Anaerobic Digestion at Colorado Cattle Operations

Decision Tree Schematic

Economic Feasibility Decision Tree

couldEconFeasible

Could be Economically Feasible

If you incur at least $5,000 per month in electricity or natural gas expenses, anaerobic digestion might be economically feasible for your operation. Digesters are very expensive and will last about 15 years. At this time, they are most economically feasible for operations with large energy needs. Even then, it will require considerable effort to investigate whether a digester is feasible for your operation since there are many variables to consider. A 2009 study by Keske found that minimizing anaerobic digestion production costs (eg. maintenance/repairs, and labor) and boosting energy production showed the greatest impact on net income from an anaerobic digester. A 1% change in production costs changed net income by 14.54%. A 1% change in energy production (a function of billing capacity and methane production) changed income by 11.14%. Generator downtime and inefficient feedstock conversion both affected energy production.

It is important to recognize that many variables can affect the economic feasibility of anaerobic digestion projects. Other financial considerations include: Net metering that returns electricity to the grid

Payments through a carbon market to offset carbon dioxide emissions or to sequester carbon Availability of bank, and loan terms/conditions. The specific financial aspects should be analyzed for every project. Industry partners also can provide insight into other revenue streams or cost offsets.

Co-Digestion

Co-digestion has shown to be economically viable in other states. When agricultural producers and related industries (eg. food manufacturers) are located nearby, there are typically efficiencies in feedstock availability and transport, as well as the energy end product. The economic efficiency improves when the biogas can be used onsite or nearby.

Feasibility studies have shown that co-digestion projects might be economically viable in Colorado (Stewart Environmental, 2008; Keske, 2009; City of Greeley and Symbios, 2009). However, at this writing, there is not a co-digestion project currently operating in Colorado. In summary, while there have been national efforts to compile information about AD and co-digestion, Colorado and the Intermountain West possess unique environmental characteristics that affect the economic feasibility of these systems. Low humidity, scarce water resources, western farm management practices, and regional policies are examples of such unique issues. If you or your community has an interest in a co-digestion project, it is suggested that you review one of the attached reports, and contact the corresponding author to learn more information.

References

City of Greeley and Symbios Technologies, LLC.Final Report to the State of Colorado Governor's Energy Office. Phase 1 Engineering and Business Feasibility Analysis of a Multi-Feedstock Waste-to-Energy Facility at the Greeley Clean Energy Park. November 13, 2009.

Keske, Catherine M.H. 2009. Economic Feasibility Study of Colorado Anaerobic Digester Projects Prepared for the Colorado Governor's Energy Office. Grant 09-205. August 28, 2009.

Stewart Environmental Consultants. Report of the Feasibility Study on Utilizing Anaerobic Digesters to Generate Biogas from Diary Cattle. Report submitted to Colorado Department of Agriculture. October 20, 2008.

Could be Economically Feasible

If you incur at least $5,000 per month in electricity or natural gas expenses, anaerobic digestion might be economically feasible for your operation. Digesters are very expensive and will last about 15 years. At this time, they are most economically feasible for operations with large energy needs. Even then, it will require considerable effort to investigate whether a digester is feasible for your operation since there are many variables to consider. A 2009 study by Keske found that minimizing anaerobic digestion production costs (eg. maintenance/repairs, and labor) and boosting energy production showed the greatest impact on net income from an anaerobic digester. A 1% change in production costs changed net income by 14.54%. A 1% change in energy production (a function of billing capacity and methane production) changed income by 11.14%. Generator downtime and inefficient feedstock conversion both affected energy production.

It is important to recognize that many variables can affect the economic feasibility of anaerobic digestion projects. Other financial considerations include: Net metering that returns electricity to the grid; payments through a carbon market to offset carbon dioxide emissions or to sequester carbon Availability of bank, and loan terms/conditions. The specific financial aspects should be analyzed for every project. Industry partners also can provide insight into other revenue streams or cost offsets.

Manure Management

Manure management practices are important for animal farming operations of any scale. Regardless of operation size, the EPA requires proper treatment and removal of onsite manure. States may have even more rigorous standards than the federal standards. Information about manure management regulations can be found at:

http://water.epa.gov/scitech/wastetech/guide/cafo/index.cfm

http://www.epa.gov/npdes/pubs/cafo_implementation_guidance.pdf

It is important that your operation complies with state standards and does not violate standards governing the discharge nutrients into a western water source. Under National Pollutant Discharge Elimination System (NPDES), which is regulated by the EPA, all CAFO's must submit a formal permit which begins with the submission of a notice for intent. Additional information can be found in §122.28(b) in the CAFO implementation guide.

