Why is California funding Concentrated Animal Feeding Operation (CAFO) dairies in Minnesota?

Bluestem's been keeping an eye on Riverview dairies for a few years now, so I though readers would appreciate Ben Lilleston's opinion piece, first published in MinnPost.

Given all the kvetching in Minnesota politics about potential application of California’s Low Carbon Fuel Standard (LCFS) in the North Star State, it's ironic to see a very large Fopher State dairy interest making bank on it in the far west.

Why is California funding big dairies in Minnesota?
By Ben Lilliston, MinnPost

In January, Minnesota’s Public Utilities Commission held a hearing in western Minnesota about a $13.9 million plan for a 28-mile pipeline of methane gas from four local dairies into a nearby natural gas pipeline. Another digester in western Minnesota captures nearly 700,000 gallons of manure daily from three big dairies to power a digester. Both projects, connected to dairy giant Riverview, receive significant funding from a California climate program. Why does California care about gas from Minnesota’s large dairies?

Methane gas derived from huge liquified manure pits at large-scale dairy, beef and hog operations is receiving a flood of state and federal dollars, tax breaks and credits. Capturing methane from Concentrated Animal Feeding Operations (CAFOs) has been branded as a “renewable” or “low carbon” fuel by many states, the Biden administration and the natural gas industry. The U.S. Department of Agriculture has declared biogas a “climate-smart practice,” sending federal dollars to subsidize methane digesters at CAFOs around the country.

The most significant source of financing for biogas is California’s Low Carbon Fuel Standard (LCFS), which provides valuable credits to transportation fuels with a lower greenhouse gas (GHG) emissions intensity score than traditional gasoline and diesel. Remarkably, CAFO-derived biogas has a negative emissions intensity score — lower than ethanol, biodiesel and even electricity generated by solar and wind. How is this possible?

When calculating CAFO biogas, California neither counts emissions from the cows (by far the largest source of methane emissions at dairy and beef CAFOs) nor emissions from feed production, including the potent GHG nitrous oxide emitted from nitrogen fertilizer used to produce corn. Finally, California doesn’t consider emissions from digestate (manure after methane has been captured) that is applied to farm fields as fertilizer, though evidence suggests digestate can emit more GHGs than undigested manure applications.

Under California’s LCFS, any biogas project around the country, including those in Minnesota, Wisconsin, Missouri, New York and other states, are eligible for credits if the captured methane enters into a North American natural gas pipeline.

The expansion of CAFO biogas projects raises concerns for rural communities and our farm economy. Because these digester projects are so expensive and require so much manure, they are only practical for the largest CAFOs located close to natural gas pipelines. When the biggest operations generate revenue from dairy, beef or pork and from the methane gas from their manure, they have a major advantage over small and mid-sized operations in sectors where consolidation is already occurring. Minnesota and Wisconsin have lost thousands of dairies over the last decade as bigger CAFOs have flooded the market, with nearly 150 dairy permits lost in Minnesota in 2023.

Rural communities are concerned about the growing role that fossil fuel companies play in farm operations. Food & Water Watch reported recently on the many ways oil giants, such as Chevron, BP and Shell, are investing in on-farm biogas and associated pipelines running through rural communities.

The climate benefits of CAFO biogas are questionable. Biogas projects create perverse incentives to produce more manure and thereby more associated water and air pollution. A large CAFO that adds cows also adds methane emissions, whether gas from the manure is captured or not. The expansion of corn acres in Minnesota and other Midwest states, and associated nitrogen fertilizer use, is tied to the expansion of CAFOs, which use corn-based feed and corn ethanol byproducts called dried distillers grains.

The carbon accounting from California’s LCFS could weaken Minnesota’s efforts to reach its climate targets. By granting credits, California is buying the GHG benefits from Minnesota projects. To prevent what is known as double-counting, Minnesota could not count those climate benefits toward its own climate targets.

Fortunately, California is reassessing its LCFS and how it considers biogas. The state acknowledges that the rapidly growing electric vehicle sector will overtake biogas as a transportation fuel, and credits will need to be phased out. But the phaseout only begins after 2029, with a 10-year grace period to 2040. Thus far, the state has ignored the recommendations of its own Environmental Justice Advisory Committee calling for the end of CAFO-derived biogas credits. IATP’s comments to California called for an immediate phaseout of biogas credits, questioning the state’s dubious carbon accounting and consequences for rural communities outside of California.

California’s LCFS-favoring CAFO biogas has implications for rural communities in Minnesota and around the country. There are other ways to raise animals (pasture-based systems) and manage manure (dried manure systems emit much less). Bad climate policy can create perverse incentives, such as more manure waste and pollution, problems that California has elected to offshore to rural communities around the country.

Ben Lilliston is the director of rural strategies and climate change at the Institute for Agriculture and Trade Policy, which is based in Minneapolis.

This MinnPost article is republished online under a Creative Commons license.

Photo: Jersey cows herded into a Riverview milking barn. Riverview specializes in milking Jersey cattle. Renee Jones Schneider/ Star Stibune/via Wisconsin State Farmer's John Oncken, Riverview Dairy's expansion covers five states.

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