Mootral looks to open new market in carbon offset linked to methane emissions reduction
Amid a growing drive to cut global emissions in the lead up to COP26, the company is now seeking a further US$2.5m to close a current seed funding round to help realize its vision of supporting the agricultural sector by providing its feed supplement at no cost to farmers across the UK and the world.
FeedNavigator spoke to Thomas Hafner, founder, and CEO of Mootral, to hear more about the startup’s business model, the carbon credit system, and the status of the rollout of its methane release busting feed ingredient.
Mootral is, of last week, a UK based company. “We redomiciled to the UK, with our Swiss base now being our commercial arm. The technology originated in the UK, from Wales based firm, Neem Biotech. We have taken over part of their biotech site, having set up our R&D and production arms in Wales in early January. There is a lot of business sense behind the move. We have a formidable team there. We did our first proof of concept trials in the UK and we have proven our carbon credits [system] in the UK, albeit at small scale."
The market is increasingly receptive to methane emission reduction strategies, and the concept of climate friendly beef and dairy products is really gaining traction, remarked the chief executive.
“Our business model has always been predicated on the idea that demand has to be triggered downstream, from retailers, from beef and dairy product producers, and from restaurants. We can’t speak to every single farmer nor is the farmer our primary customer. However, we are trying to enlist the farmers and their cows to help cool the planet, and that recruitment can be done more efficiently by those that demand more climate friendly produce in their supply chains, asking farmers to procure it and rewarding them for doing so,” said the CEO.
Mootral, to encourage uptake of its product, is creating carbon credits based on data provided by the farmer in relation to reductions in cattle methane emissions. Its CowCredits are issued by Verra, a Washington, DC-based non-profit organization that manages standards for reducing GHG emissions, improving livelihoods and protecting natural resources.
It is selling these CowCredits to polluters, usually to non-food companies such as oil and gas companies, energy companies, car manufacturers, and others, located across the globe, that are looking to offset their emissions and meet their ESG goals. They are eligible for use under schemes such as Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
"In the first phase then, we sell product, we generate carbon credits and we give back the proceeds of those carbon credits and thus subsidize the cost of Mootral Ruminant on top of the additional benefits the product brings to the farmer, and the premium they get from their customers for delivering climate friendly produce.
“In the second phase, we will be in a position where the cost of goods for our product and the yield per cow in terms of carbon credit proceeds will intersect and then we will be able to make Mootral Ruminant completely free and, therefore, speed up adoption,” explained Hafner.
Proven model
The model Mootral is showcasing is proven in the UK, he said, whereby a dairy farmer with a herd of 400 cows can produce 4-5% more milk and also sell it as climate-friendly product with a significant price premium. “Coffee shops and bakeries and the likes are buying this milk at a premium and selling it on as a premium product. We have also shown that we can generate carbon credits to supplement the farmers’ initial outlay."
Pilot commercial trials are getting underway globally on this concept. Mootral has recruited a leading UK food retailer as well as a UK dairy company; it is also testing the concept with dairy companies in Switzerland, in the Netherlands, and in New Zealand, along with a cheesemaker and a beef producer based in the US. “We are hoping to start trials soon in Uruguay and Brazil.”
“We are looking to recruit 20,000 cows in the UK over the next three quarters [of 2021], putting them on Mootral Ruminant and conversely bringing them customers ready to pay premium for climate friendly products. In the US, we are doing the same with beef, having recruited a rancher with 15,000 cows. We have already lined up a number of restaurant chains that will buy this beef, and again we are generating carbon credits to subsidize the cost. With that, we hope to show the world that this circular approach works," added the CEO.
The scientific evidence
In terms of demonstrating a reduction of methane emissions in various kinds of dairy cows and in beef cattle on feed supplemented with its product, Hafner said Mootral already has significant data in this regard. “For example, in Holstein cows in the UK, we have seen reductions of 20%; in Jerseys we have seen reductions of up to 38%, in certain beef species, we have seen reductions of up to 25%, and, in a calf trial in the Netherlands, we have seen levels of around 24%,” said Hafner.
It is continuing to run scientific validation studies on the feed ingredient: “We need to do a lot of trials to further bolster our body of evidence.”
It also needs to evaluate the product in a range of farming environments to generate its carbon credits given that the type of production system, the breed, and the ration play a huge role in the amount of methane that is released by the animal.
Unfortunately, the COVID-19 pandemic has put back a lot of that research work back by a year:
“We have had to abandon or to postpone trials and there were financial challenges in this respect as well; we are a startup and rely on investor funds and it was not that easy raising money in the first few months of the pandemic. No one knew how it would go. But we now have multiple research trials on the drawing board that are set to be run over the next 18-24 months. These are largely to prove additional benefits for cattle production beyond methane reduction including milk yield increase, or reduction in somatic cell counts.
“We are setting up Mootral Ruminant as the farmers’ choice product, with the view to this one day becoming a regulated market.”
Legislative drivers
Awareness of the environmental impact of agriculture is growing globally and Hafner sees pressure increasing internationally for regulation on the methane emissions reduction front.
“Governments are beginning to pick this up and they are designing or tabling legislation to regulate this – we have seen it in New Zealand, in the EU and in the US, in California, for example.”
He also noted the increasing number of reports showing how much we have underestimated the amount of methane there is in the air.
But the old narrative of cows being dangerous, being some of the biggest methane emitters in the world is not helpful, he says. “Cows play an important role in our ecosystem, improving soil quality and supporting carbon sequestration, as well as providing a great source of nutrition. It’s time for us to help them become part of the solution in the global fight against climate change. Bringing down methane emissions in cattle through the use of feed additives, would be hugely impactful, a quick win.”
Investment round
In terms of financial backing, Mootral has been anchored by personal income sources, and this last year it also saw support from impact investors, and climate funds, out of the US largely.
“We are now in the process of raising US$2.5m now to capture some momentum and build commercial traction, and we are planning a formal Series A funding round later this year.”
