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Financial Benefits of a Dairy Biogas Digester


Dairy biogas systems have several environmental and waste management benefits, but let's focus on the financial benefits to the COWPOWR farmer.


Aaron Smith, UC Davis, estimated a gross value of $2,827 per cow per year in air pollution and biofuel credits in February, 2022. The value of those emission credits have been reduced due to oversupply, but let's look at the current market.


The Low Carbon Fuel Standard (LCFS) is the California emission credit that pays the greatest value to the dairy. The LCFS is a complicated program that incentivizes fuel suppliers away from petroleum products. For example, 1/2 the diesel in California now comes from vegetable oil and animal fats. These incentives have caused an oversupply of some fuels, reducing the value of incentives for other, more desirable fuels, like biogas from dairies. The California Air Resources Board (CARB) is currently reviewing policies that will increase the value of dairy biogas. Bottom-line, the LCFS credit has been reduced by half, but CARB polices will support pricing and extension of the credit for at least 10 years for systems built before 2030.


Additional value comes from Federal emission credits, known as RINS, which have increased in value. Of course, the biogas itself has value as renewable natural gas (RNG), although much less than the government emission credits. Here are the estimates from US&R Services for a herd of 1,000 cows.

Cow Herd

1,000

 

 

Price Range

LCFS:

 $    100

 $    1,300,000


RINS:

 $         2

 $        360,000


RNG

 $         5

 $          70,000


 

 

 $    1,730,000

 

 

Estimates may vary based on biogas production per cow and market prices, and are only provided for comparison purposes.


These estimates illustrate a potential gross income of $1,730 per cow without considering the cost of operating a biogas digester. Some estimates place operating costs at $300 per cow, or about 18%. Additional costs will come from upgrading and transporting the RNG to it's point of sale. However, even if expenses are assumed as high as 50%, the net benefit to the farmer is still around $900 per cow.


The COWPOWR plan is aggregating many dairies together into one large biogas business.  This effort will achieve economies of scale to obtain funding, hire experts, build and operate the digesters and market the biogas.  All profits are then distributed to the dairies.

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