose, for example, began powering tractors on its farm at Leckford, Hampshire, with compressed natural gas produced from the manure of 500 cattle.

But food supplements are seen as the most promising solution, as they address enteric methane. The clear market leader here is Bovaer, also known as 3-NOP, a food supplement that manufacturer DSM-Firmenich states reduces methane emissions by an average 30% in dairy cows and 45% for feedlot beef cattle.

Already available in 59 markets, Bovaer had a major breakthrough last month, when Elanco, which specialises in animal health, announced, opens new tab that the Food and Drug Administration had "completed its comprehensive, multi-year review of Bovaer® (3-NOP), a first-in-class methane-reducing feed ingredient, and determined the product meets safety and efficacy requirements for use in lactating dairy cattle."

It said it intended to launch the product to producers in the U.S. in the third quarter

In a letter to Ethical Corporation, the FDA said the letter letter it had sent to Elanco did not constitute approval. "As an article (other than food) intended to affect the structure or function of the body of an animal, Bovaer meets the definition of a drug under the Federal Food, Drug, and Cosmetic Act, opens new tab (FD&C Act). However, at this time, the agency does not intend to initiate enforcement action with respect to certain animal drug requirements for the marketing or use of Bovaer in food for lactating dairy cows. This letter reflects an exercise of enforcement discretion and is not an approval."

Elanco last year launched UpLook, opens new tab, a tool to help dairy farmers quantify their greenhouse gas emissions reductions, which connects to Athian, a livestock carbon inset marketplace that also launched last year.

Elanco pointed out that dairy farmers can also apply for funding from the U.S. Department of Agriculture through an $89 million programme to support methane reduction on American farms.

"At an added cost of a few cents a gallon of milk, Bovaer can help food companies meet their climate commitments and consumer desire for more sustainable dairy products," said Katie Cook, vice president, livestock sustainability and farm animal marketing at Elanco.

"Meanwhile, by engaging in voluntary carbon markets and securing USDA and state conservation programming, dairy producers have a scalable sustainability practice with the potential to create an annual return of $20 or more per lactating cow by feeding Bovaer."

Another feed supplement product promising even greater methane reductions is Methane Tamer, whose main ingredient is Asparagopsis seaweed, and is formulated for beef feedlot cows.

Produced by Nevada-headquartered CH4 Global, tests show it can reduce enteric methane emissions by up to 90%, the company’s chief executive Steve Meller told The Ethical Corporation in a written statement. Importantly, it has been passed safe for human health, opens new tab by a leading toxicologist.

CH4 Global has secured investment to start processing Asparagopsis on a commercial basis in South Australia and will begin supplying farmers there by the end of the year.

“The key challenge now is producing Asparagopsis cost-effectively so that both the manufacturer and the farmer can make a profit,” he adds.

Another big challenge will be getting approval from the FDA, given the multi-year wait Bovaer has faced. The company is calling on Congress to pass a piece of legislation called the Innovative FEED Act, opens new tab, which would reduce FDA review times for feed additives by several years, and has bipartisan support.

A third way of tackling methane in cattle is better herd management and improving animal health, says EDF’s Anderson, especially for smaller farms in the Global South. “Feed management, veterinary care, access to water – those type of things can be really valuable in reducing the amount of methane that’s produced per unit of milk,” she explains.

Forum for the Future’s Williams agrees that supplements like Bovaer are an important advance in tackling emissions, but asks: “Who is going to pay for it when margins for dairy farmers are already so low?”

On a good day, he continues, UK dairy farmers could make 4 pence per litre of milk. But this system of supplements and additives, is “asking farmers to put their hand in their pocket, potentially losing 25% of their annual profit, to drop 10% of their carbon footprint. There's no other industry in the world that's being asked to make ... that kind of sacrifice.”

While markets for methane reduction are starting to emerge, especially in the U.S., he says, it is crucial that they continue to develop at the same time as the products, “as this is the only way we will see widespread roll out”.

The entire meat and dairy industry needs to address methane emissions in a more holistic way, he argues, including through innovation to drive down emissions through selective breeding programmes. “Give methane a value,” he argues, “and that would feed into the economic model that is driving those decisions … Then farmers will be selecting for low-emission cows because that's what they're getting paid for.”

Danone's chief financial officer, Juergen Esser, told participants at Reuters Events' Responsible Business Europe summit earlier this month that it's important for regulators to back up the efforts of companies that are taking steps to cut methane emissions.

"When Danone announced a pledge on methane emissions reduction ... we were the first corporate in the world to do that. The echo we got from our peers was not positive, because it's putting pressure on others," he said. "But when you are working in agriculture this is the way to decrease your carbon footprint, by decreasing your methane emissions. It's not an easy one. It's taking an initiative that impacts the industry, and we need to take the regulators with us."

Additional reporting from Terry Slavin. This article was modified to add clarification from FDA about Bovaer, and to add Kraft Heinz to list of members of the Dairy Methane Action Alliance.

This article is part of The Ethical Corporation's latest issue, on Decarbonising Industries. To read the rest of the articles in the series, click here, opens new tab. To download a pdf of the magazine, click here, opens new tab“We're having a methane moment,” says Katie Anderson, senior director of business food and forests at the Environmental Defense Fund (EDF). “And for good reason, because (cutting) methane is the best tool we have to slow the rate of warming right now.”

By Mark Hillsdon - Manchester-based freelance writer who writes on business and sustainability for The Ethical Corporation, The Guardian, and a range of nature-based titles.

Full article: Reuters