Grow meat in labs to avoid growing crises

New report from the Adam Smith Institute suggests lab grown meat could transform our world, tackling climate change and the looming antibiotic resistance crisis

• Meat consumption has rocketed as GDP has grown across the world 
• Meat demands on land are intensive, with beef taking a whole hectare to feed one person against nineteen people fed per hectare of rice produced
• Cost of a lab grown burger has dropped from £250,000 to around £8 in the past 5 years
• Lab grown meat can cut greenhouse emissions by 78-96% and use 99% less land
• UK could solve housing crisis, re-wild the country and help fight climate change by adopting the technology

Agriculture is on the cusp of an historic change that could see billions access meat at affordable prices, while reducing carbon emissions and freeing up land for housing. According to a new report by the Adam Smith Institute, the coming availability of lab grown meat could mean a cut in agricultural greenhouse gas emissions of 78-96% while using 99% less land.

Implications for the fight against climate change could be immense, the report argues, with some 14.5% of human caused greenhouse gases and 60% of biodiversity loss attributed to current intensive farming practices.  

As GDP has risen, so has the demand for meat. During the 1960s meat consumption in East Asia stood at just 8.7kg per person, thirty year later that figure was 37.7kg – an increase of over 330%. This increased demand has meant huge land given over to meat production. While 19 people can be fed from just a single hectare of rice, only one can person can fed per hectare dedicated to cattle.

With demand for meat and milk expected to increase globally 70% by the year 2050 lab grown meat generated by cleaner energy could allow more people to access high quality meat at a sustainably lower environmental cost. 

While growing meat in a lab has been difficult to master, and costly to engineer, the price has been falling. Just five years ago the cost of a burger made with meat grown in a lab stood at $215,000, but now the price tag has dropped to just £8. 

While commercially competitive prices are still some way off, there is room for meat from exotic and endangered species. Meats grown from animals like the komodo dragon or the giant panda might help prove the concept, increase public awareness, drive down long-term costs and provide funds for future production. All the while, importantly for animal rights and conservation groups, not harming any wild or farmed animals in the process. 

Lab grown meat has the potential to solve the looming antibiotic resistance crisis. With farming using up to 70% of antibiotics critical to medical use in humans, the cases of resistance are on the rise, driven by intensive farming practices. In Northern China a study found 88% of E. coli samples showed resistance to the 8 forms of antibiotics commonly found in polluted waters. Cultured meats don’t use antibiotics to speed up muscle growth and the report explains that the move from livestock to lab cultures could save millions of lives.  

Government must shy away from lobbying attempts like those seen in the USA to lock out competition by changing the legal definition of meat to exclude meats produced in labs or factories. EU Law restricts plant-based foods, such as Almond or Oat milk, from being sold using terms such as milk, butter and cheese.

Instead report authors Dr Madsen Pirie and Jamie Hollywood argue that the country needs to recognize new technological developments like cultured meat “are in the process of radically transforming the world economy”. They suggest that government should learn from financial services “sandbox” regulations to encourage experimenting businesses to locate, develop and lead the world from the UK. 

Madsen Pirie, President of the Adam Smith Institute, said:

"The UK should recognize that cultured meats are a game-changer. For 12,000 years humans have reared animals for meat. In future they will not need to. This will release millions of acres of pasture land for other uses. It will resolve all of the ethical issues involved in the rearing and slaughter of animals. It will give the world access to a low cost, high protein diet, and the UK could become a world leader in this multi-billion-pound new industry.”

Jamie Hollywood, co-author of the report, said:

" The direction of technological innovation can be the key to averting many of the major ecological problems currently facing humanity. The herald of cultured meat will lessen the impact of antibiotic resistance, as well as potentially reducing the carbon footprint and levels of pollution caused by the current methods of meat production “

“The policy direction of the government should be to encourage emerging technologies; technologies which seek to provide mass benefit to society. This should be done by removing barriers to their development and introduction. Many innovations which have been impeded by inefficient and short-sighted legislation and state procedure could alleviate problems such as starvation, malnourishment, and climate change.” 

