What Is the Issue?
Methane digester systems capture methane from lagoon or pit manure storage facilities and use it as a fuel to generate electricity or heat. In addition to providing a renewable source of energy, digesters can reduce greenhouse gas emissions, odors from manure, and potential contamination of surface water. Methane digesters have not been widely adopted in the United States mainly because the costs of constructing and maintaining these systems have exceeded the value of the benefits provided to the operator. Policies to reduce greenhouse gas emissions could create new opportunities for livestock producers to earn revenue from burning methane from manure, making such biogas recovery facilities profi table for many livestock producers. However, there is likely to be wide variation in the scale, location, and characteristics of livestock operations that would benefit, so these policies could have longrun structural implications for the U.S. livestock sector. In this report we estimate the number and type of hog and dairy operations that would find it profitable to adopt a digester at any given carbon price. We also estimate the relationship between the price of carbon (CO2) and the amount of emissions reduced by digesters on these operations.
What Are the Major Findings?
The extent to which livestock operations can reduce greenhouse gas emissions from manure management depends in part on the number of livestock operations that adopt methane digesters, which in turn depends on digester profitability from energy savings, energy sales, and/or sales of emission reductions in a carbon offset market. An offset market allows livestock producers who reduce methane emissions to sell these reductions or “carbon offsets” to other greenhouse gas emitters who might face emissions caps.
Factors that influence digester profitability and that determine the characteristics and locations of the livestock operations that could benefit from the introduction of a carbon offset market include:
• operation size—costs of constructing and operating a digester decline on a per-head basis,
making digesters more profitable on larger operations
• the selling price of surplus electricity—a higher price makes digesters more valuable for operations that can generate more electricity than they use on-farm
• farm electricity expenditures, which depend on electricity prices and onfarm use—higher expenditures make digester-generated electricity more valuable, especially if the operation cannot sell electricity or if the selling price of electricity is below the retail price