Livestock is a key source of methane emissions and a major contributor to climate change. Livestock emissions account for about one-third of human-induced methane emissions and two-thirds of annual greenhouse gas emissions from agriculture (FAO, 2023). Enteric fermentation from ruminant livestock is the largest source of these emissions, accounting for more than two-thirds of livestock farmgate emissions (Sutton et al., 2024). Demand for livestock products is expected to grow in the coming decades. Consumer demand for beef is projected to increase by 80 percent by 2050 (Nadathur et al., 2017), and milk output is anticipated to grow by 9 percent in high-income countries and 33 percent in low- and middle-income countries by the end of the decade (OECD and FAO, 2018). Reducing methane emissions by 45 percent from 2010 levels by 2030 could prevent nearly 0.3 degrees Celsius of warming by the 2040s (UNEP, 2021).

Farmers and ranchers currently lack sufficient incentives to invest in technologies that reduce methane emissions, since animal agriculture systems do not price greenhouse gas emissions in final products and the benefits of reduced methane emissions accrue globally. As a result, commercial incentives for methane reduction technologies fall far short of their social value, and asymmetric information about the quality of new innovations may further limit adoption (Hasanain et al., 2023).

Several innovations could significantly reduce methane emissions. Feed additives—including algae, lipids, tannins, and synthetic compounds such as 3-Nitrooxypropanol (3-NOP)—modify the rumen environment or interfere with methane generation in the digestive process. Experimental evidence suggests that some feed additives can reduce methane emissions by 26 to 98 percent (Honan et al., 2021). For example, supplementing cows’ diets with Asparagopsis taxiformis algae reduced methane emissions by up to 98 percent in one experiment (Kinley et al., 2020), while another study found reductions of about 37 percent among pasture-grazing cows (Meo-Filho et al., 2024). Other approaches, including selective breeding and gene editing techniques, remain at earlier stages of development (Rubin et al., 2022). Improvements in farm-management practices, such as feeding software that optimizes livestock diets, could also improve production efficiency and reduce emissions intensity (Naranjo et al., 2020).

Public and philanthropic investments could help accelerate research, testing, and adaptation of methane-reducing technologies across different production systems. Market-shaping instruments such as prizes or Advanced Market Commitments could signal future demand and encourage private investment (Kremer et al., 2020), while additional policy tools—including incentives or methane pricing mechanisms—could strengthen incentives for adopting cost-effective technologies.