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1. This week in Ag Data News, is a cow's milk worth more than its poop? https://asmith.ucdavis.edu/news/cow-power-rising
2. Anaerobic digesters turn cow manure into biogas. Like natural gas, biogas is mostly methane, so it can substitute for natural gas in electricity generation and powering vehicles. Last week, the CARB released new LCFS data showing a big jump in the use of biogas from dairies.
3. Anaerobic digestion works by sealing manure in a giant pit to keep oxygen out while microbes feed on the contents, producing biogas as a byproduct. One of the first applications of this technology was in the late 1800s at a leper colony in Matunga, India (see pic).
4. There are currently 207 anaerobic digesters operating on US dairy farms. Many were installed in 2006-13 in the Midwest and Northeast with Farm Bill funding through USDA's Rural Energy for America Program. In the last five years, most new dairy digesters have been in California
5. Equal numbers of California digesters are employed to produce CNG for transportation and to generate electricity. Most digesters outside California produce biogas that is used to generate electricity or in cogeneration plants, which produce electricity and heat.
6. Anaerobic digesters are an expensive way to produce natural gas. A digester costs about $588,000 per year for a 2000-cow dairy, or $294 per cow. That cow generates approximately 22.5 MMBTU of gas per year, which is worth $68. http://calag.ucanr.edu/archive/?article=ca.2018a0037&utm
7. It costs $294 to get $68 worth of gas from a cow's manure.
8. Policy incentives make it profitable for dairy farmers to install digesters. The largest such incentive in CA comes through the LCFS. In the most recent quarter, the LCFS offered subsidies of $12 per diesel-gallon equivalent, which translates to $86 per MMBTU.
9. Our cow generates a subsidy of $1,935 from its 22.5 MMBTU of gas per year, more than enough to cover the $294 cost of installing and running the digester.
10. Why the big subsidies? Methane is a powerful greenhouse gas, and if it were not captured, it would have been emitted. Farmers are paid to reduce their methane emissions, and they produce a little biogas for transportation as a by-product. The value is in prevented emissions
11. There is still considerable scope for biogas from dairy digesters to grow in the LCFS, especially given the large subsidy. After 2012, biogas from landfills drove fossil gas out of the market. Now, dairy biogas is poised to drive out landfill sources.
12. To implement the LCFS, CARB determines the carbon intensity (CI) of each transportation fuel using a life cycle analysis of the fuel pathway, accounting for potential emissions throughout the fuel production process....
13. ... Gasoline and diesel incur deficits because they have high CI's (i.e., high carbon emissions per unit energy). Fuels such as ethanol, biodiesel, renewable diesel, electricity, biogas, and hydrogen earn credits because they have low CI's. Credits have to balance deficits.
14. Because it receives credit both for reducing methane emissions from manure and replacing a dirtier fuel, dairy biogas generates a subsidy 10 times higher than landfill gas. It accounts for 1/7 of gas volume, but dairy biogas generates more LCFS credits than landfill gas.
15. In recent quarters, total LCFS deficits and credits have been about 4 million per quarter. If all gas were from dairy digesters, then their credits would be 2.3 million per quarter. This would relieve some pressure on the policy.
16. A sign that the policy has been under pressure is that the LCFS credit bank has been declining for three years. However, in the most recent quarter, the bank increased by 130,000 credits, about the same as the increase in dairy digester credits that quarter.
17. A typical California dairy cow produces 230 cwt of milk each year. At a price of $16.50/cwt, the cow produces $3,800 of milk per year. This is twice the subsidy the cow gets from the LCFS.
So, the cow's milk is worth more than its poop, but the poop is worth a lot.
So, the cow's milk is worth more than its poop, but the poop is worth a lot.
18. This fact should make us pause. The large subsidy is deigned to prevent methane emissions that would have happened otherwise. But, what if the farmer adds cows because of the subsidy? Then we are no longer paying to reduce emissions. https://asmith.ucdavis.edu/news/cow-power-rising
19. I generated the first two figures using this R code: http://files.asmith.ucdavis.edu/agstar.R
The remainder of the figures come from our LCFS data app. Huge kudos to UC Davis ARE PhD student @mazzonecon for his great work putting this app together and keeping it up to date.
The remainder of the figures come from our LCFS data app. Huge kudos to UC Davis ARE PhD student @mazzonecon for his great work putting this app together and keeping it up to date.
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31. And here is our LCFS data app. https://asmith.ucdavis.edu/data/LCFS
