A niche market fueled by greenhouse gas restrictions has caused the businessman to consider Florida’s dairy farms as biogas producers.
A California company has arrived in Florida to experience a reverse gold rush, but it isn’t looking for precious metals – it wants manure.
San Francisco’s Brightmark Energy is one of several companies that are asking Florida dairy farmers to convert their lagoons with cow manure into money-making biogas plants as carbon dioxide emissions standards are tightened to mitigate climate change.
U.S. renewable energy policy and California law enable fuel companies to reduce pollution by buying loans from companies that have exceeded their efforts to reduce CO2 emissions.
The improved technology that transforms cow droppings into renewable natural gas in addition to the burgeoning emission allowance market attracts pioneers, so-called developers, who build projects, pay for manure, and then take advantage of selling environmentally friendly fuel and credit.
“I know that several dairy farms are being approached and some are negotiating different stages,” said Okeechobee dairy farmer Woody Larson, whose famous family signed a biogas contract with Brightmark in January. “It’s a growing thing in the dairy industry.”
Larson, whose father Louis “Red” Larson founded the dairy in 1947, said that more than one company was looking for farmyard manure to build anaerobic digesters that work like a stomach to decompose waste and produce renewable natural gas , The family initially limited it to three companies.
“We started listening to everyone and thought we couldn’t figure it out, but we were targeting a company we wanted to deal with,” said Larson.
Florida has approximately 80 dairy farms, 124,000 dairy cows, and 19th place in milk production in the 50 states.
Brightmark, founded in 2016, hopes to work with other farms in the Sunshine State.
“We love Florida. They have a lot of cows, ”said Brightmark Energy President Bob Powell. “This area has become a really interesting market in the past year or two, and we have to thank the State of California.”
California boosted the US emissions certificate market in 2006 with the Global Warming Solutions Act. The law stipulated that the state would have to reduce its greenhouse gas emissions to 1990 levels by 2020. According to the California Air Resources Board, the Golden State reached its goal in 2016.
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Then it increased the stake. Emissions must be reduced by a further 40 percent by 2030 – a much heavier elevator.
To achieve the new goals, California adopted the Low Carbon Fuel Standard (LCFS), which limits the amount of greenhouse gases that a fuel company like Pacific Gas and Electric can release into the atmosphere. If a fuel manufacturer cannot achieve its goal by using renewable fuels, it can purchase LCFS credits generated by companies that exceed their emissions targets. Oregon has a similar loan that was launched in 2016.
The National Standard Program for Renewable Fuels also aims to reduce carbon emissions from transport and enables the sale or trading of credits, which it calls Renewable Identification Numbers or RINs.
With the tightening of emission ceilings, the market for loans increases.
A November Financial Times article said emission allowance prices had hit record highs as companies that had increased their loans had to buy additional loans as more restrictive rules came into force.
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According to Graham Noyes, executive director of the Low Carbon Fuels Coalition, transactions in California totaled more than $ 2 billion in 2018 and up to $ 2.8 billion last year.
Brightmark will participate in the national and California programs.
“Someone identified Florida as a place with lots of farms and valuable project potential,” said Janet Peace, senior vice president of politics and business strategy at the Center for Climate and Energy Solutions. “For a bio-cooker to work, there must be a large farm or several farms that deliver dung to you.”
According to a database from the United States Environmental Protection Agency, 285 anaerobic fermenters were used in livestock farms in the US in December.
At least one is operating in Florida. Alliance Dairy in Trenton, west of Gainesville, produces electricity for the farm using a fermenter installed in 2012. A 2016 article in the BioCycle publication said Alliance had received a $ 2.1 million grant to offset the $ 8.5 million set-up cost.
Depending on the size of the farm and the number of cows, a renewable gas project fluctuates between $ 5 million and $ 25 million, said Sam Wade, director of government regulatory affairs at the Coalition for Renewable Natural Gas.
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While the contract with the Larson family in Okeechobee is confidential, around 230,000 tons of manure from 9,900 cows are converted into renewable natural gas every year.
Brightmark will pay to build anaerobic digesters on four Larson family farms, including two owned by Larson Dairy, Inc. and two owned by JM Larson, Inc. Brightmark will receive two products for sale, the gas itself and the environmental credits , The project is expected to deliver 1.3 million gallons of gas a year.
“The project developers are really good at getting these things going,” Peace said.
Currently, Larson farms treat manure through a series of lagoons that break it down into wastewater that is sprayed onto fields where grasses grow to feed the cows.
“We recycle everything, but now this is another way to trap some of the resulting gas and produce energy,” said Woody Larson.
Project to reduce greenhouse gases from milk manure expected
Brightmark uses two methods to process the manure. One places a tarp over the dung lagoon to trap methane, the other involves the use of above-ground tanks. The project, which could take two years, is expected to reduce greenhouse gas emissions from milk manure by 57,400 tons annually.
Brightmark has already launched renewable natural gas projects in dairy farms in Yakima County, Washington, Madison, Wisc., And Sumter, S.C.
Powell, CEO of Brightmark, said Florida is a good state for this type of industry because its regulations are “environmentally friendly but also pragmatic”.
Brian Nowicki, California’s director of climate policy at the Center for Biological Diversity, said this could be a code of less legislative requirements that improve Brightmark’s profit margin.
“It definitely means cheaper,” said Nowicki. “Where additional environmental testing is required in California, it may not be as stringent in other states.”
It’s certainly quicker to run a Florida, California-based project, said Mark Stoerman, chief operating officer of Newtrient, an Illinois-based company that consults with dairy farmers.
Where it could take three years to get approval in California, Florida may take just 18 months to two years from project announcement to commissioning, he said.
“It’s huge for a developer,” said Stoerman, who worked with the Larsons on the Brightmark deal. “One of the big questions for dairy farms is: why do these people want to do this?”
While Brightmark is investing the money to make the project a profit, farmers will also benefit from reducing their ecological footprint and selling the manure.
According to Gary Ritter, deputy director of government and community affairs at the Florida Farm Bureau, Florida farmers could be subject to increased control and monitoring of agricultural runoff if environmental regulations are updated.
The South Florida Water Management District is currently reviewing the standards for the watershed that flows into Lake Okeechobee, which spans a vast piece of land north of Orlando.
“The dairy farms have made tremendous progress in the industry,” said Ritter. “But they may think that they can no longer work alone in the traditional way, and biogas is another option.”