Dairy Sector Climate Change Group: report

7. Opportunity and Innovation

7.1 GWP¹⁰⁰ vs GWP*

GWP¹⁰⁰ is a system to try to level the global warming potential of greenhouse gases over a 100-year period, becoming the industry-standard approach (IPPC). Carbon dioxide has a score of 1; methane, 28; nitrous oxide, 265, i.e., methane is 28 times more potent than 1kg of carbon dioxide over 100 years. However, carbon dioxide is a long-lived climate pollutant and a stock gas, accumulating continuously in the atmosphere. Whereas methane is a flow gas, as it is being destroyed as it is being added that is broken down in the atmosphere within 10 – 15 years. The warming impact of methane is not determined by how much is being emitted, but by how much more or less methane is being emitted over a period of time. Consequently, warming is neutral if methane emissions stay constant. However, there is growing evidence supporting an alternative to GWP100 to measure short-lived greenhouse gases, referred to as GWP*, taking into consideration the differences in how short-lived climate pollutants and long-lived climate pollutants warm the atmosphere.^[51]

However, it is important to note that, under GWP*, even a minor sustained increase in methane emissions over short periods of time will exponentially increase the climate change related burdens associated with methane relative to what would be expected under GWP¹⁰⁰ calculations.^[52] The decision on whether to use GWP* instead of GWP¹⁰⁰ values is due to be debated at the upcoming COP26 Climate Summit in Glasgow.

Recommendations:

• Active participation by government and industry in the GWP* debate, with further research into the implications for the dairy sector and the supply chain.

Refer to Annex 4 – Recommendations and Support Required

7.2 Low emission export opportunities:

Emissions arising from goods produced in Scotland and exported overseas for consumption are counted in the Scottish GHG inventory. Conversely, emissions arising from goods produced overseas and imported into Scotland for consumption are not in the Scottish inventory. This presents a challenge in terms of achieving global emissions targets and the tensions between that and national inventories and targets. The proposed Life Cycle Analysis of a sample of dairy farms (Section 5.3) would help to quantify these challenges for the dairy sector and highlight opportunities for resolution.

To meet both the 2030 Scottish Dairy ambitions and meet the emission targets of the country, Scottish dairy farmers must be able to take advantage of emerging low-cost logistics and low emission technological advances in milk processing. It is likely that export opportunities will soon emerge that Scotland could take. However, to do so Scotland must have available milk and although we currently export over 18% of our milk to England most of that milk is tied up in exclusive contracts that do not allow farmers to take advantage of new opportunities. The Scottish Government should therefore support change to allow farmers to hold non-exclusive contracts so opening the way for them to sell to more than one buyer easily and without undue burden or develop local and regional processing.

Joint ventures and co-operative opportunities for dairy farmers should be supported towards any inward processing investment opportunity that allows low emissions exports to flourish. If a positive commercial environment is created to allow low emission exports and farmer cooperative ownership of such investments, then a significant contribution will be made towards meeting both emissions targets and wider socio-economic benefits.

Recommendations:

• Explore opportunities for low emission logistics and milk processing technology to secure export opportunities.
• Review legislation surrounding fair trading terms and exclusivity of milk contracts.
• Support for joint venture and co-operative processing investment.

Refer to Annex 4 – Recommendations and Support Required

7.3 Carbon Credits Scheme and Trading Platform

Carbon credits could be an output of improving the carbon balance on Scottish farms. With the proposed national baseline carbon auditing, and the improvements identified on measurement in sequestration, farmers would be able to substantiate their carbon balance sheet. The opportunity for trading these carbon credits should be explored. It is a complex area but one in which farmers should be at the forefront of exploring the opportunities.

Recommendations:

• Commissioning of commercially focussed research into opportunities for carbon trading within Scottish agriculture.

Refer to Annex 4 – Recommendations and Support Required

7.4 Alternative Supply Chain Marketing

Opportunities exist to build alternative supply chains that enable stronger 'business to customer' direct relationship selling. This would allow farming businesses to access customers who are prepared to pay for high value local foods that bring environmental, welfare and social improvement. Initiatives have developed successfully using social media-based community-owned digital selling platforms, with access to the platform restricted to those producers meeting UN Sustainable Goals, for example in the Netherlands via the Local-to-Local Co-operative^[53].

Photo credit: Scotland Food & Drink^[54]

7.5 Community/Regional Processing

The CCPu^[55] recognises the need to keep people on the land to produce food as the basis for a thriving Scottish food and drink sector, even to the extent of repopulating parts of rural Scotland where population has dwindled. It identifies more localised and regionalised supply chains as one means of achieving this objective. As the experience of empty supermarket shelves during severe weather events such as "the Beast from the East" and the demand for local food during the COVID-19 pandemic has demonstrated, short, localised supply chains can build resilience to disruption and provide market support to high quality sustainable food production. However, currently in Scotland five major processors account for 94% of milk collection.

Rising to the Top 2030 outlined that growing the capacity and capability of Scottish dairy processing on all scales over the next 5–10 years will be key to the long-term sustainability of the sector. There needs to be appropriate support in place for continued process investment, product innovation and responding to climate change challenge pressures in manufacturing.

Recommendations:

• Encourage investment in processing (including local and regional) to increase supply chain and milk field resilience.

Refer to Annex 4 – Recommendations and Support Required