Large dairies experiment with creating biofuel from cow manure, a prospect made profitable by carbon tax credits

How manure is turned into natural gas (StarTribune graphic; click on it to enlarge)

When you think renewable energy sources, you're probably thinking of wind, sun, or even corn. You're probably not thinking of cow manure though. But policies California and Oregon have passed to fight climate change have created a nationwide market for biogas produced from cow manure, Adam Belz reports for the Minneapolis StarTribune.

"Farmers who capture the methane, a greenhouse gas more immediately potent than carbon dioxide, can earn lucrative low-carbon credits. Dairies across the country, especially large ones, are investigating the prospect," Belz reports. "Two large dairies in northwest Indiana are already certified for credits in California. Three Wisconsin dairies are producing biogas for transportation fuel and three more projects there are under construction, according to the Coalition for Renewable Natural Gas."

Participating farmers pump the manure into an airtight chamber that captures the gas, which bubbles up within a few weeks. After the gas is collected, carbon dioxide and other impurities are filtered out and the methane is injected into a nearby interstate gas pipeline. "The carbon-credit systems in California and Oregon reward methane that’s captured and directed at the niche market of natural-gas-fueled vehicles," Belz reports. "Fuel producers in those states, such as refiners, must meet annual targets for greenhouse gas emission reduction. If they don’t, they can purchase low-carbon credits to help them meet the target."

How much money does that work out to? A 2017 study looked at the Fair Oaks dairy in northwest Indiana, which has 10,500 cows and can produce about 221,000 dekatherms of pipeline-ready gas per year. (A dekatherm is 1 million British thermal units, or BTU.) Since biogas credits in California are about $68 per dekatherm, the farm could bring in $15 million in revenue per year. Production costs for such biogas are between $15 and $30 per dekatherm, Belz reports, which would work out to between $3.3 million and $6.6 million per year for Fair Oaks. That means the farm could get between $8.4 and $11.7 million in profit.

Though environmentalists are generally glad to see any industry reduce greenhouse-gas emissions, "some worry that government incentives prodding farmers to produce biomethane will reward only very large operations," Belz reports.