Photo Source: USDAgov (Flickr Creative Commons)
Washington is one of the top ten states for milk production, and dairy is its largest commodity after apples. But state leaders face a quandary: while Washington has been an international leader in tackling climate change, it is far behind California and other states in building anaerobic digesters, the premier way to capture the methane from its dairies. Energy Vision assessed how Washington could stimulate change in its dairy sector, forging ahead toward the all-important global goal – called for by international climate scientists – of slashing methane emissions 30% by 2030 and toward the State’s own goal of 45% total GHG reduction by 2030.
In our report “Market Challenges and Opportunities for Dairy Anaerobic Digestion (AD) in Washington State,” we looked at the problems and possible solutions.
At present, there are only five operational dairy ADs in Washington, down from nine in 2019, and none have been built in the last 10 years. Energy Vision calculated that another 80 dairies in Washington have herd sizes theoretically large enough to support ADs, and constructing them all would cost about $1.2 billion. Doing so would cut the State’s manure methane emissions by a whopping 75%, meaning a reduction of at least 1.2 million metric tons of CO2 equivalent.
EV Findings – It Comes Down to Economics
Under current state policies and market conditions, dairy farmers and AD developers face very unclear economic returns for what would be major upfront investment (of at least several million dollars to build a digester). The going prices for the electricity or RNG that these digesters would produce are currently too low to cover the expenses, even factoring in federal credits where applicable, and the State provides very little in the form of grants or other incentives for dairy ADs.
However, through strategic grants, loans, and other incentives (see below), the State could catalyze significant private capital to reach the full $1.2 billion in capital expenditure rather quickly, and it would be a cost-effective climate strategy.
Energy Vision engaged dairy farmers, AD developers, regulators, and communities to pinpoint the challenges that have severely limited dairy AD adoption in the State. Based on those findings (including detailed surveys from close to 40 dairy farmers and 10 AD developers), as well as policies that have worked well elsewhere, the report provides 10 recommendations for Washington policymakers to facilitate cutting methane through a buildout of dairy ADs.
We found there’s lots of interest in dairy ADs – 73% of respondents have at some point considered using ADs on their dairy farm, and 71% were interested in learning more about AD adoption. Meanwhile, most developers noted that three incentives would make AD adoption more financeable: 80% of the respondents felt a high priority would be guaranteed fixed-price, long-term offtake agreements from the buyers of their biogas or RNG; 70% wanted capital cost subsidies, and 60% sought better access to low-interest financing or loan guarantees.
Potential Solutions from California and Locally
Some of the report’s top recommendations are inspired by the success of key policies in California, where building dairy ADs has been among the most cost-effective methane reduction options among all sectors in the state. California supports dairy digesters through grants that cover 10-25% of a project, which equates to an average cost of $9 per ton of CO2 equivalent abated; by contrast, the average cost of GHG abatement across California’s much larger 2023 Greenhouse Gas Reduction Fund spending overall was $101 per ton. Washington could follow suit by stepping up its grants, subsidizing AD maintenance, providing loans through its new Green Bank, and amending its Clean Fuel Standard program to stabilize prices at higher levels. The State could tap into a small slice of the ~$3 billion it has accrued in its Cap and Invest program to fund these incentives.
There is also enormous potential for Washington to create incentives for diverting food waste to dairy ADs, in furtherance of the State’s goal of cutting 75% of the current organic materials going to landfills by 2030. If all 80 candidate dairies were to “co-digest” food waste with manure, they could theoretically accept almost 1.9 million tons of food waste per year – much more than the 1.2 million tons that Washington generates annually.
Moreover, by incentivizing the dairies adopting best practices for digestate treatment, the state could address one of the main sources of public concern about ADs. Based on our research and outreach, the most promising path forward to gain community support is building dairy ADs and installing digestate treatment systems.
Lastly, there is a real need for open dialogue to share the facts – backed by credible third-party certifiers – about ADs, add-on digestate treatment systems, and impacts on local communities, including through Community Benefits Agreements. These are legal contracts that define the benefits a developer will provide to local governments or community groups in exchange for their support for a project; they’re tailored to the community’s needs, such as through annual payments, support for public works, etc.
This report is the first step in ongoing education and outreach in Washington. This fall we will begin more targeted engagement with key decision-makers to assess which of these opportunities and recommendations can be best advanced.
