A bovine bonanza pt. II

Hey,

Here’s the second installment of our recap of a major cow conference in UC Davis that we attended a few weeks ago. Here’s the first installment if you want to catch up on it first.

DEEP DIVE

Last week, we introduced takeaways from a major conference at UC Davis on methane emissions from enteric fermentation and livestock. The four we've covered so far include the range of solutions being proposed to methane production from ruminant livestock, the fact that of all the solutions discussed, actually reducing demand for meat and dairy isn't one of them, and a number of others, all of which can be found here.

To start this week, we can also build off of a point I included in the last newsletter pertaining to when we can expect feed additives that reduce methane emissions to hit the market in the U.S. I wrote:

As luck would have it (or maybe I actually do occasionally make some good predictions, Bovaer was approved by the FDA for use in the U.S. on Tuesday this week. Chalk that up in the win column. As a note, Bovaer, which can reduce methane emissions from cows by up to 30% with consistent application, is also available for commercial use in Brazil and Canada.

As I'm feeling encouraged by that successful prediction, here are four more topics that were prominent at the cow conference and that are worth covering in greater detail today:

1. Feed efficiency conversion isn’t proven

2. Policy and incentives are needed (and expected)... what will they look like?

3. Where’s the MRV?

4. This is very niche stuff at the end of the day (CA vs other state example)

Feed efficiency conversion isn’t proven

One of the biggest questions looming over the methane-from-cows problem is, even once there are solutions, like Bovaer, on the market that reduce them, what’s the incentive to a farmer (or a multinational company like Tyson Foods) to use them)

One line of reasoning has long focused on the concept of feed efficiency conversion, which basically encapsulates at what rate livestock turn feed into calories and products. This is a critical economic equation on-farm because it relates the #1 cost item on most farms (feed) with the #1 source of revenue (calories that turn into products, whether meat or milk). A focus on feed efficiency also explains why people have been studying ways to reduce methane production in cows for decades, as early as the 1960s and well before methane became a climate concern. 

A co-benefit of reducing methane production could be better feed conversion efficiency; methane cows burp out is caloric energy that’s lost to the system that could have been transformed into muscle. Researchers and scientists have long hoped that reducing methane emissions might help cattle become more productive. Theoretically, if you reduce methane production, you free up more calories for meat, milk, and other dairy product production. Many companies, including ones I’ve covered like Alga Biosciences, are building business models that hinge in no small part on this idea being borne out. Some 2-12% of a cow’s caloric energy intake can get converted into methane.

Here’s the thing. No one has really proven at scale or in any semblance of a long-term trial that this actually works. Sure, the same thing could be said about this entire industry; there’s an absence of long-term trials altogether. Still, the feed efficiency point is critical because I don’t really think that feed additives or vaccines for livestock methanogenesis will scale via a carbon markets model. What’s really needed is high confidence that a, say, 30 cents per cow per day product will more than offset its own cost in feed efficiency improvements. If it doesn’t, on a 10,000-head farm, 30 cents per cow per day is $1.5 million per year. I.e., no small expense to the farmer.

Policy and incentives are needed (and expected)... what will they look like?

So often in assessing areas in climate tech and climate mitigation that are relatively ‘early,’ it’s easy to do a hand-wavy thing where we all collectively say we need supportive policies and incentives to accelerate everything from research and development in this space to actual deployment. Often, that is true. Still, a much more rigorous thought experiment involves, say, thinking through how one might structure said policies and incentives.

As this pertains to methane emissions from livestock, much needs to be clarified, including whether there will even be significant supportive policies and incentives in many countries. At the highest level, there are forward-thinking jurisdictions that have set targets for methane emissions reductions, specifically from agriculture. California and New Zealand are two such examples. California, for instance, passed a bill, CA 1383, that targets methane reductions of 40% from 2013 by 2030 for dairy and livestock.

There aren’t, however, strict penalties for emitters of methane from enteric fermentation or manure, which is the way the EPA is instituting penalties for methane emissions from oil and gas companies. Nor, to my knowledge, are there any formal incentives for methane emissions reduction from agriculture available to, say, farmers.

Often, especially the larger the jurisdiction, setting a target for emissions reductions, as California has done for methane emissions from agriculture, is a good start. It’s not up to the entire U.S., for instance, to figure out the right set of policy and incentive instruments to figure out how different players in different geographies might actually hit that target. Often, the setting of specific policies or establishment of programs and incentives is then figured out at the state or county level, where the legislatures know their constituents more intimately, while still being backed by a larger government. 

