Source: Iowa State University, Center for Agricultural and Rural Development (CARD)
A new report from Iowa State University, in collaboration with Indiana University and USDA economists, finds that carbon payments could be the tipping point in making anaerobic digesters (ADs) a financially viable option for U.S. swine producers.
The Challenge with Digesters
Anaerobic digesters capture methane from manure storage, converting it into biogas that can be used to generate electricity or upgraded to renewable natural gas (RNG). In addition to reducing greenhouse gas emissions, digesters provide odor control, pathogen reduction, and nutrient-rich fertilizer byproducts.
Yet, despite these benefits, adoption among swine operations has lagged. High construction and maintenance costs, combined with relatively low returns from energy markets, have made digesters a difficult investment. As of July 2023, only 343 livestock digesters were in operation nationwide, and just 15.7% of the avoided emissions were attributed to swine manure.
What the Study Found
The Iowa State report modeled profitability across farm sizes, manure management systems, and energy prices. Key findings include:
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Carbon payments drive adoption: Without carbon incentives, only very large swine farms show modest positive returns (generally below 4%). With carbon payments of $50 per metric ton of CO₂-equivalent, farms as small as 2,000–3,000 head could achieve profitability. At $100 per ton, returns increase substantially, opening the door for mid-sized operations.
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Energy prices play a secondary role: Fluctuations in natural gas or electricity prices influence whether farms choose RNG or electricity as an end use, but have limited effect on overall profitability.
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Lagoons vs. pits: Farms with anaerobic lagoons—common in warmer states like North Carolina—see higher returns from digesters due to greater baseline methane emissions. By contrast, states such as Iowa, where deep pits dominate, would see more modest financial benefits.
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Technology choices matter: Reciprocating engines for electricity and RNG production show stronger returns than microturbines. RNG generally outperforms electricity as an end use, especially when carbon payments are available.
Policy and Market Implications
The study points to several pathways for expanding adoption:
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Carbon markets: Programs like California’s Low Carbon Fuel Standard demonstrate how carbon credits can incentivize investment. Expanding similar markets nationally could bring digesters within reach for many hog producers.
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Cost-share programs: USDA’s Rural Energy for America Program (REAP) can provide up to 25% cost share, reducing upfront capital barriers.
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Long-term contracts: Stability in energy and carbon markets is crucial. Multi-year agreements for RNG sales or carbon credits could reduce producer risk and attract financing.
Why It Matters
Manure management accounts for nearly 90% of methane emissions from swine operations, making it one of the pork industry’s largest environmental challenges. By capturing methane and converting it into usable energy, digesters offer both environmental gains and potential new revenue streams.
The Iowa State analysis underscores that while energy markets alone aren’t enough to drive adoption, carbon payments could transform digesters from a niche technology into a mainstream solution for hog farms across the U.S.
