How can investing in the bioeconomy and food tech address climate change?
Throughout history, humanity’s progress has been marked by a series of pivotal moments and movements, often loosely categorized into different ‘revolutions’: the Agricultural Revolution was the first, followed by the Industrial. In the last decades, we’ve witnessed the Digital Revolution, which gave rise to the personal computer, the internet and the dominance of digital culture. This era has transformed our lives beyond recognition. And although we have made many giant leaps for mankind, we have taken multiple steps backwards for the Earth. Our progress has seen a dramatic shift in lifestyles, and a rate of consumption of non-renewable energy and natural resources that the planet simply cannot meet.
For more than 20 years, the Metronome clock in Manhattan’s Union Square has told the time, in giant, neon digits. Last weekend this changed, when the clock was reprogrammed to tell us exactly how much time we have left, before the effects of global warming become irreversible. It read 7:103:15:40:07–7 years, 103 days, 15 hours, 40 minutes and 7 seconds.
Earlier this year, Australia was ravaged by wildfires, unprecedented in their intensity; now the west coast of the US faces the same problem. Droughts, floods and tropical storms are becoming more and more frequent, while last month temperatures in California’s Death Valley reached 130 degrees Fahrenheit — the highest ever recorded on Earth. As early as the 1950s, climate scientists have been warning us about the devastating effects of human actions on the planet — how did we get to this point?
Since those first warnings about climate change, the world’s population has doubled, a global middle class has emerged and demand for resources — natural and otherwise — has exploded. Along with our reliance on environmentally damaging production methods, this demand has dramatically increased CO2 emissions and driven the temperature of the planet skyward. We can see this connection most clearly perhaps, in the food industry. Animal agriculture alone is responsible for 18% of greenhouse gas (GHG) emissions, while global meat production has grown fivefold between 1960 and 2018. By 2050, 60% more food will be needed worldwide and if the trends continue, the entire Amazon rainforest will have to be cleared, just to feed the global population. Meanwhile, the demand for energy keeps growing, still relying primarily on fossil fuels, which account for over 85% of the world’s energy supply. It’s evident that business as usual is not the answer. So what is?
A New Revolution
In recent years, we’ve seen clear indications that the key to a truly sustainable future is perhaps closer than we could have imagined. Because a new revolution is already underway, one that offers an abundance of potential solutions to some of our greatest challenges: the Bio Revolution.
Along with accelerated advances in digital technology over the last half century (such as computing, automation and AI), we have made astounding breakthroughs in biology. In particular, the discovery of DNA sequencing has given us the ability to manipulate the very building blocks of life on a molecular level, and programme biological matter in microscopic detail for macroscopic impact. The implications of this are profound, and become even more so when we consider what happens when we bring together both biological and technological innovation. It’s the combined force of these two fields that is driving the Bio Revolution, and a move towards the bioeconomy.
Understanding The Bioeconomy
Bioeconomy refers to the production of goods, services or energy from sustainable biological processes, using renewable biological resources. In short, it’s the transition away from a petroleum-based world, to a bio-based world.
An example of a company active in this bioeconomy is Arzeda, who design synthetic proteins to either optimize the properties of naturally occurring proteins, or to create new, functional proteins. For instance, the underside of a ship is typically covered in a protective coating that is based on MMA (commonly known as Perspex®), a chemical derived from petroleum. Now, Arzeda are using microorganisms to create a novel compound that is processed into a bio-based material, which can be used instead of Perspex. They are working on multiple designer proteins like this, including an enzyme to produce sustainable bioplastics, an enzyme to make plant-based fats perfectly mimic animal fats, a protein-based food sweetener and a protein to improve the efficiency of photosynthesis. The applications of their work are manifold, from enhancing plant health to improving our diets and health services.
A recent report from McKinsey Global Institute estimates that as much as 60% of the physical inputs into the global economy could, in principle, be produced biologically. A third of these inputs are biological materials, such as wood, cotton and animals bred for food. For these materials, innovations can improve upon existing production processes, making them more efficient and sustainable. The remaining two-thirds are non-biological materials (for example, plastics and aviation fuel) that could either be produced using new biological processes or replaced with substitutes using bio-innovations — such as bioplastics.
The potential impact of these capabilities on the global economy, environment and society is vast; the report estimates that these applications could have a direct economic impact of up to $4 trillion per annum over the next 10–20 years. As noted in Forbes earlier this year, “Even if the lofty projections about synthetic biology and the coming bioeconomy turn out to be only partially true, the opportunities for innovators, investors, and the public remain spectacularly large.”
The Future Of Food
As the bioeconomy takes hold, we find ourselves on the cusp of a new agricultural movement that will likely reshape the way we farm, ship and consume food. Food Tech (also known as AgriTech) is “the application of technology to improve agriculture and food production, the supply chain and distribution channel.” This includes innovations that will reduce GHG emissions, while reducing our reliance on arable land and freshwater irrigation.
From the introduction of biotechnology to improve the health and yield of crops and livestock, to the use of farm machinery powered by robotics, there is a wealth of exciting investment opportunities in Food Tech. One example is AgFunder, a VC fund focused on Food Tech startups, whose portfolio includes companies such as Nuggs, who make frozen, plant-based chicken nuggets, and Lavva, who produce plant-based dairy alternatives. We’re particularly interested in companies such as these, which are significantly reducing GHG emissions through the creation of plant-based proteins and cultured meats — demand for which is rapidly growing due to the rising popularity of vegetarian and vegan diets. The market for plant-based meat alone is expected to reach a value of $27.9 billion by 2025.
Until recently, the prevailing wisdom for addressing climate change has been to ask individuals to step up to the mark, change their behaviors and curb their desires: reduce, reuse, recycle — restrict their lifestyles. But to completely rely on this isn’t practical or realistic, and more importantly, it’s not working. We need to be more ambitious.
At Sagana, we believe that the only way forward is to actively build the world we want to see. We can do this by investing in new, planet-positive goods, services and solutions that are more attractive than what is currently available. Make the environmentally friendly option the better option, and you not only reduce demand for the suboptimal status quo, but replace it with something far superior.
In the last five years we have seen advances in the bioeconomy and food tech that seemed completely impossible — even ten years ago. And with that, decreasing costs make further innovation not just more achievable, but easier and faster to scale. This is only the beginning of the Bio Revolution, however it is perhaps the single most important moment in our history: the moment where man and nature learn to work together, in order to guarantee not just the survival of our species, but a more abundant future for all.