Climate-Friendly Cows Put New Zealand at Center of Global Methane Fight

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1:32Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio.

1:45Carol Massar:Well, late last year, Bloomberg reported that the world remains far behind global commitments to slash methane. That's according to a U.N. assessment, United Nations assessment, that underscores the need for rapid aggressive work to stifle emissions. of the super pollutant. If you don't know, methane is a highly potent greenhouse gas with roughly 80 times the heat trapping power of carbon dioxide in the first 20 years after it is released so it sticks around for a long time. And stemming it is seen as essential to keep the world's temperature rise in check and avoid critical tipping points. And as we know, a lot comes from cows.

2:20A lot comes from cows and those cows often live in New Zealand.

2:23Carol Massar:They do indeed. They've been working on this a lot, creating, yes, climate friendly cows. We're going to get into that in just a moment. We do head to Wellington, New Zealand and Bloomberg News reporter Tracy Withers, where it's pretty early in the morning. Tracy, thank you so much. We've been talking about this story in the newsroom, so we are so glad you could join us. What's going on in New Zealand? First of all, give us the backdrop, because there is a lot of cattle, and farming and ag is certainly very important to the New Zealand economy, but that means a lot of methane gas. Yes, good morning.

2:54Certainly, Exports of wool, milk, meat are pretty significant in the New Zealand economy as you've just said. But equally methane emissions from what we call ruminants or cows and sheep and cattle make up about 40 % of our total emissions down in New Zealand. We don't have as much coal burning and so forth. So the government's been pretty focused on coming up with solutions to achieve its methane or greenhouse gas reduction targets by sort of funding research and trying to work out ways that the cows and the sheep can still grow but not produce as much. Yeah, Tracy, walk us through some of those options, just thinking, okay, well, you want the cows to be able to produce things like milk and ultimately be eaten, but you can't just kill them, I guess?

3:49Walk us through what's going on. Well, that's right. I mean, one solution clearly would be to reduce the size of the herds and the flocks, to reduce the overall methane output, but that would impact New Zealand's economy quite severely. So there's a range of research projects funded by a government agency. Well, it's a government agency that's co-funded with a lot of dairy processors, rural banks and other interested parties. So it's a public-private partnership. And they're looking at a range of things like vaccines, feed additives, probiotics, changing the grasses that the animals eat. all their desire to sort of reduce methane.

4:35And some of these products are getting close to being available commercially.

4:41Carol Massar:Yeah, you talk about this company, Ruminant, if I'm saying correctly, Biotech, and about a capsule placed in an animal's stomach that slowly releases a compound to suppress production of methane. I mean, it sounds funny. We laugh about it kind of in the newsroom. And, you know, whenever this story comes up, I don't know if it does in your newsroom as well. But it's a serious problem when we think about, you know, what impacts the climate. And we've been talking about the climate a lot lately this week, coming off of a lot of excessive temperatures. And again, excessive rains impact, certainly on a lot of states across the country.

5:21Carol Massar:And I know we've also seen a heat wave across Europe as well. Talk to us too about the Cool Sheep Program. And this is the actual breeding of low methane livestock. I think about genetics and genetic engineering. Tell us a little bit about what you found out on that specifically. Well, certainly, whether it's genetic engineering is a moot point, I guess. But certainly there are breeding programs and quite a lot of research going on into both sheep and cattle in terms of finding out animals that still grow and produce the meat and the milk that's obviously necessary, but do so by emitting less methane.

6:12I did visit a research farm in the middle of the North Island here in New Zealand where they have cattle, they weigh them every week. They are in an open barn, which in New Zealand, of course, is unusual. Most of the animals, almost all the animals in New Zealand are pasture grown. So the manager there referred to this establishment as like an animal hilton because the animals are under shelter in the middle of winter, getting fed, getting weighed, and their methane is measured on a daily basis. the idea being that that you don't want animals emitting less methane but you know not growing and producing you know the milk and meat that's needed yeah one of the things that's interesting in the story is that customers like Mars Inc and Nestle are prepared to pay a premium for lower emission dairy products can you walk us through that because I just again as a consumer it feels like so much of food consumption is a race to the bottom.

7:13How cheaply can you produce it? Don't worry about the ramifications down the line. Expand margins from there. I think these major food companies are quite conscious of their carbon footprint, and it's the so-called scope three emissions. So clearly they're controlling the emissions from their own plants, but they also want their suppliers to be tackling the problem. So Fonterra Cooperative Group, which is the world's biggest dairy exporter based in New Zealand, which supplies companies like Nestle and Mars, is now going to its farmer suppliers and saying, well if you can produce milk from cows that are emitting less methane, then we'll pay you a premium because that's what Nestle and Mars will offer us if we can supply them milk powder and other dairy ingredients that has a low emissions content in it, then we will get a premium from them.

8:12So they're passing that benefit back to the farmers. And that's the incentive, I would argue, for the farmers to take up these new technologies.

8:21Carol Massar:Yeah, and what's interesting too is you've got to remember there's agreements, trade agreements in the UK and European Union that require efforts to reduce emissions. Like while the US has felt like maybe we're on a regulatory front easing back on some things. Certainly when you look over in Europe and the UK, things are certainly moving ahead and there are a lot of rules and restrictions. Thank you for getting up early. We know it is early over there, but we were hoping to do this story and glad that you could join us. He is Tracy Withers. He is in Wellington, New Zealand. He is a Bloomberg News reporter and delighted to check it out with him.

8:54Carol Massar:You can catch his story on the Bloomberg app.

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