What is in this article?:
- Higher carbon prices could spur adoption of methane digesters
- Digester profitability and adoption
- Carbon revenues would accrue to Western dairies
- Policies and facility sharing
- 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.
Digester profitability and adoption
Methane digesters, also known as “anaerobic digesters,” “biodigesters,” or “biogas recovery systems,” can be used to capture and burn methane from lagoon or pit-type manure storage facilities. With lagoons (earthen storage ponds), covers are installed to capture the methane. With pit systems (concrete or metal tanks located above or below ground), manure can be heated to encourage methane production. Digesters collect manure, optimize it for the production of methane by adjusting temperature and water content, capture the biogas, and burn it for heat or electricity generation. Burning methane reduces its global warming potential, which corresponds to a reduction in greenhouse gas emissions that could be marketed as a carbon offset.
Several factors influence the profitability of methane digesters and consequently determine which types of producers are likely to adopt the technology. These factors include an operation’s manure management method, startup and ongoing costs of a digester, buying and selling price of electricity, onfarm electricity expenditures, and carbon offset price. Many of these factors vary with farm size and location.
Only operations that generate a significant quantity of methane are viable candidates for biogas recovery systems. When manure is kept in oxygen-free (anaerobic) conditions that exist in lagoons, ponds, tanks, or pits, it decomposes to produce a biogas containing about 60 percent methane. When manure is in oxygen-rich environments, such as when it is deposited on fields, it generally produces little methane. Many dairy and swine operations employ anaerobic manure management facilities. Dairy cattle and swine are each responsible for 43 percent of U.S. methane emissions from livestock manure. Other livestock sectors predominantly using aerobic manure management methods, including beef cattle, sheep, poultry, and horses, are collectively the source of only 13 percent of emissions.
Anaerobic manure management methods are generally more common on large-scale operations. For example, only 38 percent of dairy operations with fewer than 250 head use anaerobic manure management systems, compared with 56-73 percent of larger operations. Consequently, larger operations produce a disproportionate share of methane emissions; dairies with more than 2,500 head accounted for 19.7 percent of total emissions in 2005, though they only produced 13 percent of dairy output.
There is substantial variation across regions in manure management methods and, consequently, methane emissions. Dairies in the West and South are much more likely to have lagoon systems than those in the Midwest and Northeast. Dairies in the West produce 43 percent of all emissions from the dairy sector, reflecting that region’s large share of output and the prevalence of lagoon systems.
The costs of building, maintaining, and repairing manure storage facilities and electricity generators generally decline on a per head basis with the size of the operation, which makes digesters more cost effective for larger scale operations. In addition, there can be substantial transactions costs associated with selling electricity or certifying and marketing carbon offsets. Larger operations can spread these costs over a larger revenue base.
Digester profitability depends on the value of the electricity generated, which varies by farm size (electricity use per head declines, on average, as herd size increases) and by region (electricity is most expensive in the Northeast and least expensive in the West). In most States, operations that generate more electricity than they use can sell their surplus electricity to the grid. However, the selling price of electricity varies widely and depends, in part, on whether local utilities are required to purchase renewable energy. Renewable energy mandates can substantially raise the selling price for digester-generated electricity and make adopting a digester more profitable. Whether an operation has surplus electricity depends on its generating capacity relative to its demand. On average, dairies in the West and South use substantially less electricity per head than farms in the Midwest or Northeast, and so have more electricity to sell.