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How Dairies are making the US Midwest Attractive to RNG Investments


US dairy Holsum Dairies upgraded two anaerobic digesters in Wisconsin and began producing renewable natural gas last year. In fact, the digesters now deliver RNG to California’s renewable fuels market.

“California’s market is the biggest driver, for sure,” said Holsum Dairies owner Dr. Robert Nagel. Thus, Mr. Nagel estimates the northeastern Wisconsin dairy will receive three to five times more revenue from selling the RNG than it did from electricity sales to the local utility.

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Wisconsin leveraging RNG demand from California’s biofuel consumers

In fact, this situation comes mainly from Low Carbon Fuel Standard adopted by the California Air Resources Board in 2009. Accordingly, the standard seeks to slash the carbon intensity of transportation fuel by 20% by 2030. Additionally, it includes annual benchmarks for gasoline, diesel, and greener replacement fuels.

Under the policy, RNG can be used to reduce emissions from existing natural gas-fueled vehicle fleets. Moreover, California refineries, petroleum importers, and wholesalers receive credits for buying renewable fuels that lower the overall carbon intensity of the fuels they sell.

Considering such legislation, a biogas boom in the Midwest has to do a lot with what we’re seeing. For instance, the American Biogas Association lists three Midwest states in the top 10 for biogas production potential. In fact, these outlooks are primarily based on the strength of the dairy industry in such states as Wisconsin.

More examples

Indeed, Holsum Dairies installed Wisconsin’s first anaerobic digester. Thus, the company started mixing cow manure with heat and bacteria. Particularly, to produce biogas at its combined heat and power system.   

Furthermore, throughout these years, Holsum reduced the size of the open lagoons of manure. Mainly, those that released significant amounts of co2 into the atmosphere.

“I think a lot of the development you’ve seen in this industry has been in the Midwest;” said Grant Zimmerman, CEO of the Chicago-based renewable natural gas developer Amp Americas. “

Similarly, U.S. Gain, a Wisconsin, renewable gas developer, signed Holsum Dairies and three other farms last year to join its network of 26 projects that supply RNG for California and other markets. Another example is Amp Americas, which last year opened the largest dairy operation in its fleet at the Riverview LLP dairy in Morris, Minnesota.

In Iowa, Gevo, Inc. recently announced a $68 million project that will collect waste from 20,000 cows for renewable natural gas production. Moreover, the company expects to earn $9 million to $16 million annually from mainly the California fuel transportation market.

As well, many renewable gas producers now have Midwest projects either completed or under construction. 

Pros and cons of anaerobic digesters used at Dairies

Some potentialities of the farms using anaerobic digesters is that they substantially reduce methane emissions. After digestion, the remaining material remains suitable for fertilizer and animal bedding, so it isn’t used as a feedstock only.

However, anaerobic digesters carry their criticism. For instance, its critics argue that RNG coming from those digesters only marginally impact methane (since cow burps cause more emissions than manure). A significant concern, in this case, is that some dairy farms are leveraging the Price trend by adding cows to create more waste for renewable gas production.

Moreover, there is a financial concern behind anaerobic digesters since they cost millions of dollars and rely on custom designs, so that makes them harder to replicate

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