Bad climate policy promotes factory farm system
In October, the renewable natural gas (RNG) industry in the U.S. and Europe co-published a report outlining a strategy to tap into new money from corporations hoping to meet climate targets. The report focuses on the corporate climate standards body, the Greenhouse Gas Protocol (GHGP), arguing that it should legitimize the trading of RNG certificates as a corporate strategy to reduce emissions. In the U.S. and Europe, companies producing so-called RNG from the manure at large-scale cattle or hog operations can sell the methane gas created by the manure and separately sell credits (in the U.S.) or certificates (in the EU) claiming climate emission reductions. The GHG Protocol’s endorsement could open the door for corporations and governments around the world to reach climate targets by purchasing RNG certificates generated at large-scale factory farms. The industry report concluded “the inclusion of RNG in GHGP reporting could help further develop RNG production and use in EU and US voluntary-based markets and global RNG markets.”
The RNG industry has been built largely on a mass infusion of public money linked to poorly designed climate policy, driving gas projects on factory farms that would never have been economically viable before. In the U.S., factory farm gas is primarily generated by installing anaerobic digesters that capture the potent greenhouse gas methane from giant liquid manure pits on big dairy and hog operations or beef feedlots. That methane is cleaned and ultimately piped into existing natural gas pipelines. Factory farm gas is attractive to natural gas firms like BP or Chevron as an alleged green, drop-in fuel, meaning it can easily be utilized within existing fossil fuel infrastructure. It’s also attractive to meat and dairy companies like Smithfield, JBS or Dairy Farmers of America, who can now benefit from the enormous waste produced by the factory farm system, providing market advantages to larger operations selling methane gas, leading to fewer, bigger farms.
The factory farm gas industry has gained a foothold in climate policy through a remarkable carbon accounting trick. It has successfully lobbied for factory farm gas to count as negative emissions, arguing that it is creating new energy from an existing source of pollution. The result is that factory farm gas receives a climate score better than wind and solar in states like California, making its credits particularly valuable. This carbon accounting trick assumes liquified manure waste is an inevitable source of pollution, and disconnects it from GHGs coming from the cow (methane), manure (nitrous oxide and methane) and feed production (nitrous oxide from fertilizers and carbon dioxide emissions from land expansion). By overinflating the climate benefits of factory farm gas, the RNG industry can cash in on credits and certificates through climate policies in California, the U.S. and Europe.
Despite a range of climate policies backing factory farm gas, the emerging sector is highly controversial, particularly in rural communities where the operations are located. A slew of recent reports have confirmed what environmental justice and family farm groups have been warning about for years, namely that it creates perverse incentives to add animals to produce more manure, creating more waste and pollution; allows the fossil fuel industry to greenwash natural gas to protect its market share and sunk cost infrastructure; has questionable climate benefits, (particularly if operations are adding cows); and that by expanding concentrated manure production it also increases a host of air and water pollution risks for the rural communities (often low income) where these operations are located.
Opening the door to international factory farm gas credit trading
The RNG industry on both sides of the Atlantic are pushing hard to create a global market for both the gas and certificates. California’s Low Carbon Fuel Standard and the U.S. Renewable Fuel Standard have established credits for factory farm gas that can be bought by the fossil fuel industry around the country. Now the RNG industry in Europe is looking to expand its credit trading system, including allowing RNG fuels and credits from outside Europe to meet climate targets.
In March 2024, the European Renewable Gas Registry (ERGR), an association dedicated to facilitating cross-border trade in renewable gas certificates, called for immediate action by the European Commission to allow imported biomethane (the EU’s term for RNG) and biomethane-based fuels to be included within the EU’s database for biofuels, created as part of the EU’s Renewable Energy Directive. The Union Database is a traceability tool designed to track renewable fuels from their raw materials to their final product, with a goal of avoiding the double-counting of biofuel or biogas-related credits as part of meeting the EU’s climate targets. The current rules do not allow for biomethane that is imported from outside the EU to be included. The ERGR stated that: “no limitation should exist for fuels which demonstrated full compliance of sustainability and GHG emissions saving requirements equivalent to those defined in Renewable Energy Directive. This decision will hinder imports of biomethane and biomethane-based fuels, such as biomethanol, from third countries.” Many of the companies who signed the EU letter, such as BP, also have factory farm gas investments in the U.S.
