Faisal Vellani
Austin Berliner
Sharda Sharma
Mariana Nardon
Sinan Pismisoglu
July 20, 2009
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Used by dairy farmers to
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Process:
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store & dispose of manure
reduce waste odor
create fertilizer
burn methane
produce renewable energy
A hollow container fed by organic material, e.g., animal
manure
Resulting anaerobic bacteria eat & digest the organic
material
After digesting its “food,” the anaerobic bacterium emits
its waste: methane, CO2, and nitrous oxide
The methane and CO2 combine to create the
ultimate end product: biogas
• With a cap-and-trade scheme, regulated
entities will be “capped” at a set amount
• When regulated entities cannot meet this
requirement, they turn to a carbon offset
market
• An unregulated entity may undertake a
project to reduce carbon emissions and
receive a number of carbon offset credits
• Reductions must be . . .
1. Measurable
2. Verifiable
3. Permanent
4. Additional
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Is the project business-as-usual?
Source of contention to be discussed later in
the presentation
• Biodigesters are . . .
1. Measurable
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EPA provides formulas for calculating tons
reduced
2. Verifiable
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3rd parties can use meters to verify reductions
3. Permanent
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Digests methane and converts it into CO2,
thereby reducing the amount of CO2 emission
4. Additional
• Key Question:
 Is the project business-as-usual?
Would the project have occurred if the project
was not implemented as a carbon offset
project?
• Currently recognized as additional
 High costs make business-as-usual unlikely
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Need access to a carbon offset market to
overcome the costs
• Biodigesters can produce renewable
energy, creating further financial
incentives
• But, current regulations cause roadblocks
for making biodigesters economically
feasible
• Today’s proposed changes can improve
financial profitability as well as accomplish
the goal of reducing emissions
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These changes will present challenges to the
Additionality requirement
However, this requirement should overlooked to
promote goal of reducing GHG emissions
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Interconnection fees
Demand charges
Net Metering
Renewable Energy Certificates (RECs)
• Amount paid to utility for connecting to the
power grid
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Initial connection fees
• Protective measure for the safety of the farm
and utility personnel
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To ensure that the entity has electricity at all time
E.g., if a power line near the farm is broken
• Proposed change – eliminate or reduce
interconnection fees for biodigester projects
• Incurred during biodigester downtime
• Biodigester owners required to shut-off the
system for maintenance, mechanical failures, etc.
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Average: 3 days out of the year
• During downtime, system receives electricity
from utility
• Maximum amount of energy the owner would
demand in any fifteen-minute interval
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The highest recorded demand is used to determine the
demand charge for the month
Substantial fee charged by utility
• Example, California dairy farm
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Before biodigester = $180,000
Ater biodigester = $90,000
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3 days of energy usage in 1 year
Farm produced 25% surplus & contributed to the
power grid
• Proposed change – eliminate demand charges
and charge based on actual energy usage
• Selling surplus energy from a renewable energy
source is a necessary financial incentive
• Act promotes:
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Use of renewable energy and energy efficiency
Reduction of dependence on foreign oil
Diversification of the electric power industry
• Requires electric utility companies to purchase
renewable power from non-utililites
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Biodigesters are qualified facilities
• Act sets the ground work for state net metering
and REC regulation
• Occurs when the renewable energy source provides
electricity to the utility company
• The “net” =
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Difference between the electricity supplied back by this customer
& the electricity supplied by the utility to the qualified customer
• States regulate the agreement made between the utility and
the customer
• Issue – vast variation in net metering laws state-to-state
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Some states require utilities to purchase surplus of renewable
energy at an “avoided cost”
Other states allow overage to be zeroed out at the end of the year
• Proposed change – consistent, favorable net metering laws;
customer should be compensated for energy they
contribute
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Certificates issued for clean power
production from a renewable energy source
By purchasing a REC, an entity pays the
difference between the market rate for
clean energy and the production cost of
clean energy.
Only a few states address the issue & those
that do vary on their treatment of RECs
Issue – REC ownership
Proposed change – allow project owners
(dairy farmers) to retain REC ownership
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Proposed changes challenge the carbon offset
requirement that projects be Additional
In general, biodigester projects present many
profit-generating avenues
Changes proposed will provide financial benefits
that may adequately outweigh start-up &
maintenance costs
So, will biodigester projects become business-asusual?
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Would the project have occurred but for its certification
as an offset project?
If the project would have been undertaken regardless of
its ability to generate offsets, then it is not additional
Carbon offsets
Reduction in interconnection fees
Reduction in demand charges
Renewable energy production
 For on-farm use, avoiding electricity costs
 Compensation for surplus sale with net
metering agreement
• REC ownership
• Sale of fertilizer
• Reduction in odor maintenance costs
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• Goal: Reduce GHG Emissions
• Biodigesters provide tremendous environment benefits
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Reduce GHG emissions from dairy farms by 96%
Produce 100% clean-burning energy
PERMANENTLY eliminate GHGs, compared to other carbon offsets
• Emissions reduction outweigh Additionality requirement
 Technicality should not discourage carbon offset certification of
biodigester projects
• Promotion of biodigesters needs immediate attention,
 To reduce emissions
 To increase a sustainable source of renewable energy
• Example: Vander Haak Dairy Farm
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Washington
10,000 square-feet, capable of handing 1,500 cows
$1.2 million Biodigester
Financial support up to 50% of cost
15-year investment
$16,000 carbon offsets in 2006
Capable of serving electricity to 180 homes
• Sold to the power grid
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Manure obtained from neighboring farms to make it
cost-efficient
Supplemental income from fertilizer, tipping fees,
bedding for cows
Faisal Vellani
Austin Berliner
Sharda Sharma
Mariana Nardon
Sinan Pismisoglu
Contact Info:
Faisal Vellani:
frvellani@gmail.com
Austin Berliner:
austinberliner@yahoo.com
July 20, 2009