Your move, Bill

Prime Future 150: the newsletter for innovators in livestock, meat, and dairy

What ONE thing will most determine the future shape of the global livestock industry?

Today I’m making the case for why the answer to that question is an emerging debate over a single calculation and why the outcome of this debate will create lasting global impacts that will reverberate for decades. (And why that dramatic framing is not an exaggeration…)

Enteric methane emissions from livestock are a problem.

If we're going to tackle a problem, we need to understand the problem, starting with a common sense way to quantify the problem.

Historically methane emissions have been calculated using GWP100. The FAO is now making the case for GWP* as an alternative measurement for the global warming potential of methane rather than GWP100, with the intent to issue a recommendation in June to adopt the use of GWP*.

If this sounds super wonky and a little boring, that’s what I thought too until recently when I realized THIS IS A BIG FREAKING DEAL. Because how methane emissions are calculated is enormously relevant to any discussion about ruminants and GHG emissions.

Let's start with a bit of context on the difference in GWP100 and GWP* before we get to the 3 big implications, and why anybody in livestock needs to know the names of these two calculations and the difference.

Some quick context from a great primer on the topic:

"All gases categorized as greenhouse gases have a global warming potential (GWP) value. This measures how effective each gas is at trapping heat in the Earth’s atmosphere, and from that we better understand how a gas warms our planet. Essentially, GWP measures how potent a gas is as a contributor to climate change. The most commonly used metric to quantify greenhouse gas emissions is known as GWP100. This metric looks at the GWP of the greenhouse gases over 100 years.

There are fundamental differences between what happens to long-lived versus short-lived gases. For example, CO2, a long-lived gas, takes hundreds of years to break down in the atmosphere and as a result, collects in the atmosphere. Therefore, CO2 is a stock gas because it accumulates over time.

Methane, on the other hand, is a short-lived gas and breaks down in about ten years. Imagine you have two bathtubs. Both have faucets that are on and water is flowing. However, only one of these bathtubs has a drain. The tub with the drain represents methane and the one without represents CO2.

Because the drain is removing water, the tub will not fill up and overflow. That is what happens with methane in the atmosphere. Its short-lived nature means that the gas is actively being removed from the atmosphere and thereby reduces its contribution to warming over long periods of time.

While GWP100 does consider short-lived gases like methane, it does not account for removal from the atmosphere. Like explained above, since methane is removed in about 12 years through a natural process, stable emissions do not increase warming after that 12 years.

Livestock are a large source of methane. Stable livestock herd levels (i.e. no growth or losses), especially in ruminants like cattle and sheep, result in constant emissions of methane. If emissions are kept constant, meaning we do not release any additional methane into the atmosphere, then we will see warming from methane stabilize. Stabilization of short-lived gases, like methane, means there is no additional warming coming from livestock. And lastly, if we decrease emissions a cooling effect will be induced.”

My simplistic way of thinking about this is that GWP100, the historic way to calculate methane emissions, looks at total methane emitted. Period.

GWP100 ignores the fact that methane naturally breaks down in the atmosphere, and over a relatively short amount of time. GWP100 is a calculation of gross methane.

That breakdown and removal of methane from the atmosphere should be taken into account because it's a naturally occurring process that is happening, whether we include it in an equation or not.

Enter GWP*, a net methane measurement.

Think of GWP* as a net methane measurement that mirrors what happens naturally in the atmosphere. It is a more appropriate way to understand how methane emissions from livestock impact total warming.

Where it gets reeeally interesting is that the FAO is set to release a recommendation soon, around GWP*. Here's how ChatGPT summarized the 305 page report:

Now let's look at the 3 primary implications of this debate:

(1) Shifting from GWP100 to GWP* does NOT mean methane emissions from ruminants don't matter.

There's still an opportunity to improve, by reducing methane emissions. For countries whose national herd is not increasing in size (aka most mature ag economies), it's not that this will avoid warming. It's actually that it will create a cooling effect. Refer to the bathtub example above.

What we know about ag is that the industry can do whatever the market wants it to, so if incentives are aligned, methane reduction will happen.

Incentives are most aligned when there is natural overlap between producers’ drive to reduce cost by improving efficiency and reducing methane emissions per unit of meat/milk. That is not an artificial incentive or a forced incentive alignment, it's brought to you courtesy of economics 101 principles.

(2) If you look at methane emissions from ruminant animals using GWP 100 it is a significantly worse picture than if you look at GWP*, or net methane emissions.

GWP 100 artificially inflates the badness of methane emissions from livestock. Full stop. Here is ChatGPT’s comparison:

Just as it would be unhelpful and artificial to downplay methane emissions from livestock, it is unhelpful and artificial to overplay methane emissions from livestock.

