faisal vellani austin berliner sharda sharma mariana nardon sinan pismisoglu july 20, 2009

Faisal VellaniAustin Berliner

Sharda SharmaMariana Nardon

Sinan Pismisoglu

July 20, 2009

Used by dairy farmers to store & dispose of manure reduce waste odor create fertilizer burn methane produce renewable energy

Process: A hollow container fed by organic material, e.g.,

animal manure Resulting anaerobic bacteria eat & digest the organic

material After digesting its “food,” the anaerobic bacterium

emits its waste: methane, CO2, and nitrous oxide The methane and CO2 combine to create the

ultimate end product: biogas

• With a cap-and-trade scheme, regulated entities will be “capped” at a set amount

• When regulated entities cannot meet this requirement, they turn to a carbon offset market

• An unregulated entity may undertake a project to reduce carbon emissions and receive a number of carbon offset credits

• Reductions must be . . .1. Measurable2. Verifiable3. Permanent4. Additional

Is the project business-as-usual? Source of contention to be discussed later in

the presentation

• Biodigesters are . . .1. Measurable

EPA provides formulas for calculating tons reduced

2. Verifiable 3rd parties can use meters to verify

reductions

3. Permanent Digests methane and converts it into CO2,

thereby reducing the amount of CO2 emission

4. Additional

• Key Question: Is the project business-as-usual? Would the project have occurred if the

project was not implemented as a carbon offset project?

• Currently recognized as additional High costs make business-as-usual unlikely• Need access to a carbon offset market to

overcome the costs

• Biodigesters can produce renewable energy, creating further financial incentives

• But, current regulations cause roadblocks for making biodigesters economically feasible

• Today’s proposed changes can improve financial profitability as well as accomplish the goal of reducing emissions These changes will present challenges to the

Additionality requirement However, this requirement should overlooked to

promote goal of reducing GHG emissions

• Interconnection fees• Demand charges• Net Metering• Renewable Energy Certificates (RECs)

• Amount paid to utility for connecting to the power grid Initial connection fees

• Protective measure for the safety of the farm and utility personnel To ensure that the entity has electricity at all

time E.g., if a power line near the farm is broken

• Proposed change – eliminate or reduce interconnection fees for biodigester projects

• Incurred during biodigester downtime• Biodigester owners required to shut-off the

system for maintenance, mechanical failures, etc. Average: 3 days out of the year

• During downtime, system receives electricity from utility

• Maximum amount of energy the owner would demand in any fifteen-minute interval The highest recorded demand is used to determine

the demand charge for the month Substantial fee charged by utility

• Example, California dairy farm Before biodigester = $180,000 Ater biodigester = $90,000

• 3 days of energy usage in 1 year• Farm produced 25% surplus & contributed to the

power grid

• Proposed change – eliminate demand charges and charge based on actual energy usage

• Selling surplus energy from a renewable energy source is a necessary financial incentive

• Act promotes: Use of renewable energy and energy efficiency Reduction of dependence on foreign oil Diversification of the electric power industry

• Requires electric utility companies to purchase renewable power from non-utililites Biodigesters are qualified facilities

• Act sets the ground work for state net metering and REC regulation

• Occurs when the renewable energy source provides electricity to the utility company

• The “net” = Difference between the electricity supplied back by this

customer & the electricity supplied by the utility to the qualified customer

• States regulate the agreement made between the utility and the customer

• Issue – vast variation in net metering laws state-to-state Some states require utilities to purchase surplus of renewable

energy at an “avoided cost” Other states allow overage to be zeroed out at the end of the

year• Proposed change – consistent, favorable net metering

laws; customer should be compensated for energy they contribute

Certificates issued for clean power production from a renewable energy source

By purchasing a REC, an entity pays the difference between the market rate for clean energy and the production cost of clean energy.

Only a few states address the issue & those that do vary on their treatment of RECs

Issue – REC ownershipProposed change – allow project owners

(dairy farmers) to retain REC ownership

Proposed changes challenge the carbon offset requirement that projects be Additional

In general, biodigester projects present many profit-generating avenues

Changes proposed will provide financial benefits that may adequately outweigh start-up & maintenance costs

So, will biodigester projects become business-as-usual? Would the project have occurred but for its

certification as an offset project? If the project would have been undertaken regardless

of its ability to generate offsets, then it is not additional

• Carbon offsets• Reduction in interconnection fees• Reduction in demand charges• Renewable energy production

For on-farm use, avoiding electricity costs Compensation for surplus sale with net

metering agreement• REC ownership• Sale of fertilizer • Reduction in odor maintenance costs

• Goal: Reduce GHG Emissions• Biodigesters provide tremendous environment benefits

Reduce GHG emissions from dairy farms by 96% Produce 100% clean-burning energy PERMANENTLY eliminate GHGs, compared to other

carbon offsets• Emissions reduction outweigh Additionality

requirement Technicality should not discourage carbon offset certification of

biodigester projects• Promotion of biodigesters needs immediate attention,

To reduce emissions To increase a sustainable source of renewable energy

• Example: Vander Haak Dairy Farm Washington 10,000 square-feet, capable of handing 1,500 cows $1.2 million Biodigester Financial support up to 50% of cost 15-year investment $16,000 carbon offsets in 2006 Capable of serving electricity to 180 homes

• Sold to the power grid Manure obtained from neighboring farms to make it

cost-efficient Supplemental income from fertilizer, tipping fees,

bedding for cows

Faisal VellaniAustin Berliner

Sharda SharmaMariana Nardon

Sinan Pismisoglu

July 20, 2009

Contact Info:

Faisal Vellani: frvellani@gmail.com

Austin Berliner: austinberliner@yahoo.com