On June 16, Representative Tom Reed (R-NY) and Ron Kind (D-WI) along with 12 Republican and Democratic co-sponsors introduced the Agriculture Environmental Stewardship Act (H.R. 5489), which would expand the eligibility of biogas systems under the Investment Tax Credit (ITC), a 30 percent tax credit for eligible renewable technologies. Currently, the ITC extends only to biogas systems which use the produced methane as electricity, whereas H.R. 5489 would extend the 30 percent tax credit to biogas that is put into natural gas pipelines and used as compressed renewable natural gas in vehicles. Increasingly, nutrient management is a significant problem on farms – particularly those with livestock or dairy operations – but the economics often don’t work to install nutrient management systems.
States and Regions Grappling with Excess Nutrients in Water and Air
Across the United States communities and regions are dealing with water quality issues driven by excess nutrients stemming from crop production, livestock and dairy cows, as well as urban sources, to a lesser degree. Problems such as toxic algae blooms in Lake Erie and water quality in the Chesapeake have prompted responses from federal and state agencies to address the problem.
States such as Ohio, Minnesota and Wisconsin have adopted various nutrient management strategies to keep excess phosphorous and nitrogen out of waterways. In the Chesapeake Bay watershed, six states have agreed to nutrient budgets imposed by the EPA to address nutrient flows from fertilizer and manure into the Bay. Debate over the Chesapeake Bay cleanup plan, and whether the Administration has the authority to set pollution budgets mirrors the heated debate around the Waters of the United States (WOTUS). WOTUS centers on whether or not EPA has jurisdiction over the quality of water flowing off of farms into larger bodies of water.
With increasing nutrient management issues, manure represents a significant challenge for farms, but not just in terms of water quality. Cow manure is roughly 50 to 70 percent methane. While shorter-lived in the atmosphere, methane is a potent greenhouse gas (GHG), 84 times more effective at trapping heat in the atmosphere than carbon dioxide in a 20-year period. Agriculture is the largest source of domestic methane emissions, at 23 percent. Currently, methane accounts for almost 9 percent of domestic GHG emissions, down from 11 percent of total GHG emissions in 1990, despite an uptick in methane-producing activities. However, methane emissions are expected to rise by 2030, unless further action is taken.
Turning a Problem into a Solution
Anaerobic digestion can turn a problem into a solution – the process converts manure, food scraps and agriculture waste into biogas and fertilizer, allowing farms to be more self-sustaining, economical, and environmentally friendly. The EPA’s Biogas Roadmap estimates that 11,000 biogas systems could be added to farms and dairies in the United States, producing enough power for 3 million homes and reducing methane emissions by 4 to 54 million metric tons by 2030.
The potential for biogas is huge -- according to USDA, if there were 2,600 digesters on U.S. dairy farms, they would produce an astonishing 11.7 million megawatt hours of electricity per year from biogas (worth $894 million), $467 million dollars worth of nitrogen, $325 million dollars of phosphorous, and $217 million dollars per year of fiber. These numbers would be even higher if calculations included the potential for biogas production at hog, cattle, poultry and produce farms, as well as waste from food manufacturers, restaurants and homes.
Expanded ITC Could Make Biogas Systems More Economical for Small and Medium Farms
Unfortunately, biogas systems have not really taken off in the United States, as compared to Germany or other countries with strong subsidies for digesters. The average cost of an anaerobic digester runs approximately $1.5 million dollars, which is one reason the EPA’s AgStar program recommends digesters for farms with 500 or more cows. The total cost of systems, combined with low natural gas prices, make the economics of digestion difficult for dairy farms, the majority of which are small.
According to a recent presentation given by the USDA’s Northeast Climate Hub on Cost-Effective Small Scale Digesters, there are only four anaerobic digesters on farms with 200 cows or less. In total, there are only 260 digesters on farms, with the remainder in waste-water treatment plants. Yet, if small-scale dairy operations had digesters, there would be 25 percent less natural gas consumption and 5 percent less methane emissions from these farms, not to mention the benefit to water quality. Lack of policy support, such as net metering or inclusion of the ITC have further hampered the progress of these systems.
The American Biogas Coalition (ABC) and the National Milk Producers Federation think that expansion of the ITC for biogas systems could tip the scales in favor of adding more digesters to U.S. farms. Jim Mulhern, President and CEO of the National Milk Producers Federation commented that “the creation of this new investment tax credit … will help dairy farmers to utilize these new, often expensive technologies on their dairies.”
Not only can an expanded biogas ITC make the systems more economical, incentivizing their use on dairies can have multiple benefits. Water and air quality would be improved, and digester co-products like fertilizer and compost can improve soil quality and reduce fossil inputs on the farm. According to Patrick Serfass, the bill is a win-win for farmers and the environment, with Serfass commenting, “Biogas and nutrient recovery systems contribute to cleaner, healthier soil and water and the Agriculture Environment Stewardship Act will make these systems possible.”
It is expected that the Senate will introduce a companion bill in the near future.
For more information see:
Biogas Industry Applauds Agriculture Environmental Stewardship Act (HR 5489), BioCycle Magizine
The war over Chesapeake Bay, Politico