(3) GWP* makes it crystal clear that, if your objective is to mitigate climate change, ignore countries with highly productive & stable national herds. Laser focus on countries with low productivity & growing national herds.

If your objective is simply to do something so you can say you're doing something, then by all means, focus on markets that already have highly efficient production systems that are stabilized or decreasing in size. Perhaps this sounds like whatboutism, or reductionism…..isn’t it just realism though?

Trying to reduce methane emissions from the dairy industry in places like the US or New Zealand is not going to yield the same impact as reducing methane emissions from the dairy industry in places like India or China where per animal (or per unit) emissions are much higher as a result of significantly lower productivity per animal, AND the national herd is increasing in number of head.

Love it or hate it, production efficiency is the name of the emissions game: more meat or milk per animal = less emissions per unit of meat or milk.

But the FAO report notes that there is an ongoing discussion within the scientific and policy community about whether GWP100 or GWP* is more appropriate. I wanted to understand the argument for sticking with GWP100, but the best I can tell is that it’s largely a weird combo of “that’s how we’ve always done it” and “what if this changes policy priorities”.

It’s hard to take either of those arguments seriously; they are weak arguments.

The reason all this matters is because in a GWP100 world, some governments see forced herd reduction as the only viable path to reducing methane emissions. (Yeah, that makes my stomach turn too.)

Meanwhile other governments see taxation schemes on methane emissions from ruminants as a way to achieve lower emissions.

Either policy approach has significant implications for the health of a country’s beef, dairy, and/or sheep industry as well as the financial health of individual producers.

That’s the most extreme reason that this debate matters but it also matters even as packers think about allocating resources to reduce their Scope 3 emissions, or emissions from their supply chain. The debate also matters as it relates to where innovation is focused, and how incentives are aligned…both carrots and sticks.

Alignment around how we calculate the actual impact of methane from livestock is fundamental to a conversation that seems to be growing louder and louder.

But this isn’t our first goat roping, is it? We've been here before, where the science lined up but the story still got away from us; where politics trumped science. The question will be whether this is one that lands on the side of science or on the side of scapegoats.

Landing on the side of science is going to require leaders in the GHG space to be very clear about how emissions are calculated and why.

While there are a whole lot of carbon pimps out & about looking to cash in on the perceived pending gold rush, I believe there are even more serious people working on climate change who want to focus time and resources on interventions that will actually move the needle. Who are genuinely seeking to understand where the needle really is, and how to move it most effectively.

The author of Factfulness: Ten Reasons We’re Wrong about The World And Why Things Are Better Than You Think puts it this way:

“People who are serious about climate change must keep two thoughts in their head at once: they must continue to care about the problem but not become victims of their own frustrated, alarmist messages. They must look at the worst-case scenarios but also remember the uncertainty in the data. In heating up others, they must keep their own brains cool and so they can make good decisions and take sensible actions, and not put their credibility at risk.”

He goes on to say this matters both to avoid directing money and resources to the wrong things and to protect the long-term credibility of the cause.

With this framing, let me repeat myself:

Just as it would be unhelpful to downplay methane emissions from livestock, it is unhelpful to overplay methane emissions from livestock.

But weirdly, despite the enormous importance of this debate, everyone seems to be standing around avoiding eye contact like 7th graders at a junior high dance.

Especially companies and governments who are eyeing FAO’s recommendation to adopt GWP* and looking to the broader global community for the signal of whether GWP* will become the new standard, or if GWP100 will continue to be the default calculation.

That signal of acceptance will require people like Bill Gates to work from first principles, update their mental models about methane & ruminants, AND leverage their influence publicly.

The FAO is set to issue its GWP* recommendation soon and the International Panel for Climate Change (IPPC) is set to follow. Bill Gates - it’s your move.

Two caveats:

(1) Until the mid-1800's, roughly 90 million magnificent ruminant animals grazed the Great Plains of the United Stations: buffalo. So we are not talking about net new ruminant animals emitting methane in the US compared with hundreds of years ago. The fact that this historical view of emissions doesn’t inform our current view of emissions tells me we humans are kinda silly. If things don’t make sense in a historical context, they usually don’t make sense.

(2) The FAO report is 305 pages. I started to read it (or at least give it a healthy skim) and then remembered it is the year of our Lord two thousand twenty-three and we have ChatGPT. Instead of spending 3 hours reading and summarizing this report, in <60 seconds I had the above responses from ChatGPT. This is my first time using ChatGPT in a way that saved me meaningful time. I've played around with it a decent amount but mostly to get creative ideas and for the fun of it. This was a whole new thing, like a where-were-you-when-you-realized-how-insanely-high-impact-AI-would-become kinda moment.

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