Notes to editors:

For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, at matt@adamsmith.org | 07584 778207.

The report “Don’t have a cow man: the prospects for lab grown meat” can be accessed here.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Corbyn's backward looking future plan for the press

Commenting on Corbyn’s plan to hit Netflix, Google, and Facebook with a new tax to fund the BBC, the Adam Smith Institute’s Head of Research Sam Dumitriu said:

“This is an anti-innovation, anti-consumer, and anti-youth move. Younger viewers now spend more time watching Netflix than the BBC. But rather than respecting their choice, Corbyn’s Digital License Fee forces young people to pay more for the programmes they want to watch in order to subsidise the programmes they don’t.

“As more and more viewers switch to Netflix, Amazon, and YouTube, the government should consider scrapping the License Fee and turning the BBC into a subscription service. This would force the BBC to stay lean and focus on what its viewers actually want.”

On the Labour leader's idea to create a taxpayer-funded social media service to compete with Facebook and Twitter:

“This would be a colossal waste of public money. Corbyn may fret about receiving ads for hotels in Somerset, but most people don’t. If they did they might switch to one of the many ad-free competitors to Facebook, Twitter, and Google, like Mastodon or Ello. 

“Consumers are concerned about privacy, but they worry more about government surveillance than targeted ads. I doubt any privacy-conscious web user would willingly hand over their personal data to Corbyn’s knockoff Facebook.”

If you want any further comment or to arrange an interview contact Matt Kilcoyne (07584778207; 02072224995 OR matt@adamsmith.org).

ASI welcomes Science and Technology Committee report recommendations on e-cigarettes

Welcoming the report and recommendations of the Science and Technology Committee on e-cigarettes, Daniel Pryor, Head of Programmes at the Adam Smith Institute and author of the ASI’s recent paper “1 Million Years of Life: How harm reduction in tobacco policy can save lives” says today that:

“Today’s report is fantastic news for public health and consumer choice. If its recommendations are adopted, many lives will be saved.”

“Most importantly, the Committee is urging a rethink on how these products can be advertised to cigarette smokers. The majority of UK smokers don’t know that e-cigarettes are significantly safer than smoking, and this situation is getting worse. Public health authorities are clear on the relative risks, and we're throwing lives away by preventing vendors from relaying this information to smokers.”

“Taxing e-cigs and heat-not-burn products based on their relative risk would be a smart move, but contrasts with worrying rumours of a proposed vaping tax from the Treasury. Lifting EU restrictions on tank size and nicotine limits—which make vaping less appealing—would also encourage more smokers to make the switch.”

“The UK can lead the world in tobacco harm reduction, and it’s encouraging to see politicians getting behind a liberal approach: one that is based on hard evidence, not scaremongering.”

For further comment or to arrange an interview please contact Matt Kilcoyne via email (matt@adamsmith.org) or phone (02072224995, 07584778207).

We shouldn’t fret about CEO pay

Commenting on today’s news that executive pay has risen by 11% in the past year, Sam Dumitriu, Head of Research at the Adam Smith Institute said:

“We shouldn’t fret about CEO pay. CEOs command massive wages because they are massively important to the firms that employ them. Take Angela Ahrendts, when she left Burberry to move to Apple it wiped £536m off Burberry’s share price. When one individual can be so important to a firm, then it’s no surprise that shareholders are willing to pay top dollar to get the best.

“Today’s news is part of a long-term trend. As businesses face increasingly rapid technological change and stiff international competition, CEOs have become more important. Research looking at the impact of unexpected executive departures (e.g. private plane crashes) on firm values has found that CEOs have become much more important over the past few decades.

“There is a growing body of evidence highlighting the impact of management on productivity. If we foolishly rush in and cap CEO pay, we risk chasing away the best managers to Europe and the US. That would be bad news not only for the millions of Brits who hold shares through private pensions, but also workers who might see their firms lay off staff as they fall behind to better-run international competition.”

To arrange an interview or further comment please contact Matt Kilcoyne via phone (07584778207) or email (matt@adamsmith.org).

