The author is a long-time agriculture policy adviser based in Knoxville, Tenn.
We have all witnessed firsthand the negative effects of high gas and diesel fuel prices on the pocketbooks of consumers and, equally as important, on all businesses, including agriculture. It is one of the major forces behind the current 40-year high inflationary spiral and a potential precursor toward a recession.
Renewable shortfalls
With that in mind, let’s examine where we are in the process of moving toward more renewable energy sources. Although there is much discussion on the additional development of solar and wind as the most viable sources of renewable energy in the future, at this point in time, renewables provide a very small amount of our total energy needs at just 3% and 4%, respectively. Also, most solar panels are made in China, and U.S. production has lagged. Wind turbines take a great deal of maintenance and our electric grid is not up to par in handling energy sources by distributing them to a broad spectrum of our homes, businesses, and industries. Where does agriculture fit into this equation and, in particular, what role can our dairy operations play?
The dairy industry has been at the forefront of finding ways to reduce greenhouse gas emissions (GHGs). National Milk Producers Federation, the International Dairy Foods Association, and other dairy organizations have set a goal of obtaining a net-zero GHG emission reduction level for the dairy industry by 2050. While that is certainly a very ambitious schedule, setting a goal is still an important objective.
There is not a simple solution to moving completely away from fossil fuels to 100% renewable energy, for U.S. or global needs. A major focus has been on the reduction of gasoline and diesel fuel for our vehicles and for the conversion to electric vehicles (EVs). If that’s the goal, we have just started this journey. In recent testimony before the House Agriculture Committee, Jay McKenna, the CEO of Nacero Inc., a Houston-based company, stated that Americans drive 3.2 trillion miles each year, equivalent to 500 round trips to Pluto and back using vehicles that stay on the road an average of 12 years. That is an astounding number!
Last year, there were 434,879 EVs sold in America, about 2.8% of the 15.1 million vehicles sold in the U.S. One of the problems, besides the cost of EVs ($56,000 to $60,000 for a car alone), is the availability of lithium necessary for EV battery construction. Only one lithium mine is operational in the U.S.
For EV automakers, such as Tesla, this key product is imported. I point this out because despite federal subsidies for EVs, the potential in the near future for mass production is limited. Although a number of automakers have announced a goal to switch completely over to EVs by 2035, this is going to be difficult to obtain. And it is very important to point out that trucks, which use diesel fuel, contribute most to GHG emissions. Therefore, they can clearly benefit from switching to a cleaner renewable energy fuel.
About our climate
Climate change has struggled to maintain its position as a major issue for the American public given the many other challenges consumers and businesses face each day. The economy leads the list of concerns with inflation now at 8.6% and gasoline prices reached as high as $5 per gallon earlier this summer. Food prices have ballooned with egg prices up 32.2%, chicken up 16.6%, and milk moving up 15.9%. At the same time, crime has spiked in many of our major cites as well as our rural areas. Another concern is the crisis at the U.S-Mexican border, where well over 200,000 illegal immigrants are crossing each month. And of course, there is the war in Ukraine.
Given these developments, climate change concerns are much further down the list. One problem faced by the climate change lobby has been its tendency, in some cases, to over exaggerate the severity of the problem. They make statements to the effect that major developed countries like the U.S. that contribute more significantly to GHG emissions have 10 years to completely reduce them or our planet will “burn up.” They lose their credibility with the public when such outlandish claims turn out to be untrue.
The Biden Administration has identified climate change as an “existential threat,” and therefore, has made it one of its major policy priorities. They have taken a number of steps to reduce GHG emissions and, in particular, fossil fuel production, and will continue to move forward on this issue in the months ahead.
Reducing the number of oil drilling leases on federal lands and stopping the construction of the Keystone XL pipeline has had an immediate impact on energy prices for both gasoline and diesel. At the same time, other polices aimed at reducing GHG emissions are being implemented at the federal and state level.
Both carbon dioxide and methane gas emissions are targeted for substantial reductions in the next few years. Agriculture is a key part of this concern since methane gas emissions from manure is considered a major problem. National estimates place GHG emissions from livestock production at 10%, with dairy at 2% of this total. However, the UN environment estimates globally place agriculture emissions at 25% and other environmental organizations agree with this much higher figure.
In any event, U.S. livestock manure production is identified as a contributor to global warming from methane gas emissions. Although nutrient management in feed for dairy cows is helpful in reducing methane gas, manure from dairy cows remains the greatest focus.
Report those emissions
Most recently, the Securities Exchange Commission (SEC) has proposed new rules that would require publicly traded companies to report their GHG emissions for the first time. However, more importantly, the SEC could require these companies to provide that information from their suppliers. In other words, a dairy cooperative selling its product to a company would have to provide information on climate change risks from their operations, including the dairy farmers who produce their products. The SEC also could require independent certification and disclosure from the customers these publicly traded companies are doing business with.
Since the SEC rule is still in the process of being drafted, it is not clear at this point how far down the SEC’s tentacles will reach. A large number of major farm organizations wrote to the SEC asking for more time to comment on the proposed rule given its complexity and potential impact on family farms and cooperatives. The SEC granted an additional 30 days, and that comment period expired the last week of June.
