Biogas Poised to Seize RFS Potential
While Environmentalists Push to Kill RFS e-RINS Proposal, Biogas Industry Ready to Grow
LINCOLN, Neb. (DTN) -- This past December, EPA proposed adding an electric-renewable identification numbers program, or e-RINS, to the Renewable Fuel Standard to grow biogas-based electricity production to help fuel electric vehicles. During a recent public hearing, environmentalists expressed concern the new program would lead to a proliferation of new confined animal feeding operations, or CAFOs, as more farmers try to capture the potential value of methane from increased manure production.
Adrian Busby, senior food and climate policy analyst with Friends the Earth, said during the RFS virtual hearing on Jan. 11 that EPA should instead focus on cutting pollution from feedlots and other CAFOs, rather than incentivizing increased livestock production.
"Factory farms produce an immense amount of waste and pollutants that degrade soil, air and water and destroy the quality of life of fence line communities, which often have compounded exposure to risk due to historic but lingering contamination, while also being targeted for new industrial development," Busby told the agency.
"Research shows that to be living in proximity to a factory farm can decrease life expectancy. These communities are experiencing unconscionable living conditions and adverse health impacts from these operations, and EPA's decision to provide a pathway for electricity produced from factory-farmed biogas will further entrench this industry and its harms."
In reality, the e-RINS proposal is more likely to spark a myriad of investments in new biogas plants at existing animal-feeding operations, a biogas industry expert told DTN. Livestock production and a need for more CAFOs to feed more animals is based solely on market supply-and-demand factors.
It is more likely expanded biogas production would come from existing feedstocks such as manure and food waste, which are in much need of management.
Patrick Serfass, executive director of the American Biogas Council, told DTN that environmental groups' beef is not with biogas, per se.
By and large, environmental groups continue to grow and thrive by their organized opposition to large farming operations -- feedlots, dairies, major hog operations and the like.
"These groups are some of the same groups that have been anti-large farming operations for many, many, many years," Serfass said. "And some of the same groups that have been anti-meat and promoting vegan diets. And, basically, what has happened is that they've discovered that that messaging isn't working to stop large farms."
Simply put, environmental concerns about expanding biogas production are unfounded, Serfass said.
There are 2,300 sites producing biogas in the U.S. in all 50 states, according to the American Biogas Council.
Included in the total are 316 on-farm anaerobic digesters, 1,269 wastewater recovery facilities, 66 stand-alone systems that digest food waste, and 652 landfill biogas projects.
BIOGAS POTENTIAL MASSIVE
The potential for biogas production at existing sites is massive, making it highly unlikely there would be an explosion of new CAFO construction like the RFS did for ethanol production in the early 2000s. What's more, biogas production is reducing methane emissions.
The American Biogas Council says there are nearly 15,000 facilities with the potential to produce biogas, including 8,574 dairy, poultry and swine farms, as well as 3,878 wastewater recovery plants -- that includes about 380 locations that already produce biogas that goes unused.
The big potential game-changer for biogas enthusiasts is finding a way to harness food waste, which has an even greater biogas potential than manure. More than 2,000 food scrap-only systems in the U.S. flare biogas at 415 landfills.
RFS BIOGAS OPPORTUNITY
Renewable Natural Gas companies are beginning to seize the opportunity by announcing plans to build $150 million worth of biogas production facilities on existing farms.
At the beginning of January, for example, UGI Corporation announced that MBL Bioenergy entered an agreement to develop dairy manure waste-to-renewable-natural-gas projects in South Dakota.
The company plans to build on three farms near Brookings that are expected to generate 300 million cubic feet of RNG annually by 2024. Biogas produced from dairy manure will be piped to a gas-upgrading plant before moving to market.
In addition, plants are slated for two farms in Summit, South Dakota, expected to generate about 225 million cubic feet of RNG annually by sometime in 2024.
BIOGAS UPS, DOWNS
Between 2016 and 2018, natural gas fracking operations began in earnest, as there was a push to shut down the use of coal in energy production. Also, at that time, the U.S. was importing more oil and energy than it was consuming.
