Ten Years Is Enough for Methane Credits on Manure Digesters, Says Analyst

The California Air Resources Board (CARB), which oversees the state’s low-carbon fuel program, is considering a change in rules for the manure digesters on dairy farms that prevent methane emissions by capturing it for use as a transportation fuel. The digesters are eligible for up to 30 years of prevented-methane credits at present. CARB has proposed a reduction to 20 years for digesters built by 2030.

“Prevented-methane emissions cover the cost of constructing a digester,” said agricultural economist Aaron Smith of the University of California in a blog. “However, after the initial 10-year crediting period, there is little economic justification to continue the credits.”

Digesters cost around $8.6 million for a dairy farm with 2,500 cows and produce around 760 metric tons of methane a year, said Smith, who calculated likely returns from the sale of the gas and the value of state and federal credits versus the amortized cost of the digester over 10 years. At current credit prices, digesters receive $3,540 per ton of methane abated, which is slightly higher than the annual cost to build and operate the digester, wrote Smith.

“Credits for prevented methane emissions make digesters on livestock operations unique. Digesters on landfills do not receive such credit,” he said, remarking on “the weirdness of running agricultural emissions policy through a transportation program.”