Whether and where that’s how things go with respect to methane emissions from livestock is TBD. What’s most noteworthy sitting here in the middle of 2024 is that regulatory clarity is summarily missing right now. The targets, policies, and incentives will need to get structured soon, not just given the urgency of global warming but also because, as we saw with the approval of Bovaer by the FDA this week, products are hitting the market. How to get the market to use products will quickly become a question just as germane as how to develop said products.

If you enjoy this content, consider becoming a paid subscriber to support it — Nick

Where’s the MRV?

In chatting with some folks who have attended the conference multiple years in a row, many noted that last year’s was more focused on measurement technologies than this year’s was. Still, it was a bit striking how much air time mitigating solutions got at this year’s conference versus measurement technologies, which weren’t really discussed at all.

Measuring methane emissions from livestock is a particularly pernicious problem unless you’re talking about cows in a dairy barn. There, the emissions emanating from the barn itself are more concentrated and measurable. If, however, you’re talking about the 80% of methane emissions globally that stem from cows that are raised on pasture outside the feedlot or dairy barn context, then you’re talking about a highly diffuse and distributed emissions source.

Most of the technology on the market today is optimized to measure emissions from one cow. For instance, there’s a system produced by C-Lock called GreenFeed, which came up a lot at the conference, that’s designed to measure methane (and other greenhouse gas emissions) from cows as they eat. GreenFeed is a great technology, but it’s neither cheap nor can it scale to a massive herd of cows. Hence, absent advances in satellite imagery or other tech, a lot of methane emissions estimation at the level of the herd will depend on modeling from smaller samples. Considering there can be significant variance in any one cow’s methane production, even when other factors are controlled, that’ll require some thoughtfully crafted error bars. 

If that feels a bit unsatisfactory to you from a rigor perspective, especially where things like government-set targets for emissions reductions or perhaps even carbon-dioxide-equivalent credits are concerned, well, I agree. Methane measurement and monitoring for emissions sources like livestock are some of the most niche, least discussed, least invested in, yet also most crucial climate tech areas I can think of. Do with that information what you will.

This is very niche stuff at the end of the day

Building on the last sentence of the previous section, it isn’t just methane measurement and monitoring as a technology class or investment area that’s niche. It’s this topic as a whole.

Yes, many people know cows burp methane. Yes, the conference at UC Davis this year was apparently 2x bigger than it was last year. Still, the conference was only ~200 people, and that felt like it included many (though certainly not all) of the people, at least in the U.S., that are keenly focused on the issue of reducing livestock methane emissions. 

Nor is this necessarily a widespread topic with other stakeholders, including farmers. One nutritionist at the conference related that yes, Californian dairy and beef farmers are talking about methane. California also has a methane emissions reduction target. With respect to other farmers in other states, of those he had relationships with, he said exactly zero of them had asked him about methane, let alone feed additives or other solutions to reduce it, recently.

Hopefully in writing this I helped expand the subset of folks who know something about what’s up in efforts to reduce methane emissions from enteric fermentation a bit. Perhaps importantly, hopefully the size of the conference doubles again next year, and all the other things I added to my proverbial wish list above accelerate in the intervening year too. If you’re keen to get involved in any capacity, happy to point you to more resources and in the right directions.

KEEP COOL PODCAST

In the latest from the Keep Cool Podcast, I was joined by Rob Hanson, the CEO of Monolith, a company building methane pyrolysis plants to turn methane into hydrogen and carbon black, both of which are critical products for global industries and which are predominantly produced with significant emissions footprints today. 

Monolith's process aims to decarbonize hydrogen and carbon black production while commercializing clean production at scales not seen anywhere else in the world. 

We also discussed the duality of methane's inherent economic value and its staggering cost to the environment, especially as a major global warming driver, as well as:

• Technical ins and outs: Among other things, one of the technologies Monolith has built is one of the world's largest plasma torches. Not sure what that means? Listen for more.

• What it's like working with the DOE's Loan Programs Office: While the Loan Programs Office's risk appetite doesn't suit itself to every type of project, Rob breaks down under what circumstances working with the LPO can be a powerful partnership to scale technologies.

• Sustained will for the energy transition: Why 'sustainability' is about a lot more than just greenhouse gas emissions and other 'green' metrics.

If that's compelling to you, give the pod a listen here.

OTHER ~COOL~ STUFF

My friends Mike Lewis, Mackenzie Scurka, and others are hosting another great event for climate-focused investors, operators, entrepreneurs, and the climate-curious alike in Los Angeles on June 12th. This one’s happening at the Bungalow in Santa Monica, a place I spent a number of hazy afternoons at nearly a decade ago as a student at UCLA.

Good times and good conversation guaranteed – if you’re interested, get a ticket here.

Have a nice weekend,

— Nick