Chugga Chugga Moo Moo: Developing Cow Power

Carol Lu, MPA


While solar and wind power have become synonymous with renewable energy, the US Environmental Protection Agency (EPA) has made it a priority to support the commercialization of a much less glamorous source of energy – dairy biogas from digester systems. Biogas (bio-gas) is gas produced by the biological breakdown of organic matter in the absence of oxygen, and digester systems are industrial structures designed to capture that material. Located on the dairy farms themselves, digesters capture biogas from manure, transforming waste to energy. These systems benefit the environment by reducing water pollution from nutrient run-off. And, they represent a potential business opportunity. Even in this win-win situation, the current nascent digester industry is not economically sustainable: electricity sales to the wholesale market don’t justify capital costs. Entrepreneurs may make inroads to costs through “learning” on operations, but more is needed to push the industry toward profitability.

As a key environmental player with strong connections to local regulatory agencies and regulated entities, the EPA can help to increase digester project revenues in two ways:

• Reduce barriers to co-digestion. Because restaurant grease has high energy potential, co-digestion of these wastes with manure would allow projects to generate double or triple the electricity at nearly the same costs. In addition, digester developers could charge restaurants a tipping fee to dispose of their grease. These additional revenue streams could make a project profitable. Unfortunately, co-digestion in areas like California is nearly impossible because of strict environmental permitting standards. The EPA should work with local agencies to develop a fast-tracked permitting exception for diary digester projects in states where co-digestion is not permitted.

• Facilitate direct partnerships between large electricity end-users and digester projects. By directly providing electricity to an end-user rather than selling electricity to the wholesale market, a project developer is able to obtain a higher price for its renewable energy. Higher prices mean higher revenues. As an agency that regulates both large industrial electricity users and small dairies, the EPA is in a unique position to match these parties together. Thus, the EPA should develop an internal process in which those that work with large electricity users in the air permitting office collaborate with those that work with dairies in the water and agriculture offices. With sufficient support from the top, this intra-agency working group has the potential to bridge this critical gap.

With California’s cap-and-trade program rolling out in 2013, dairy digester projects across the United States may be able to supplement electricity revenues with compliance-offset revenues. Eight percent of emissions reductions by entities regulated under the cap may come from offsets, and livestock manure projects are one of the four approved offset project types. While there are many other factors to ensuring sustained deployment of dairy digester technology, increasing revenue potential is a vital first step.