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How food and agriculture contribute to climate change

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How food and agriculture contribute to climate change
© Reuters. FILE PHOTO: Fresh compost made from food scraps and green waste is loaded onto a truck before being sent to a farm at Recology Blossom Valley Organics North near Vernalis, California, U.S., November 10, 2022. REUTERS/Brittany Hosea-Small/File Photo

By Leah Douglas

(Reuters) – Feeding the world is a big job, and the effort produces billions of  mets of emissions of greenhouse gases each year – around a third of the global total.

Despite the fact that food is a big climate problem, very little has been done so far to address it.

This year’s U.N. climate conference in Dubai will be the first to dedicate a whole day to the question of how to reduce food’s climate impact, and advocacy groups are pressing countries to come up with real solutions.

Here are some details about the sources of emissions from the food and agriculture sector:

HOW MUCH DOES OUR FOOD EMIT?

Global food systems accounted for 17 billion metric tonnes of carbon dioxide equivalent or 31% of human-made greenhouse gas emissions in 2019, according to the United Nations’ Food and Agriculture Organization (FAO).

That includes emissions related to farming and land use, producing crops and livestock, household food consumption and waste, and energy used in farm and food processing and transportation, according to FAO.

Altogether, those sectors generated 21% of all the world’s carbon dioxide, 53% of all methane and 78% of all nitrous oxide emissions globally, according to FAO.

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One the biggest contributors is livestock. Global livestock production generates around 14.5% of all anthropogenic GHG emissions, according to FAO.

Cattle are responsible for 65% of those emissions, largely as methane. When ruminant animals like cows and sheep digest food, they produce methane in the form of burps. Storage of manure, especially in large lagoons, also emits methane.

Emissions also come from producing and processing animal feed, including tilling land to grow crops, which releases carbon dioxide stored in the soil.

LAND USE

Activities to support agriculture like deforestation or degrading of peatlands generate 3.5 billion metric tonnes CO2 equivalent annually, according to FAO.

When forests are cleared for agricultural purposes like raising livestock or growing crops, stored carbon is released into the atmosphere.

Deforestation is responsible for nearly 80% of emissions from food production in Brazil, for instance, the world’s largest exporter of beef and soybeans.

Peatlands, meanwhile, store massive amounts of carbon – twice as much as the world’s forests.

Draining or burning peatlands for purposes like growing crops or livestock grazing is responsible for about 5% of all anthropogenic emissions, according to a 2021 report by the United Nations.

FOOD WASTE

About one-third of all food grown in the world is wasted, according to the U.N. – 13% between the harvest and retail stages, and 17% in households and in the food service and retail sectors.

That wasted food – including the energy used to produce and transport it, spoilage along the way and the food thrown out after rotting in household fridges – generates half of all global food system emissions, according to a March study published in the journal Nature Food.

A good chunk of those emissions are caused by the methane formed when food rots in landfill. Food waste makes up about 25% of municipal solid waste in landfills in the United States, according to a recent study by the Environmental Protection Agency.

Commodities

Oil prices settle lower after weak August jobs report adds to demand concerns

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Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand. 

At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.

U.S. economic slowdown worries resurface after weak jobs report

The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.

Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.

Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.

Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.

U.S., Europe working on Iran sanctions 

Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia. 

The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine. 

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Goldman Sachs expects OPEC+ production increases to start in December

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(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.

OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.

However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.

The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.

© Reuters. FILE PHOTO: A view of the logo of the Organization of the Petroleum Exporting Countries (OPEC) outside their headquarters in Vienna, Austria, November 30, 2023. REUTERS/Leonhard Foeger/File Photo

“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.

Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]

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Citi, Bank of America see oil prices potentially going to $60

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Investing.com — Strategists at Citi Research said oil prices could decline to around $60 per barrel by 2025, citing a significant market surplus as the primary driver.

While recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have offered short-term support for Brent prices in the $70-72 range, Citi views this as temporary.

“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent around flat to the 4 September close. Still, the Libyan situation could take months rather than a week to resolve, strategists wrote.

They highlight the likelihood of a strong market surplus emerging next year, pushing prices lower.

“We recommend selling on a bounce toward ~$80 Brent, as we look ahead to moves down to the $60 range in 2025 as a sizeable market surplus emerges,” the note states.

OPEC+ has delayed the start of its planned production cut unwind from October 2024 to December 2024, with the process now set to conclude by the end of 2025. This decision comes in response to recent market weakness and price declines, despite ongoing disruptions to Libyan oil supplies and broader economic concerns in the U.S. and China.

Separately, Bank of America’s Commodities Research team has revised down its price forecast to $75 per barrel for the second half of 2024, down from nearly $90, and for 2025, reduced from $80.

The team cites concerns about growing global oil inventories despite assuming OPEC+ will delay planned production increases. They note that weaker demand growth, combined with record OPEC+ spare capacity exceeding 5 million barrels per day, has dimmed the outlook for oil prices.

“In effect, we now see Brent oil prices moving from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously warned,” BofA strategists said. This surplus in capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.

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