"And then, the discovery of fracked gas changed the economics for everything in our energy space," Serfass told DTN. "And it made gas really cheap. That plus oil exploration made us a net-exporter. So now we've got really, really cheap energy in the U.S. So, what that means from the biogas standpoint is that about five to seven years ago when that happened, the price of making electricity in the U.S. plummeted."
When the price of gas plummeted back then, the price of electricity plummeted with it. Before the price fell, Serfass said, biogas producers could get between 8 and 12 cents per kilowatt hour.
"But with natural gas making everything really cheap," he said, "Now, you're lucky to get like 2 to 5 cents a kilowatt hour. And, obviously, between 8 to 12 cents and 2 to 5 cents, that is like a third to a half as much revenue. And, so, it became a lot more difficult to develop biogas electricity systems."
As a result of the economics, companies developing biogas-to-electricity projects shifted gears away from electricity to renewable natural gas.
"That's why there's been so much talk over the last five years or so about RNG, RNG, RNG, because that's the best way to make revenue from your biogas project," Serfass said, "to sell into the Renewable Fuel Standard and the low-carbon fuel standard (in California)."
With the development of an e-RIN program by the EPA in the Renewable Fuel Standard, Serfass said it could bring a much-needed push for the biogas industry to become a dominant player in the energy sector.
Even with a potential revenue boost that could come from e-RINS, the economics for biogas projects favor the larger production volumes.
"So, we think about 1.7 billion e-RINS could be generated from the existing fleet of operational biogas projects," Serfass said.
Serfass said RNG technology isn't at a place where it can scale down economically.
"And, so, that means that as you're developing RNG projects, we're looking for the largest projects, and the largest projects that are going to produce the most gas are either landfills because they're already large, or it's the largest volumes of feedstock," he said.
"The largest volumes of the newer feedstocks are food waste. So, that's why there's been a focus recently just in the last couple of years on larger projects, and you've seen more talk about large farms, but really, it's just large amounts of feedstock. The large farm doesn't matter. It's how much manure is there."
So where does this leave individual farms that want to produce biogas?
In some areas of the country, farmers have organized cooperatives of sorts to collect a large volume of manure waste to use in biogas production.
In Europe, for example, there are local farmers who own million-ton digesters and provide manure from 60 to 70 relatively small farms because the economics for such a setup work, Serfass said.
"They figured out a way to make the logistics of digesting all the manure on all sizes of farms," he said. "You have huge biogas systems, but you don't have large farms. And that's how they do that there."
FOOD WASTE POTENTIAL
In the U.S., Serfass said, it's possible to develop similar cooperative systems. In addition, he said there is significant biogas potential using the massive amount of food waste in the U.S.
According to USDA estimates, between 30% and 40% of the U.S. food supply is wasted each year -- or about 133 billion pounds.
Serfass said U.S. farms could produce more biogas by finding a way to use more food waste.
"It doesn't matter the size of farm," he said. "It is a matter of the volume of material that counts because that's going to produce a lot of gas."
Food waste produces between 10 and 30 times more biogas than manure does, Serfass said.
"So, as RNG project development has focused on these larger volumes of feedstock, and thankfully, from an environmental standpoint, that also means you're getting the most methane-emission reduction," he said, "because you're taking these large manure lagoons or large volumes of food waste or large volumes of wastewater sludge that are already producing methane into the atmosphere, you're now capturing almost 100% of that methane.
"The main point of all of this is what are you going to do with all of the organic material that we have in the U.S. if you don't recycle it?"
Serfass said biogas systems are flexible and can be designed to use any combination of feedstocks.
"The curse is that means every biogas system is different," he said. "You can make a lot of things similar, but at the end of the day, they're going to be two totally different systems. And even if you developed exactly the same system in the digester, you have microbes of the living system."
Commercial-size systems range in cost from $1 million to $100 million, Serfass said.
"Most farmers are not going to make an investment if they can't get an ROI (return on investment) of around five years or less. Maybe that's part of why there's 300 systems and 8,500 potential systems. They're farmers first. The fact is no farmer is buying an animal for the amount of manure that they are producing."
Todd Neeley can be reached at email@example.com
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