By Leah Douglas and Nichola Groom
WASHINGTON, Jan 11 (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.
Farmers could then sell the trapped methane for use in
generating electricity or vehicle fuel in the form of compressed
natural gas.
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. The industry that produces gas from
organic waste says subsidies would boost the development of the
machinery.
But some environmental groups and Democratic lawmakers have
lined up against the subsidies, saying they could backfire
because if capturing and selling methane from cows becomes
profitable, it could incentivize large farms to grow, increasing
greenhouse gas emissions. They warn that supporting a market for
biomethane fuel would delay a transition to an all-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.
The debate, which has intensified as use of the technology
has expanded, reflects the difficulties of reducing emissions
from dairies due to growing cow herds and a lack of commercially
available technologies to reduce methane, which is produced both
by manure and animal digestion.
Methane, a potent greenhouse gas that has a higher
heat-trapping potential than carbon dioxide (CO2), is the
second-biggest cause of climate change behind CO2.
Senate Democrats’ full support is needed to pass the BBB
spending package, which has garnered no backing from Senate
Republicans. Democrats were unable to pass the bill last month
but say they hope to do so in some form this year.
Some Democrats are critical of these methane-trapping
machines, known as anaerobic digesters. 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.
Livestock methane pollution accounts for more than a third of
U.S methane emissions, according to the U.S. Environmental
Protection Agency (EPA). Digesters are mainly found at dairies
because milking cows produce more manure than beef cattle.
The spending plan would make digester owners eligible for a
30% tax credit and put billions of dollars into U.S Department
of Agriculture (USDA) programs that could help digester
companies offset their costs.
Digester developers and investors say the criticism from
green groups is a distraction from efforts to combat climate
change.
“What’s the alternative?" said Bob Powell, chief executive of
San Francisco-based digester developer Brightmark LLC. “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.
In 2009, the Obama administration and an industry group, the
Innovation Center for U.S. 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.
Instead, methane emissions in the sector have risen more than
15%, in part driven by growth in herd size, according to EPA
data reviewed by Reuters. The number of dairy cows nationwide
has grown 3.3% since 2009, according to USDA data, to 9.39
million cows.
The dairy industry has since pledged to become greenhouse gas
neutral by 2050, and the USDA will continue to work with the
industry to meet that goal, according to an agency official.
Current agriculture secretary Tom Vilsack was also secretary
under Obama.
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.
Digesters are pricey, typically costing between $4 million
and $7 million each, and often require dedicated staff to run
them. 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.
But the landscape has changed, industry officials said,
because since 2017 digesters have been able to generate
lucrative credits for the biogas industry under a California
policy called the Low Carbon Fuel Standard. 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.
In a sign of the controversy around digesters, however,
environmental groups in October petitioned the California Air
Resources Board (CARB) to make them ineligible for credits,
arguing that their presumed role in combating climate change was
inflated and that the credits encourage making more manure.
California is the top dairy state and the industry is
responsible for more than half of the state’s methane emissions.
CARB said it is evaluating the petition.
Meanwhile the state is doubling down on the technology, and
CARB has said it may need to spend between $700 million and $3.9
billion to build 200 additional digesters to help meet a goal it
set in 2016 to reduce dairy methane emissions by 40% below 2013
levels by 2030. The cost depends on whether the digesters would
be paired with polluting internal combustion engines or cleaner
but far more expensive fuel cells.
The state is currently on track to meet only half its
emissions-reduction goal, after spending nearly $200 million on
digesters since 2015.
"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.
Investment in U.S. biogas projects has already tripled since
2017 to more than $1.6 billion, according to data from research
firm AcuComm, including from players like oil companies Chevron
and BP, as well as car maker BMW, which are
seeking to cash in on the biogas market and its subsidies.
There are currently 317 operational manure digesters
nationally, up from 141 in 2009, according to EPA data.
At the moment, digesters favor large farms. 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. Just 714 of the U.S. roughly 40,000 dairy farms have
2,500 cows or more, according to the most recent USDA census.
But the proposed incentives in BBB could benefit some smaller
farms, said Jed Davis, head of sustainability at Cabot Creamery
in 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 reported from Washington, D.C., Nichola Groom
from Los Angeles. Editing by Richard Valdmanis and Julie
Marquis)
BP (BP.)