Equity Release sector hiding huge losses from under-valued guarantees

New report from the Adam Smith Institute reveals a major scandal in the Equity Release sector due to firms under-valuing their No-Negative Equity Guarantees

• Under-valuation of guarantees in Equity Release Mortgages is a ticking time bomb
• The Prudential Regulation Authority made half-hearted attempts to address these undervaluations, but permitted them anyway
• The recent Treasury Committee report into the UK life industry missed a chance to scrutinise the sector and instead suggested that the Equity Release sector was one to be promoted
• The UK’s Equity Release market nearly trebled in size between 2012 and 2017 and was forecast to grow a further 40% by 2020
• PRA stress tests in 2017 indicated that a 30% house price fall could lead to losses of between £2 billion and £3 billion
• The industry had snowballed the Treasury Committee and the Committee’s recent report reflected industry spin
• This scandal highlights serious failings on the part of Equity Release firms, their regulator and the actuarial profession

A new report released this morning from the free-market Adam Smith Institute suggests that the UK’s Equity Release sector is in deep trouble, with the regulator having missed opportunities to effectively manage the risks in the sector.

“Asleep at the Wheel: The Prudential Regulation Authority and the Equity Release Sector” reveals that firms are greatly under-valuing their No Negative Equity Guarantees – guarantees that ensure that borrowers’ debt can never exceed the value of the mortgaged property.

These problems have been well-known to the regulator, the Prudential Regulation Authority, for years and the report argues that the regulator has knowingly allowed firms to use valuation methods that are unfit for the task.

“Nearly two decades and one Global Financial Crisis later it seems like history is repeating itself,” says report author Kevin Dowd.

Not pulling any punches, Professor Dowd says that the Equity Release fiasco is yet another case of incompetent management, undervalued long-term guarantees and regulators who are not up to their jobs.

The UK’s Equity Release market had nearly trebled in size between 2012 and 2017 and had been forecast to grow a further 40% by 2020. PRA stress tests in 2017 indicated that a 30% house price fall could lead to losses of between £2 billion and £3 billion, with the exposures skewed towards firms with larger house price or ERM exposure.

The Prudential Regulatory Authority is confused about the capital requirements it imposes upon the industry, the report argues. When asked at a parliamentary Committee in 2017 about the size of these capital requirements, Deputy Bank Governor Sam Woods suggested the requirement was £126bn, while moments later his colleague David Belsham suggested it was just £80bn.

The Treasury Committee is accused by Professor Dowd of botching its scrutiny of the impact of Solvency II on insurance companies, and having been captured by corporate lobbyists.

The regulator, the Prudential Regulation Authority, has itself made half-hearted efforts to address this under-valuation problem. Yet for years the PRA failed to rein in firms that continued to use inadequate valuation methods for their No Negative Equity Guarantees.

In most financial regulatory scandals the regulators are caught off-guard and never see the problem coming. In this case, not only did the regulator identify the problem of poor NNEG valuation practices years ago, but the PRA allowed them anyway.

Questions must now arise about the Prudential Regulation Authority’s capacity to regulate the industry competently.

The report’s author Kevin Dowd, professor of finance and economics at Durham University, said:

"We never seem to learn. Equitable Life hit the rocks two decades ago because it under-valued its long-term guarantees. Now the Equity Release sector is in deep trouble for the same reason. In both cases, the firms involved got into difficulties because they were using voodoo valuation methods that had no scientific validation. Same causes, same results.

In the aftermath of the Equitable Life fiasco we were assured that lessons had been learned and the vastly expensive Solvency II regulatory regime was installed to ensure there would never be a similar disaster in the future.

The PRA and Solvency II have failed spectacularly.

“The most astonishing thing about this scandal is that the PRA knew about these poor valuation practices but permitted them anyway. It would be interesting to know why.”

The Dowd report follows a joint investigation with BBC business journalist Howard Mustoe.

BBC Radio 4 will broadcast a programme on the Equity Release story, The Equity Release Trap, this evening at 8pm. 

Notes to editors:
 
For further comments or to arrange an interview, contact Matt Kilcoyne, Head of Communications, at matt@adamsmith.org | 07584 778207.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.