CAR Livestock Methane Protocol &
Project Case Study
Scott Subler, Ph.D.
Environmental Credit Corp.
CAR Offsets Workshop
Houston, Texas, June 14, 2011
Environmental Credit Corp.
•
Leading US carbon offset
project developer and
”aggregator”
•
~ 65 projects listed through
programs including the Climate
Action Reserve (CAR), the
Clean Development Mechanism
(CDM), and the Chicago
Climate Exchange (CCX)
•
Project types include:
– destruction of ozone depleting substances
– agricultural methane destruction
– composting
– landfill and waste water methane capture
– renewable energy production
ECC’s Offset Projects in the US
ECC ranked as #1 US offset project developer in 2009
(PointCarbon)
Livestock methane capture
Landfill methane capture
Composting
Destruction of Ozone Depleting Substances
manure lagoon
Case Study: Fessenden Family Dairy
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King Ferry, New York (Finger Lakes Region)
1,100 dairy cows
Liquid manure management (flush system)
Open-air anaerobic manure lagoon
dairy barns
Dairy Farming
Manure collection
Photos: USEPA AgStar
Animal manure storage is a widespread
source of methane emissions
Odor
Greenhouse gases
VOC, NH3, H2S, N2O, CO2, CH4
anaerobic decomposition
(bacteria)
Air Quality Concerns:
• Greenhouse gas emissions (Fessenden Farm ~200 metric tons methane/year)
• Odor
• Ammonia
Open-air manure lagoon
Simple covers can capture methane from
lagoons and reduce GHG emissions
Air-tight membrane cover
Biogas collection system
Generator/flare
biogas
CH4
anaerobic digestion
Benefits:
• Reduced GHG emissions (Fessenden Farm > 4,000 metric tons CO2e/year)
• Reduced odor
• Improved stormwater management
• Potential for biogas use (renewable electricity, heat)
Covered manure lagoon
Lagoon Cover Design &
Implementation
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Simple, low-cost technology
U.S. supplier, local jobs
Rapid installation
Reliable operation
Farmer friendly
Methane Emission Reductions
• Established protocols
Methane Combustion
• Independently audited
• Formal registration
Renewable Energy Production
Fessenden Dairy -- Anaerobic Digestion to Energy
2nd Stage Effluent Storage
Manure &
Food waste
1st Stage Heated
Covered Lagoon Digester
Genset & Heat Exchange
Anaerobic digesters in US (livestock)
Number of operating digesters (Nov. 2010): AgStar Database
(129 Dairy)
Source: USEPA AgStar
Common Technologies for Dairy AD
• Ambient Temperature
“Lagoon Covers”
• Plug Flow/Mixed Plug Flow
Photo: RCM International
• Complete Mix
• Other…
Photo: Fair Oaks Farms
ECC Lagoon Cover Program
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ECC Build/Own/Operate
– Permits, insurance, major
maintenance
– Carbon monitoring, verification,
registration
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Rob Hilarides
Lindsay, CA
Routine oversight by farmer
Farmer compensated with share of
carbon credit value
Farmer can buy out lagoon
cover/biogas collection system to
own/operate for a larger share of
carbon value
Plug Flow Manure Digester
Mixed Plug Flow Manure Digester
Centralized Complete Mix Digester
Huckabay Ridge, Texas
Typical Livestock Digester Economics
• Capital requirements
– High ($1,000 – $1,600) per milk cow
– AD systems not always ‘farmer-friendly’
• Electricity prices
– Mostly low ($0.04 - $0.06/kWh)
• Renewable energy value
– Significant in some states ($0.02 - $0.07/kWh)
• Carbon prices
– Have been significant for some projects; uncertain market
• Tipping fees for off-farm organic materials (food waste)
– Site specific, but in some cases equal to or greater than
electricity revenues
• Separated solids value (nutrients, compost, bedding)
– Variable; often high value for bedding
CAR U.S. Livestock Project Protocol (v3.0)
• Project Definition
– The installation of a biogas control system (BCS) that captures and
destroys methane (CH4) gas from manure treatment and/or storage
facilities on livestock operations.