Once implemented, this rule could make the SEC more powerful than the Environmental Protection Agency (EPA) in terms of regulatory authority on the issue of climate change. There is no question that the dairy industry is going to face many more regulatory requirements in the future.
California leads the way
The state of California has been heavily involved in the production of methane gas from dairy manure for some time. The impetus for this effort was the state’s goal for a 40% reduction in the methane gas emissions by 2030 from the manure produced by its 1,195 dairy operations. California is the largest dairy producing state in the nation with more than 35 billion pounds of milk produced annually.
The process for producing methane gas from manure is relatively straightforward. Dairy digesters can prevent the escape of GHGs such as methane in lagoons or other manure holding structures from being released into the atmosphere because the gas is trapped inside. The gas can then be utilized, for electricity, fuel for vehicles, or heat for homes and businesses.
One of the most expedient and productive uses of these gases is a replacement for gasoline and diesel fuel for trucks, buses, and cars. This is particularly true for trucks, as diesel fuel is very carbon intensive and responsible for a high level of GHG emissions. So, dairy manure that has been long considered a contributor to GHG emissions has been turned into a renewable energy asset.
It should also be noted that methane gas from animal manure has a shorter lifespan than carbon dioxide (CO2), as it stays in the atmosphere for about 12 years. Carbon dioxide emissions from fossil fuel have a much greater lifespan of several hundred years.
The driving force behind California’s growing methane gas production for vehicular use is a carbon credit incentive-based program called the Low-Carbon Fuel Standard or LCFS. It requires companies that sell transportation fuels in the state to lower their product’s carbon intensity . . . meaning the CO2 emitted during manufacturing, distribution, and consumption.
Companies that produce gasoline and diesel have to buy LCFS credits. This has resulted in a major incentive in using captured methane gas from manure to power natural gas for trucks and to generate electricity in other vehicles. All of this has served to substantially reduce GHG emissions.
Half the digesters
Starting in 2006, California Bioenergy LLC developed projects to make renewable energy from dairy manure. Cal Bio has 45 projects now in operation and over 60 more in development — they are a leader in this effort. There are approximately 185 anaerobic digesters operating or in development in California at this time. Overall, it is estimated that there are less than 400 digesters operating in the U.S. in total, therefore the Golden State is home to nearly half the country’s digesters.
One downside at this point is that the value of the LCFS credits has recently dropped substantially, which poses a problem for the financing of digester units and for the growing production of dairy methane gas. However, dairy methane gas production appears to be a rich source of renewable energy and it seems to have a bright future.
As mentioned earlier, Nacero is now working on developing “large scale facilities that will make affordable, lower net-zero life cycle carbon footprint gasoline from 100% domestic and renewable natural gas,” as quoted from testimony before the House Agriculture Committee on April 5, 2022. Nacero plans to be a major consumer of renewable methane gas from landfills, dairy, and other livestock operations as part of its overall effort to reduce greenhouse gas emissions and strengthen U.S. energy independence.
They forecast that each of their facilities could support renewable gas demand from 75 to 100 anaerobic digester units. This will drive new capital investment, reduce dependence on foreign oil, and, as pointed out in their testimony, create thousands of jobs in rural communities.
It is important once again to briefly visit GHG emissions as they are categorized into three groups or “scopes.”
Scope 1 covers direct emissions from owned or controlled services.
Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting companies.
Scope 3 includes all other indirect emissions that occur in the company’s value chain. Again, adding natural gas can offset Scope 3 emissions entirely because of the importance of avoiding the pre-combustion release of bio-methane.
Private sector companies like Nacero should be applauded for taking the lead in creating demand for renewable natural gas. Gasoline made from natural gas and renewable natural gas will create a new source of demand for renewable natural gas, and in turn, create a new source of income for the dairy industry.
Is there a bright future for dairy manure as a renewable energy source? I believe so for a number of reasons. First of all, fossil fuels are finite. There is going a be a gradual shift away from fossil fuels in terms of investments by energy companies and its demand as an energy source. However, it is still going to be in the mix as a needed source of energy as we transition to renewable energy sources.
When the winds don’t blow
Secondly, solar and wind are clearly not going to be the major sources of renewable energy in the future. They will be part of many different sources of renewable energy as technology uncovers other sources and further develops current renewable energy sources that are available but need more refinement. Solar and wind are not very reliable given the problems with battery production and storage in solar power. Also, when the wind doesn’t blow, the lights don’t stay on.
As the old saying goes, you can’t put your eggs all in one basket. So, multiple sources of renewable energy will be needed in the future, and our nation’s power grid will have to be upgraded to accommodate the movement of energy from state-to-state and to handle renewable energy such as solar as it is produced since storage capacity right now is limited.
Dairy manure has potential, as it has already demonstrated. There are 9.4 million head of dairy cattle in the U.S. alone on 29,858 dairy operations as of 2021. Digesters work the best on larger dairy operations but technology advances may change that.
What we do know is that methane gas from dairy manure can be converted to natural gas for vehicle use rather easily and cheaply and its use cuts down significantly on GHG emissions. Equally important, it is an efficient source of energy. We will all see what happens in the upcoming years. But as of right now, the future looks bright!
