The author is a graduate student at West Texas A&M University who grew up on a New York dairy farm.

In a not so far-off future, the most profitable dairies in the country may not be milking for money. Dairy farms will be milking cows for credit. Not credit scores, credit cards, or even credit banks. This type of credit has to do with carbon, and some dairies are already cashing in.

Every year, there is a massive push for businesses to lower their greenhouse gas emissions. Many large organizations and businesses are promising to have lowered their emissions to zero by a certain date. These initiatives are typically followed by media coverage about how the company is switching over to all electric delivery vehicles, replanting forests, or creating a wind farm. However, that is not the whole story.

It’s a growing market

The carbon credit system is designed so businesses can subtract the number of emissions by the ton that they have contained from the number of emissions they have already released. Carbon crediting is a pathway that businesses can use to “lower” their total emissions through preventative management by capturing emissions.

The carbon crediting market is presently run on an honor system that is based on energy costs. There is no governing body to regulate how the carbon is measured, how it is converted and released, or how much the carbon is worth.

Often, large businesses do not have the resources to contain their own types of emissions. This is when they turn to dairy farmers for help. Dairies have been introduced to the idea of capturing their by-products to be sold or reused for some time. In fact, manure is one of the biggest by-products a dairy has to deal with. Manure is also one of the better producers of biogas energy, which is considered renewable, when placed in conversion technology.

Anaerobic digestion is something most farms have seen or studied. Some farmers may know another dairy that received grant money to build a digester that turned out to not be profitable to operate and run daily. Methane digesters do require specific maintenance, but the ability to turn agricultural waste into biogas is modern on a large scale. Biogas can be considered a renewable resource. There is a certain niche area that can greatly benefit from the installation of a digester.

Texas is currently home to approximately a little over half a million dairy cows. There are around 380 dairy farms that contribute to the Texas milk supply, earning the state bragging rights for being ranked fifth in the nation for total milk production. In the past 20 years, there has been a 65% increase in the total number of milking cattle in Texas, and they have climbed from the seventh state ranked in milk production to fifth. The success lies within the panhandle region of Texas, which produces about 80% of the state’s milk.

Pipelines are plentiful

The panhandle of Texas prides itself in another important commodity — oil and gas. There are underground gas pipelines covering an astonishing amount of land in the region. Pipelines are not exclusively owned by energy and oil companies. Some are owned by software, delivery, or even grocery companies. The closer a dairy is to a natural gas pipeline, the easier it is to transfer biogas produced in a methane digester into the pipeline.

The carbon credit market might become available and even profitable for dairy farms to join if they are close to a natural gas pipeline. If a dairy is not happy with their milk check, a check written for carbon credits will certainly bolster the farm’s revenue stream.

Dairy farmers who enter the market will have to be proactive in developing a contract with the benefactor company. There are many business models between the dairy and benefactor company that may be discussed for a best fit scenario.

Some companies will pay and own the methane digester and will essentially be buying the manure from the dairy, so the carbon credits are owned directly by the benefactor. Others may fund the methane digester but develop a partnership with the dairy so the dairy business can claim part of the carbon credits benefits.

Further down the road, dairies need to be aware of how the carbon credit market will establish itself as it gains popularity. The trend of every industry is to become closely regulated by the government. It is likely there will be an emissions tax in the future. There is belief that one day there will be a limit on how much carbon a company can produce, and any emissions produced over the allotted amount will be taxed heavily.

A large driver against the regulation of emissions on dairies is that within property law, with certain exclusions, one can do what they want on their privately owned land. This includes ownership of the air straight up into the atmosphere within property lines. It is only when something privately produced is proven to negatively affect the surrounding public that laws need to be established to regulate emissions.

It is difficult to accurately measure carbon produced by a dairy, and this is one of the strongest reasons that the government cannot compare agricultural emissions to factory emissions. Although both can be done at a point source, measuring carbon in a pipeline will be far easier as it is a closed source. However, there is need to look back into how the controlling of emissions on dairies has already happened.

In California, dairies had to be compliant with nitrogen emissions to continue operation. Feedlots across the country already have reporting requirements for nitrogen and hydrogen sulfide. Establishing regulations will be as simple as establishing an accurate emissions model to place limits on emissions, and yes, it has already been built in some places.

The dairy industry has been keeping up with other sectors to stay competitive when it comes to alleviating environmental concerns. The Innovation Center for U.S. Dairy has taken forward-thinking steps to establish that dairy farms will be an environmental solution. The industry has made its own promise to be carbon neutral or better by 2050. Participation in the FARM Environmental Stewardship program also is an effort designed to bring evaluations onto dairy farms and propose new practices and technologies that can take a dairy one step closer to becoming a better steward of the land. This includes carbon neutrality.

Carbon credit marketing is likely to establish itself and be available to dairy farmers for a long time. Large companies with no products to feed into an anaerobic methane digester will continue to investigate other options on how to become and stay carbon neutral.

That’s positive news, for dairy farms will always have manure available. Plus, most people are going to buy dairy products no matter who the dairy industry is creating business with.

To be fair, not every dairy farm is going to be able to sustain a monetarily beneficial relationship with pipeline owners. There could be groups of smaller dairies working together to share a digester and carbon credit benefits in parts of the country. Some dairies will never have the option to run biogas from a digester into a pipeline because there are none nearby . . . unless that methane gets transformed into compressed renewable natural gas (RNG). The latter has real potential as RNG can be transported by truck.

The selling of carbon credits to other companies does raise the question of whether those carbon credits are “lost” in the count for the dairy industry to become carbon neutral. It is important for the dairy industry to share their experiences about the availability of profit from a digester with one another. The dairy community needs to stay transparent and progressive to remain a top competitor of environmental sustainability.

Will you be milking cows for a milk check or for credits?