New report finds that with 25% of global GHG emissions caused by the food value chain, the shift to alternative proteins may be the most capital-efficient and high-impact solution to addressing the climate crisis — and over 30% of consumers are ready to make the switch.
In the past few years, increasing global concerns about food security and the climate-changing impact of conventional, livestock-centered agriculture — along with staggering price increases for animal-based products over the course of the pandemic — have all fueled the sales, funding, and public interest in alternative proteins. With 25 percent of global greenhouse gas emissions caused by the food value chain, the shift to alternative proteins may be the most capital-efficient and high-impact solution to addressing the climate crisis. Projected to represent at least 11 percent of all meat, seafood, eggs, and dairy consumed globally by 2035, alternative proteins will save three times the emissions for each dollar invested compared with the next-best tool in the box — decarbonizing cement — according to a new report from Boston Consulting Group (BCG) and impact investor Blue Horizon.
The forthcoming report, The Untapped Climate Opportunity in Alternative Proteins (July 18), presents findings from a survey of more than 3,700 consumers in seven countries (China, France, Germany, Spain, the United Arab Emirates, the United Kingdom and the United States), regarding their reasons for trying alternative proteins and the inhibitors that keep them from buying even more. Three-quarters of survey respondents cited a healthier diet as their primary motivator for switching to alternative proteins, while more than 30 percent of consumers would fully switch their diets to alternative proteins if they believed doing so would have a major positive impact on climate.
Consumers across all markets surveyed view alternative proteins positively: 76 percent are aware of the category, and approximately nine out of ten said they like at least some of the alternative-protein products they have tried. While consumers in China and Germany are the most willing to pay close to parity with protein equivalents, none of the consumers surveyed is willing to pay a premium for protein alternatives that match meat for taste, texture and nutrition — a price premium requires a value add, beyond the eventual climate benefits.
“Nearly one in three people across the world are plagued by food insecurity. Coupled with the impact of the continued geopolitical crises on the supply chain and food prices, there is immense pressure on the global food system,” says Ben Morach, a BCG managing director and partner. “Pivoting away from animal-based proteins will lead to shorter, more resilient, and potentially more local supply chains. Widespread adoption of alternative proteins can remove the risk of supply chain disruptions and play a critical role in tackling climate change, with consumers playing a key part in propelling this transition.”
An acceleration in funding
Capital invested in alternative proteins rose at an annual rate of 124 percent, from $1 billion in 2019 to $5 billion in 2021, with investments in fermentation and animal-cell-based companies such as Aleph Farms and Opalia leading the way. Investment in alternative proteins is increasingly global. Middle Eastern funders — which tend to focus on animal-cell-based investments — made up 11 percent of worldwide investment in alternative proteins last year while APAC investment, fueled by plant-based deals, increased by 92 percent.
For investors, a key finding of the report is the fact that investments in plant-based proteins are more CAPEX-efficient with regard to carbon dioxide and methane emission reductions than in any other industry. Plant-based protein market penetration, as forecasted in the Food for Thought I base case, would save 0.85 gigaton of emissions by 2035 — a savings potential equivalent to decarbonizing a majority of the aviation industry. Investing in plant-based proteins has the highest emission savings per invested capital — at least twice as effective as investments in cement, iron, steel, chemicals or transport.
Significant progress in regulation of alternative proteins
As the report points out, sensible and effective regulation is imperative for ensuring that the rapid innovation and growth of the alternative protein market deliver safe, healthy and transparent food to customers. There has been acceleration around the globe to provide regulatory approval for fermentation-based and animal-cell-based products. In 2015, Israel led the way by announcing that its novel framework for regulating food safety would apply to alternative proteins. And in its latest five-year plan, released in January 2022, China acknowledged the need to “expand beyond traditional crops, livestock, and poultry to more abundant biological resources” and made animal-cell-based meat and other alternative proteins part of its food security strategy.
Everyone has a stake in accelerating the protein transformation and in the broader transition to a sustainable food system. The report points to the need for action in five areas:
Ensuring a level policy and regulatory playing field between conventional and alternative proteins
Directing capital toward transformative ventures
Optimizing resources and waste recovery
Continuing to build consumer acceptance
“The products consumers are seeing on the shelves today will be followed by a wave of cleaner, healthier and tastier alternative proteins, as technology allows for increasing innovation,” says Blue Horizon CEO Bjoern Witte. “We've seen the fast-paced development of these technologies in our own portfolio as well as the wider food-tech industry, leading to an overall better consumer product range. This is great news for today's consumers; but we're just at the beginning, really. Future generations will benefit greatly from the demonstrable impact this will have on the environment, as shown through our analysis of climate data.
“This is the second report from BCG and Blue Horizon confirming that protein transformation is the most capital-efficient way to avoid emissions and deliver Impact of Capital Employed (IoCE). If we reach 11 percent market penetration by 2035, which is our goal, we could save more carbon emissions than decarbonizing 95 percent of the aviation sector. The positive impact is absolutely massive, and secular drivers have never been stronger — the time to invest is now.”
And yet … while the global food system — and the meat sector, in particular — is unsustainable in its current form, so is completely replacing the use of animals as a food technology. As Aleph Farms VP of Sustainability Dr. Lee Recht recently pointed out, for the biggest and fastest environmental impact, we must address the way we grow our food; and more sustainable models will likely involve coexistence between traditional (if better-produced) and alternative proteins.
Read more key findings from the BCG/Blue Horizon report here.