Stock Groups

Biden spending bill ignites debate over dairy methane pollution -Breaking


© Reuters. FILE PHOTO – Healthy Holstein dairy cattle feed on a central Washington farm. This file photo was taken December 24, 2003. REUTERS/Jeff Green/Files (UNITED STATES)/File Photo

Leah Douglas and Nichola Garoom

WASHINGTON (Reuters) – As U.S. President Joe Biden’s administration seeks to revive its ambitious social spending and climate plan in Congress, environmental groups and the farm industry are at odds over proposed subsidies aimed at offsetting agriculture’s substantial contribution to global warming. Tax credits and grants proposed in the administration’s sweeping “Build Back Better” bill(BBB) would bolster the small but fast-growing market for manure-based methane gas by supporting construction of machines that trap the gas from open manure pits on dairy farms and other livestock operations. It could then be used to produce electricity and vehicle fuel as compressed methane. The proposed incentives have been hailed by dairy farmers and investors as a “game changer” that could pad farm incomes while combating climate change by providing a less-polluting alternative to fossil fuels. According to organic waste producers, subsidies will boost development of machinery. Some environmentalists and Democratic legislators have resisted the subsidies. They claim that if methane capture and sale from cows is profitable it will encourage large-scale farming, which could increase greenhouse gas emissions. The opposition to the market for biomethane would hinder the transition from an electric future. “If you start making money off of pollution, you’re not going to stop polluting,” said Rebecca Wolf, policy analyst at environmental group Food & Water Watch. As the use of this technology increases, the debate has intensified. This is due to the difficulty of reducing methane emissions from dairy farms, as well as the lack of commercially-available technologies that can reduce it. Methane can be produced by animal digestion and manure. The second largest cause of climate change is methane. It’s a powerful greenhouse gas with a greater heat-trapping capacity than carbon dioxide (CO2).

Senate Democrats’ full support is needed to pass the BBB spending package, which has garnered no backing from Senate Republicans. The bill was not passed by the Democrats last month, but they say that they plan to try again this year.

Anaerobic digesters are also criticized by Democrats. Sen. Cory Booker, a New Jersey Democrat, told Reuters that money in the plan should instead be “targeted to family farmers for soil health and regenerative agriculture practices,” such as planting cover crops and employing no-till farming.

West Virginia Senator Joe Manchin, a Democrat whose opposition to the spending plan led to its failure to pass the Senate in December, this month expressed support for clean-energy tax credits, bolstering the industry’s optimism that the plan could still be enacted. According to the U.S. Environmental Protection Agency, more than a quarter of U.S. methane emissions are caused by livestock methane. Because milking cows are more fertile than beef cattle, digesters can be found mainly at dairies. A spending plan could make digester owner eligible for a 30 percent tax credit. The U.S. Department of Agriculture (USDA), would also invest billions of money in programs that could assist digester companies to offset their cost. Investors and digester developers say that the negative criticism from environmental groups distracts from climate change efforts. “What’s the alternative?” Bob Powell is the chief executive of Brightmark LLC in San Francisco, a digester development company. “More methane into the air.” MISSED GOALS A previous deal between the administration of former President Barack Obama and the dairy industry to promote digesters failed badly in reducing emissions, according to a Reuters review of government documents and data. The Obama administration in 2009 partnered with the Innovation Center for U.S. Industry Group. Dairy, pledged to reduce the industry’s greenhouse gas emissions by 25% by 2020 over levels in 2007, in part by expanding federal support for new digesters. According to Reuters data from the EPA, methane in this sector has increased by more than 15% due to an increase in dairy herd sizes. USDA data shows that the national number of dairy cattle has increased 3.3% to 9.39 Million cows since 2009. According to an official at USDA, the dairy industry pledged that it will become carbon neutral by 2050. The USDA will work closely with the industry in order to achieve this goal. Obama’s current agriculture secretary Tom Vilsack is also the secretary. The industry missed the 2020 goal in part because digesters were so expensive and there was no market then for the gas they captured, according to the Innovation Center’s Karen Scanlon, executive vice president of environmental stewardship, and Jim Wallace, senior vice president of environmental research. It is expensive to buy digesters, which can cost between $4 and $7 million per unit. They also require dedicated staff. Digesters also don’t capture the 27% of U.S. methane emissions that come from livestock enteric fermentation, or cow burps, for which there is no commercial-scale solution. Industry officials claim that since 2017, digesters have been capable of generating lucrative credits for biogas industries under the Low Carbon Fuel Standard in California. Even out-of-state producers can claim the credits if the gas they produce is piped to fuel the state’s’ trucks and buses. The value of those credits has roughly doubled since dairy methane was included in the program, to around $200, and the policy has helped to “super-charge the industry,” Wallace said. However, in response to the debate surrounding digesters in October, environmental groups asked the California Air Resources Board for credit exclusion. The board argued that digesters’ role in combating climate changes was overstated and credits encourage the making of more manure. California is the top dairy state and the industry is responsible for more than half of the state’s methane emissions. CARB indicated that they are evaluating this petition. CARB stated that the state is increasing the spending on technology. It may spend $700million to $3.9 billion for 200 new digesters in order to achieve its 2016 goal to cut dairy methane emissions to 40% lower than 2013 levels. The cost of digesters depends on whether it is paired up with polluting internal combustion engine or cleaner, but more costly fuel cells. After spending close to $200 million since 2015 on digesters, the state currently is only on track for half of its emission-reduction goals.

“We think we can realize the rest of the reductions that we’re hoping to see through additional digesters, as well as some other reduction processes,” said Ryan Schauland, acting chief of the project assessment branch of CARB. According to AcuComm data, investment in U.S.-based biogas projects increased by more than three times since 2017, to $1.6 billion. This includes players such as oil companies. Chevron (NYSE:) and BP(NYSE:), along with car manufacturer BMW, are looking to make a profit on the growing biogas market. According to EPA data there are now 317 operating manure digesters in the United States, up from 141 during 2009. Large farms are preferred by digesters at this time. One 2018 study of the potential for dairy biogas in Idaho found that a farm needed at least 3,000 cows for an “economically viable” digester operation. According to USDA Census, 714 out of America’s roughly 40,000 dairy farms are home to 2,500 or more cows.

However, the BBB incentives could be beneficial to smaller farms according to Jed Davis of Cabot Creamery (NYSE:) Creamery, Vermont. He said six of Cabot’s farms have digesters and more are in development. “I’m not imagining a future where every farm uses anaerobic digestion,” Davis said. “But I’m bullish on the fact that there is more opportunity than is currently available.”

Leah Douglas was reporting from Washington, D.C., Nichola Garoom reported from Los Angeles. Richard Valdmanis & Julie Marquis edit.