The biogas road map is filled with opportunities…and a few potholes

By Sarah Gonzalez

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, April 30, 2014 -- Just 25 miles from downtown Seattle, Jim Werkhoven and his brother Andy run a 1,100-head dairy farm that uses an anaerobic digester to process cow manure and pre-consumer food waste. Their system, located in Monroe, Washington, protects nearby salmon streams while recycling methane and solids from the manure and food waste into co-products like fertilizer, cow bedding and enough renewable energy to power 300 homes.

It's the type of voluntary system - aimed at reducing greenhouse gases - that the Obama Administration would like to see more dairy farms develop. In June, the USDA, EPA and DOE - in partnership with the dairy industry - will jointly release a “Biogas Roadmap” outlining strategies to accelerate adoption of methane digesters and other technologies to reduce U.S. dairy sector greenhouse gas emissions by 25 percent by 2020.

But the pathway isn't an easy one, especially when you consider that the equipment can cost from $500,000 to $3 million and the regulations guiding the purchase and use of digesters are often complex and inconsistent. Little wonder then that, out of over 57,000 dairy farms in the U.S., there are only 193 anaerobic digesters, according to the Anaerobic Digester Database. An additional 29 are located on swine operations and there are a handful on beef and poultry farms.

Lets Talk Food

Here are just a few of the speed bumps that dairies could face on the biogas roadmap.

-Feasibility: How do you determine the best size and type of equipment? Anaerobic digesters vary depending on the size of the operation and the co-products that will be most profitable for each operation. Facilities must examine each option's potential effects on financial performance, associated labor requirements, the skills needed to maintain and repair the equipment, or the need for a third-party system operator, notes AgSTAR, a government outreach program intended to increase use of biogas recovery systems coordinated by EPA, USDA and DOE.

-Capital costs: Systems cost between over $500,000 and $3 million. Depending on the type of digester system, capital costs per dairy cow range from about $8,000 to $68,000. Statistics show on-farm digester units typically cost at least $1.5 million when there are more than 1,500 animals. Both USDA and DOE have loan and grant programs which can assist with construction of anaerobic digesters, but the application process can be complex and time-consuming.

Volume and Scale: According to AgSTAR, dairies with at least 500 cows and swine farms with 2,000 pigs are considered technically and economically viable to use an anaerobic digester. Some systems are now designed specifically for smaller operations, particularly when they include co-digestion of manure and other organic substrates like food waste. 

 -Permitting: Currently, air, solid waste and water permitting requirements for anaerobic digester systems can vary in each state and sometimes at the county level.

-Inputs and Outputs: How do you measure emissions before and after implementing a digester system to demonstrate reductions? How do you correct what might be an imbalance of nitrogen or phosphorous in the solids - so the byproduct can be sold as fertilizer?  Where can the renewable energy be utilized? The power grid is often too small to accept the power produced by a digester. A correctly-sized digester should supply enough electricity to supply the farm and as much to the grid that local utilities can accept. 

Despite the challenges, dairies like the Werkhoven's are finding a way to make their anaerobic digester system work. They overcame the high cost hurdle through a partnership with local farmers, environmentalists and Native American tribes by forming the nonprofit Qualco Energy to buy a digester that began operating in 2008. The group was able to develop the digester after receiving a $3 million federal renewable energy loan, a $500,000 grant from USDA, and the donation of a state-owned dairy farm from the Washington State legislature worth almost $2 million.

Tom Gallagher, CEO of the Innovation Center for U.S. Dairy, said the roadmap is intended to reduce governmental red tape by providing dairy operations access to resources, because it formally recognizes biogas systems as an effective technology to mitigate environmental risks.

The Innovation Center for U.S. Dairy's “Dairy Power” project shows a $3 billion market potential for the products and co-products developed by digester systems. The voluntary plan envisioned by the industry would put biogas on the same playing field as other renewable energy sources recognized by the government, Gallagher suggests.

Others, including Sen. Chuck Grassley, R-Iowa, are skeptical about the process and the eventual outcome. During a recent teleconference with reporters, Grassley, expressed his concerns.

 “The intent is to seemingly incentivize voluntary action by our producers,” Grassley said. “But it's hard to forget only a couple years ago, this administration was trying to push ‘cap and trade' through Congress. It seems only right to be suspicious about the administration's intentions.”

In a letter to EPA Administrator Gina McCarthy sent on April 17, Grassley said he asked about the percentage of average-sized dairy farms that would need to install digesters to achieve a 25 percent reduction by 2020, as well as the typical costs and payoff time for an anaerobic digester.

“It's especially difficult to do this on farms,” he noted, wondering “What's the reaction if the voluntary goals aren't met?”

The federal government is prevented from regulating greenhouse gas emissions associated with livestock production through an annual appropriations rider that expires at the end of each fiscal year. However, Republican senators including Mike Johanns and Deb Fischer of Nebraska and John Thune of South Dakota said the administration is pursuing regulations on livestock emissions through its climate action plan. In a letter, they warned the EPA, DOE and USDA that if the methane emissions plan “leads to heavy-handed regulations or mandatory guidelines,” farmers and ranchers would face significant production cost increases.

 Although the biogas plan has its skeptics, Andrew Walmsley, American Farm Bureau Federation (AFBF) director of congressional relations, said AFBF supports the roadmap, particularly because it is voluntary. “Of all the climate suggestions, this is something we can support,” he said.

Walmsley added that providing funding opportunities through rural initiatives like the Natural Resources Conservation Service's Environmental Quality Incentive Program and Rural Development's Rural Energy for America Program should help farmers accelerate use of the technology.

Sidebar: USDA programs boost biogas production

During the two last quarters of fiscal year 2013, USDA made payments to operators of 56 anaerobic digesters that produced almost 173 million kilowatt hours of electricity - enough to power more than 17,000 homes annually.  Here are some of the programs available to help boost biogas production.

Rural Energy for America Program

REAP provides loans, grants and loan guarantees for producers seeking to install anaerobic digesters. Ownership structure must be an agricultural producer or a small business and can be in the form of sole proprietorships, partnership, corporation, LLC, LLP, or other business entity. From 2009 to 2013, REAP has funded 63 anaerobic digesters. 

Value Added Producer Grants

Value Added Producer Grants (VAPGs) are awarded to agricultural producers to enable economic planning and for working capital activities directly related to the processing and/ or marketing of value-added agricultural products, includ¬ing farm-based renewable energy generated from an agricul¬tural commodity or by-product such as an anaerobic digester.

Independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures are eligible to apply. Planning grants of up to $100,000 per project are available and working capital grants are capped at $300,000 per project. A cost share of at least 50 percent is required.

Advanced Biofuel Payment Program

The Advanced Biofuel Payment Program provides funds to eligible producers to expand production of advanced biofuels -- fuels derived from renewable biomass, other than corn kernel starch, including biofuel derived from materials such as animal waste, crop residue, other vegetative waste material, and food and yard waste.

Business & Industry Loans Guarantees Program

The program provides loan guarantees for business projects aimed at improving the economic and environmental climate in rural communities.

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