The main objective of the permit is to regulate the nutrients discharged associated with land application, direct discharge and manure storage of the CAFO operation. Manure storage area includes but is not limited to lagoons, runoff ponds, storage sheds, stockpiles, under house or pit storages, liquid impoundments, static piles, and composting piles. If your facility does not have a manure management plan, it is likely that you do not have a permit, which might be necessary, depending upon your facility's size. For more information about obtaining a permit, contact the Colorado Department of Public Health and the Environment (CDPHE) at PHONE NUMBER

Odor Write Up

Anaerobic digestion may be an economically feasible solution for odor control, particularly when an agricultural producer is susceptible to a nuisance lawsuit. Producers who receive persistent or harsh complaints about farm odor should evaluate the feasibility of an anaerobic digester as a cost offset to a lawsuit. Poultry and swine producers, in particular, should strongly consider an anaerobic digestion system. Legal research shows that poultry and swine producers are particularly vulnerable to odor-related lawsuits. During interviews conducted by Keske (2009), both technology providers and agricultural operators affirmed that AD units effectively reduce agricultural odors that often prompt nuisance lawsuits. Work by Martin (2003) also notes that AD units can provide a measurable reduction in odor, in addition to playing a role in the management air emissions, water quality, and waste management. A summary of recent nuisance lawsuit awards and settlements are shown, below. The cases are ordered by year. Also listed are the states where the lawsuit was filed, case or plaintiff as available, and type of operation. The settlement and damage values (which include punitive damages) have not been corrected for inflation. The type of agricultural operation appears in the right hand column. It should be noted that the majority of cases are settled out of court and the financial data are not readily available.

The awards ranged from $12,100-$50,000,000. Seven of the ten reported cases involved swine operations. Two cases involving large awards were against the same owner of two Ohio egg production facilities. There was one example of a settlement to a Kansas cattle feedlot. Six of the documented cases occurred west of the Mississippi. In summary, a lawsuit could result in more millions in damages (including punitive damages). Off setting legal costs can make an anaerobic digestion project pay for itself. Poultry and swine operations should strongly consider anaerobic digestion systems as their operations appear vulnerable to lawsuits.

Claims Awarded in Nuisance Suits
Year	State	Award	Plaintiff/Case	Operation
1991	NE	$375,600	Kopecky v. National Farms, Inc.	Swine
1996	KS	$12,100	Settlement-plaintiff/respondent both undisclosed in news article.	Swine
1998	KS	$15,000	Twietmeyer v. Blocker.	Beef feedlot
1999	MO	$5,200,000	Vernon Hanes et al. v. Continental Grain Company	Swine
12001	OH	$19,182,483	Seelke et al. v. Buckeye Egg Farm, LLC and Pohlman	Egg/Poultry
2001	OH	$19,182,483	Seelke et al. v. Buckeye Egg Farm, LLC and Pohlman	Egg/Poultry
2002	IA	$33,065,000	Blass, McKnight, Henrickson, and langbein v. Iowa Select Farms	Swine
2004	OH	$50,000,000	Bear et al. v. Buckeye Egg Farm, Anton Pohlman and Croton Farms, LLC	Egg/Poultry
2006	AL	$100,000	Sierra Club, Jones, and Ivey v. Whitaker and Sons LLC	Swine
2006	MO	$4,500,000	Turner v. Premium Standard Farms Inc.; Contigroup Co., Inc.	Swine
2007	IL	$27,000	State of Illinois (Plaintiff). Respondent undisclosed.	Swine

References:

Keske, Catherine M.H. 2009. Economic Feasibility Study of Colorado Anaerobic Digester ProjectsPrepared for the Colorado Governor's Energy Office. Grant 09-205. August 28, 2009.

Martin, John H. 2003. An Assessment of the Performance of the Colorado Pork, LLC. Anaerobic Digestion and Biogas Utilization System.Report submitted to Kurt Roos, U.S. Environmental Protection Agency AgSTAR Program. EPA Contract #68-W7-0068 March 18, 2003

	yes	no
Do you meet the definition of a large CAFO? (Check Link for requirements) http://www.epa.gov/npdes/pubs/sector_table.pdf
Does your energy use and waste management have the potential to be combined with a community energy or waste managements system?
Do you spend an average of $6,000 per month on utilities (gas, electric and water)?
Have you received formal complaints about odors?
Do you obtain water from a utility (eg. City or County)?
Do you raise swine or chickens?
Do you have a lagoon on site?
Do you pay for offsite manure disposal?

Do you compost the majority of solids for reapplication to soil?
Do you spend an average of $5,000 or more on energy utilities (gas and electric)?
Do you receive formal complaints about operation odor?
Do you raise swine or chickens?