Modelling the effect of a carbon tax on the development of a cultivated protein industry: a Norwegian case study

Abstract

Cultivated protein (also called in vitro, lab-based, cultured protein) startups emerged in the 2010s in response to technological advances in the medical/pharmaceutical sector alongside the global demand for more environmentally sustainable food systems. Offering greenhouse gas reductions of up to 97 %, these technologies could provide a means of rapidly reducing emissions from agriculture. However, heavy subsidisation of the livestock sector in many countries puts them at a considerable disadvantage. In this paper we explore what would happen if we rebalanced the equation through the introduction of a carbon tax on animal protein. Using an agent-based approach (ABM) we develop a detailed model of agricultural systems in Norway and explore a number of cost scenarios based around two main hypothetical events: the introduction of cultivated proteins without a carbon tax and the introduction of cultivated proteins alongside a carbon tax. Simulations reveal that conventional beef, lamb, milk, and egg production are more vulnerable to a steady loss of market share to cultivated protein than pork and chicken production – regardless of whether a carbon tax is in operation. However, the introduction of a carbon tax would result in a rapid and substantial decline in these sectors due to the dramatically increased costs imposed on conventional producers and the triggering of tipping points along value chains. Conventional pork and chicken sectors prove more robust due to their comparatively lower emissions. The overall conclusion is that the introduction of a carbon tax alongside the emergence of a cultivated protein industry could have severe impacts on the livestock sector that make the outcome politically unacceptable. Any global or Europe-wide carbon tax could thus, paradoxically, limit the introduction of revolutionary new low-carbon food technologies unless the introduction is carefully managed.