The COP26 Impact on Agribusiness
At the latest UN climate change conference, COP26, Canada confirmed its support for ambitious initiatives to enable solutions at the intersection of agriculture and climate. From this conference emerged several agricultural related commitments surrounding four key areas:
I. Capping emissions
II. The Global Forest Financial Pledge
III. A clean power technological transition
IV. The enhancement of traceability systems
During the forum, the Canadian government committed to several initiatives that could directly impact the Canadian food and agriculture sector. Of course, these impacts will only be realized if the government follows through on these commitments.
Capping Emissions
On November 1, 2021, Prime Minister Trudeau announced a previous pledge to cut current methane emissions by 30 percent before 2030. This particular commitment makes the agriculture sector a key actor in the proposed methane reduction strategy. According to the federal government’s Official Greenhouse Gas Inventory, approximately 30 percent of Canada’s methane emissions come from the agricultural sector, where methane accounts for more than any other GHG sources.
COP26’s emphasis on methane reduction needs to be matched with new technology adoption in the agricultural sector to reduce emissions at decreased costs. The government has committed to extending its financial support to industry partners taking action to reduce emissions and states, “This includes [..] investments in new programs, such as the Agricultural Climate Solutions initiative and the Agricultural Clean Technology Program, which aim to help farmers adopt new, beneficial management practices and clean technologies to boost productivity and lower emissions.”
Scientists are experimenting with alternative solutions to accelerate action aligned with climate targets. This program represents a significant opportunity in the agri-food sector to adopt new and emerging technologies. There is a strong call for more efficient management practices surrounding livestock and manure management, soil conservation and sequestration, energy conservation and fuel replacements and on-site energy production. In attempts to reduce reliance on climate costly practices, the government is looking to create new economic opportunities for agricultural producers.
The Global Forest Financial Pledge
The Global Forest Financial Pledge was the most significant joint policy commitment on deforestation supported by Canada. This agreement aims to provide US$12 billion towards the protection, restoration, and management of forests with the goal of ending deforestation by 2030. It is important to note that this agreement recognizes agriculture as a leading driver of global forest loss, representing three-quarters of land use emissions. In fact, the official communique directly links the consequences of deforestation to agricultural traders, processors, manufacturers, retailers, commodity companies and consumers. This prompted an official response from the commodities sector, promising to work with “key stakeholders in our supply chains, to accelerate sector-wide action and to identify opportunities for public-private collaboration to catalyze further progress on eliminating commodity-driven deforestation.”
This direct policy linkage from the agri-food sector to deforestation could have longer-term implications for the sector, imposing challenges on the Canadian agriculture systems to manage land uses through the responsible sourcing of high-risk commodities linked to forest loss.
A Clean Power Technological Transition
With the evolution of climate related priorities in the agricultural landscape, there is a growing demand for new technologies and future opportunities. The United States, in partnership with the United Arab Emirates, Canada and over two dozen other countries, launched the AIM for Climate campaign. This coalition is focused on transforming agricultural innovation systems and accelerating investment in R&D in areas of sustainable productivity, efficient uses of land, crop resilience, livestock production and emissions management. Experts and officials are turning to the development and implementation of new technologies in transition toward climate-smart agriculture and innovative food systems over a five-year period.
The Enhancement of Traceable Systems
COP26 provided new impetus to optimize compliance efforts surrounding transparency and traceability systems. The importance of consistent measurement frameworks led to multiple panel discussions throughout the summit. These captured efforts to identify opportunities for enhanced collaboration, digital innovation, and institutional strengthening. Canada extended its support in the assessment of existing systems to identify the most significant data gaps to enable transparency within agricultural commodity supply chains. This initiative, led by Agriculture Canada, will expand efforts and data sharing with a focus on improved traceability and transparency.
Our Takeaway…
The media have given global leaders mixed reviews on the final outcomes of COP26. What is clear, however, is that several of Canada’s commitments will significantly impact the agricultural sector, requiring stakeholders to rethink many of their current practices, and creating opportunities for innovation and investment in new technologies supporting agricultural transformation. What remains to be seen, however, is the extent of execution on the Canadian government’s commitments, and the degree to which efforts live up to the headline announcements.
Vienna Psihos is our analyst with a focus on agriculture and the agri-food sector. Bliss Baker is the Chairman and founder of Cumberland Strategies and has represented a range of large Canadian and multi-national companies in the ag-sector.
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