• Eligible technologies
– Centralized digesters
– Co-digestion of organic waste (greenhouse gas [GHG] benefits not
quantified for non-manure waste streams)
– Methane destruction onsite (enclosed flare, open flare, electricity
generation, thermal energy production)
– Methane destruction offsite (direct use via pipeline)
– Methane destroyed as fuel for vehicles (onsite or offsite)
– Biogas destruction in fuel cells
CAR Project Eligibility Requirements
• Location
– U.S., territories, U.S. tribal lands
• Start Date
– Project must be submitted within six months of becoming
operational
• Performance Standard
– Installation of one of the technologies accepted in the protocol
• Legal Requirement Test
– Project must not be required by law
• Regulatory Compliance
– Project must be in compliance with all federal, state and local laws
or regulations
CAR Project Quantification Methodology
• Methane emission reductions relative to ‘Baseline’
– Baseline represents “business as usual” or what would have
occurred without the BCS installation
– Calculated monthly for each year of the project
– For new livestock operations (greenfield sites), baseline is based
on prevailing system type for their region, animal type and farm size
• Monitoring of methane production, destruction and emissions
– Biogas flow and methane concentration
– Destruction device operation and efficiency
– Project equipment and vehicle emissions
• Annual reporting and verification
• Crediting Period
– Project is eligible to receive credits for 10 years from start date.
Project may apply for a second 10-year crediting period
Livestock Methane Project Profile
Project Duration
Long
10 – 30 years
Relative Credit Yield
Low
1,000 – 25,000 per year
Total Available Market
Large, stable
Thousands of suitable
livestock operations;
20+ million tons per year
Capital Requirements
High
Relative to carbon yield
Additional
Revenues/Benefits
Many
Renewable energy,
RECs,
Compost/bedding,
Environmental benefits
CAR Livestock Methane Projects
140,000
120,000
CRTs
100,000
80,000
60,000
40,000
20,000
0
2007
2008
2009
2010
2011
Vintage
CRT Issuances
Number
Avg. Quantity
*As of June 2, 2011
2007
2008
2009
2010
2011
2
7
14
11
0
18,000
4,700
7,600
11,100
0
Livestock Project Issues/Risks
• Carbon credit value tends to be small compared to other project
revenues and benefits
– Carbon credits are an important driver for carbon-specific ‘lagoon
cover’ projects
– Less important for renewable energy projects (although may ‘tip’
economics favorably)
• Carbon credit certification is currently only feasible for very large
livestock operations
– Relatively small quantity of emission reductions per project means
that CAR listing and verification expenses, along with required
monitoring and sampling costs, tend to exceed the value of the
CRTs for all but the largest farms
ARB Implementation of CAR Protocol
• Similar in approach and quantification methodologies
• Except: 1 CAR CRT is worth only 0.87 ARB offsets?
– Reflects project (biogenic) CO2 emissions from combusted methane
• Additional costs for conversion of registered CAR CRTs
– A “desk review” may be possible for some project verification
transitions, but the cost of even a “desk review” is likely to be
substantial on a per-credit basis
• Future program design changes that could reduce costs
– Bundling of projects
– CDM-style “small scale” project designation with different
requirements and costs
– Allowing conservative default factors in place of direct measurements
– Use of electrical production data in lieu of gas flows and gas
composition
Keys to Success
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Ownership
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3rd party build, own, operate
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Farmer focus on area of expertise:
on farm manure management
‘Bundled’ projects
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Reduced capital costs
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More efficient, coordinated O&M
Supplemental feed stocks
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Readily available organic waste sources for enhanced performance
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Additional revenues from organic waste tipping fees, compost sales
Aggressive incentives
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New state and federal incentives for renewable energy from dairy
digesters provide attractive project economics
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CONFIDENTIAL
ssubler@envcc.com