In today’s Exponential Investor:

  • Finding falling costs outside of the energy and EV sectors
  • The extraordinary and unappreciated climate impact of food
  • Cultivated meat, coming soon to a table near you?

On Tuesday, we looked at solar energy. Its cost has fallen dramatically over the last decade or so, with the result that it is now the cheapest form of electricity generation in history, and cheaper than coal fired power in over two-thirds of the world.

Sales of electric vehicles (EVs) are now at the level that confirms that they really are competing with conventional vehicles. EVs’ share of the global vehicle market surged to over 8% in 2021, having been just 4% in 2020.

Solar energy and EVs are not the only sectors where new technology and plummeting costs ensure that the new market entrants are competing aggressively with the incumbents – in this case, fossil fuels and vehicles with internal combustion engines – and, at the same time, doing good things for the environment.

Indeed, the same forces are at work in the oldest sector in the world, the biggest, and the most fundamental: food.

A world of extremes

Estimates for the food sector’s contribution to global carbon dioxide (CO2) emissions range from a fifth to about a third.

Our World in Data has the number at 26%. We don’t think about it that often, but growing, making, transporting, packaging, selling and cooking food is unbelievably energy intensive.

The emissions come from livestock and fisheries (31% of total), crop production (27%), land use (24%) and the supply chain (18%).

Further, consider the following:

  • Beef production emits between 33kg and 100kg of CO2 (or equivalent greenhouse gases) for each kilogram of beef.
  • The equivalent number for lamb is just under 40kg, while those for prawns and cheese are in the mid-20s pork and chicken around ten, and eggs and rice just under five.
  • At the opposite end of the spectrum, most vegetables and nuts are below 1kg of CO2 emissions per kilo of food produced.

Obviously, some foods are more calorie intensive than others too, so that needs to be factored into overall calculations. (For instance, you get more calories from a kilo of beef than from a kilo of onions.)

Use of water use by the food industry a huge issue as well.

It takes over 17,000 litres of water to produce a kilo of chocolate, and over 15,000 for a kilo of beef. Again, most fruits, roots, vegetables and nuts are way down on this list.

And when you realise how carbon and water intensive it is to produce food, the fact that we waste so much of it is a real concern. Then again, simply eliminating waste would help to tackle food sector emissions).

For example, each year, we waste 1.3 gigatons of edible food and this releases 3.3 gigatonnes of CO2 equivalent (without taking into account land use change). This means that 1kg of food waste equals to 2.5 kg of CO2 equivalent.

We are a decade away, on the current operating model, from breaching our “carbon budget” (roughly how much more we can emit before temperatures are near-certain to rise past 2 degrees) and risking scary things like every summer in Europe being a heatwave, alongside sea level rises of one metre, 13% more heavy rains (like the ones which flooded Europe last summer) and other extremes.

Check out this beautiful graphic to see exactly what I’m talking about.

Given that food contributes a quarter of annual emissions, there is an urgent and absolute need to rapidly change how the industry operates, and how food is transported, packaged, and consumed.

The turning of the tide

It’s lucky then, that the same processes of disruption that have made solar the cheapest electricity in history, and made EV sales skyrocket in the last few years, are happening in the food industry.

There are three main disruptive technologies:

  • Lab grown (cultivated) meat
  • Precision agriculture
  • Vertical farming.

Lab-grown meat involves the duplication of real animal cells, which are then “cultivated” or “grown” into whole meat products.

Just think about it – we currently need to chop down a forest to grow some corn to feed a chick to grow for months into a whole animal to then kill and dissect it for human consumption. The whole process takes a lot of energy, resources, and time.

What is being suggested is that with far less energy, resources, and time, we could skip the carcass and just grow a chicken breast – in a matter of hours, or even minutes. Much more efficient, in every way. And efficiency gains like that inevitably mean huge cost reductions too.

When you can save 90% or more on energy, land, pesticides and medicines, food, water and time, you’re going to be able to produce that thing much more cheaply.

And that is just what is happening.

In fact, lab-grown meat is falling in cost faster than the best inventions of the past. Faster than solar and EVs, faster than the internet, and faster than Moore’s Law, which famously predicted the falling costs of computing.

Here’s what happened, according to Quartz magazine:

In 2013, Mark Post, a Dutch scientist and the co-founder of Mosa Meats, became the first person in the world to make a cell-cultured beef burger. The process he used was really expensive, taking three lab technicians about three months to nurture the 20,000 fibers of the burger, according to AgFunder News. That pound of lab-made beef would have cost $1.2 million per pound to sell.

In the years following, that number has plummeted.

In March 2017, Memphis Meats told the Wall Street Journal that it’d gotten the price of a pound of cell-cultured chicken down to $9,000 per pound. A year later its CEO announced the price had dropped to below $1,000 per pound. And in early 2019, the Israeli-based company Aleph Farms told reporters they’d gotten a beef patty down to around $100 per pound.

This rapid reduction in cost as technology improves and manufacturing scale increases is set to drive an extraordinary disruption of the largest and most fundamental pillar of our world – food.

Science fiction for dinner?

It’s only natural, though, to slightly baulk at the extent of science involved in all this.

But it’s important to realise that food production is already incredibly scientific. What is being offered is not new science, but better science.

Already, food is overloaded with fertilisers, pesticides, and unbelievable amounts of antibiotics.

Make no mistake, this is going to make food healthier as well as saving the planet.

There isn’t time or space with this edition of Exponential Investor to delve into the likes of precision agriculture, and vertical farming (or land-based fishing, plant-based meats and milks, salt-water crops (quinoa, salt rice), precision fermentation, or anything else).

But across the food sector, the speed and scale of innovation and disruption is extraordinary.

If the development of cultivated meat is anything to go by, the food sector still has a chance to play a huge role in accelerating the Race to Net Zero.

You might not think it, but food tech is climate tech. If it’s decarbonisation you want, there may be no better sector to look at today.

A new world beckons, and the food sector is moving quickly towards it.

And you can expect to hear a lot more about sustainability in the coming weeks and months. Especially here at Southbank Investment Research…

All the best,

Kit Winder
Co-editor, Exponential Investor

PS Surging demand for new technologies that help to reduce CO2 emissions – and to achieve other good outcomes – are not the only sources of opportunity for investors. The New World will also involve huge changes in financial services, as Southbank Investment Research’s technology guru Sam Volkering explains here.