What is in this article?:
- A market price for carbon emission reductions would allow livestock producers with methane digesters to earn additional revenue from trapping and burning methane from manure.
- Greater income from reducing methane emissions could substantially increase the number of livestock producers who would find it profitable to install methane digesters.
- Large-scale hog and dairy operations with lagoon manure management systems are likely to benefit most from a higher carbon price, which could have longrun structural implications for the livestock sector.
Methane digesters that collect and burn methane from manure can provide numerous benefits to livestock producers and the environment. Still, digesters have not been adopted widely, mainly because the costs of constructing and maintaining these systems have exceeded the benefits accruing to operators. Currently, there are 157 methane digesters operating in the U.S., of which 126 are on dairies and 24 are on hog operations.
Methane is a potent greenhouse gas (GHG), and burning 1 ton of methane is equivalent to eliminating about 24 tons of carbon dioxide. There are a number of policies that could encourage farmers to use a digester to reduce methane emissions, either by providing financial inducements for those who install a digester or by penalizing those who do not.
A carbon offset market is one mechanism currently used for valuing methane emissions reductions. An offset market allows livestock producers who reduce methane emissions to sell these reductions, or “carbon offsets,” to other greenhouse gas emitters who face emissions caps or who voluntarily wish to offset their own emissions. Currently, only a few U.S. livestock operators sell offsets in regional or voluntary carbon offset markets. This is partly because the carbon prices in these markets have been low. However, future efforts to reduce greenhouse gas emissions could result in substantially higher carbon prices.
If farmers could earn a higher price for their methane emissions reductions, then digesters could become profitable on many more operations. However, there is likely to be wide variation in the scale, location, and characteristics of the operations that would benefit. The main beneficiaries would be producers whose operations emit substantial quantities of methane—particularly, dairy and hog operations with lagoon or pit manure storage facilities. Among these, larger scale operations will likely profit more from higher carbon prices because it is generally more cost effective to construct and operate larger digesters than smaller ones. Consequently, in the long run, valuing emissions reductions could encourage further concentration in the dairy and swine industries unless ways are found to promote the adoption of digesters on small-scale operations.