Saturday, December 9, 2023

Sustainable food production could ‘supercharge’ NZ brand

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NZ needs to think about whether it is investing aggressively enough in agri-reasearch.
When it comes to sustainable food, NZ is starting from a good base, says Richard Hobbs of BCG. In dairy, for example, it has the most emissions-efficient milk production in the world.
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The green economy presents New Zealand with one of the largest economic opportunities in decades, the Boston Consulting Group says.

The group is forecasting the global green economy to be worth $9.4 trillion by 2030 and has identified five areas to “supercharge” NZ’s brand. 

Its August 7 report outlines the areas Boston Consulting Group (BCG) sees as the best for NZ to pursue. These are in sustainable food production, ecotourism, sustainable construction, low-carbon energy systems and green consumer products.

Last year, BCG released a study of several “megatrends” it saw as the most relevant for NZ’s future economy. One megatrend was the green economy, which the new report takes a closer look at.

BCG principal and lead author Richard Hobbs said the new Megatrends in Detail paper set out to look for the win-win opportunities in the economy. 

The issue is usually seen through the lens of making a least-cost transition, which is still important – but “what we’re trying to do here is flip that logic on its head. What is the opportunity? What is the green growth agenda?”

BCG identified four trends affecting the NZ’s food industry: growing demand for premium food, regulation to reduce the environmental impact, a decrease in agritech costs and the potentially disruptive rise in alternative proteins and alternative milk.

“NZ is starting from a good base in, for example, dairy, where we have the most emissions-efficient milk production in the world,” Hobbs said. 

The pastoral farming system is now more sustainable than the grain-fed systems prevalent overseas, but that could change because grain systems could more easily add methane-suppressing additives to the feedstocks. 

That means NZ needs to think about whether it is investing aggressively enough in agri-reasearch, he said. 

BCG is forecasting animal cell-based alternative proteins could reach cost-parity with meat as early as 2032. 

“When combined with superior environmental and animal-welfare outcomes [it] is an attractive value proposition for consumers,” the report says. 

Said Hobbs: “It’s just another reason why, in areas like dairy, we need to keep getting more sustainable.”

As for ecotourism, BCG predicts the global industry is set to grow to $700 billion by 2030. It highlights two international trends that are changing the face of tourism – the rise in ecotourism and the demand for premium travel. 

Hobbs said NZ’s natural environment is the major drawcard for international tourists. The environment has an economic value beyond its intrinsic worth. 

“Tourism is one of our major exports, and because there is growing concern over carbon miles we really need to think about this as a country,” he said.

The trend towards premium tourism may already be under way. BCG cited Tourism NZ data showing the average spend per traveller has grown 18% over the past three years.

Hobbs accepted that won’t stop backpackers touring the country in clapped-out old vans, but it is a niche worth developing. 

“Is that going to fundamentally change tourism in New Zealand? Possibly not, but it is an opportunity that can help grow the sector. 

“Even things as simple as ensuring that we have really good electric vehicle charging infrastructure … and even in remote areas like on the west coast of the South Island.”

BCG’s report says NZ has a head start in adopting sustainable construction materials because of its history of building wooden houses. That meant NZ’s residential construction emissions are 16kg of CO2 per square metre per year, just under a third of the international median of 50 kg/m2/year.

Hobbs said that could be extended to wooden apartment blocks and other large buildings to reduce the cement and steel needed. It’s an idea that is starting to gain traction in NZ and overseas.

Emissions can be further reduced by cutting back the emissions in cement and steel making. As an example, Golden Bay cement is using waste tyres and wood to make a new cement product that reduces the emissions from cement by 27%.

Last year, BCG’s Future is Electric report said NZ could reach 98% renewable energy by 2030 at a cost of $42bn. 

Hobbs said electrification would save New Zealanders a lot on fuel bills, even if the present off-peak EV charging equivalent cost of 40 cents a litre goes up over time, which is possible. 

“This is a really significant opportunity for NZ to leverage our natural resource advantage to reduce our dependence on foreign oil, exposure to foreign oil prices and global energy shocks,” he said.

BCG said the uptake of electric and hybrid vehicles had increased by five times since the introduction of the clean car discount.

It cited Ministry of Business, Innovation and Employment (MBIE) data that showed energy emissions in 2022 were 12% lower than in 2019.

Hobbs said the peak-demand conundrum should be dealt with in two ways, with utility-scale batteries and the demand-shifting of home EV recharging.

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