The EU has a 2030 target of 35 billion cubic meters (bcm) of biogas production, from only 4.2 bcm today. Feedback Europe estimates that up to a third of the 35 bcm will need to come from manure-based gas production. The ERGR argues that the EU will not meet its 2040 climate targets without imported biomethane.
In addition to increasing imported RNG, the Renewable Gas Trade Centre (RGTC) in Europe also wants a Euro-wide registry of RNG certificates, including certificates generated outside of the EU to help meet EU targets. The RGTC writes, “The international exchange of gas certificates must be considered when developing a registry system. Such international trade needs organisational, technical and legal agreements between the registries involved.”
The industry is also working to establish an international RNG credit trading system. In May 2023, the International REC (Renewable Energy Credit) Standard Foundation announced it was developing a new standard for biogas credits. Still in development, the biogas credits would track information on where biogas was produced and its source, allowing users to reliably purchase these certificates known as I-TRAC (G). The initiative includes U.S., Brazilian and European partners and would allow buyers to purchase I-TRAC (G) certificates through an international registry of credits. According to the International Tracking Standard Foundation which is developing the standard, “once developed, will be available for use in a variety of (voluntary) requirements including Scope 1 reporting, national energy reporting, and general End-user claims.”
The shadow of LNG exports
The growth of RNG in general, including factory farm gas, sits within the massive expansion of Liquified Natural Gas (LNG) production in the U.S.. As President-elect Donald Trump enters office with the backing of the fossil fuel industry, it is expected that the LNG industry will continue to grow in the U.S., and along with it RNG production. Russia’s invasion of Ukraine disrupted natural gas supply chains around the world, but particularly in Europe. U.S. natural gas production grew to meet global demand, setting a new export record in 2023. The U.S. now provides half of Europe’s natural gas imports and is the largest natural gas exporter in the world. Even as energy from wind and solar production expands in U.S., natural gas production and GHG emissions continues to grow to feed a growing global market.
Natural gas is coming under fire as a major source of methane emissions, including from importing countries. In January, the Biden Administration put a pause on the approval of new LNG export licenses, but the incoming Trump Administration is expected to lift that pause and increase drilling on public lands and offshore sites.
Europe is developing new standards to limit methane emissions from fossil fuels, including from fossil fuel imports. The Biden Administration wrote European regulators in November to request an “equivalency determination” that would allow U.S. LNG to be approved for import. While RNG takes up only a small fraction of the overall natural gas market (currently only around .3%), it could help deflect some of the industry’s climate scrutiny. By integrating RNG into their natural gas pipelines companies like BP and Chevron can tout their climate credentials, cash in on government credits, and export RNG at a premium to countries seeking to meet climate targets.
In July, the RNG company Verbio submitted an application with the U.S. Department of Energy (DOE) to export RNG to “countries that have a demand for natural gas.” Verbio is producing RNG in Nevada, Iowa through corn and corn stover (leftover plant material after corn is harvested), but also purchases RNG from other sources. Verbio inserts the RNG into natural gas pipelines and then purchases an equivalent LNG on the Gulf coast and exports that LNG to countries looking for the climate benefits of RNG. In a sense, they are proposing a type of RNG climate credit system. “Verbio intends to purchase and export an equivalent amount of LNG from such facilities primarily to France and Germany, and secondarily to other European countries, Japan, the Republic of Korea, and emerging markets in the Caribbean.” Verbio’s application argues to the DOE that, “The ability to export this volume of RNG will facilitate the sustainable contribution of RNG to the natural gas transportation grid in the future.”
Positioning RNG for corporate buyers and voluntary markets
A host of industry analysts have touted the growth potential of the RNG market. The International Energy Association (IEA) projects U.S. biogas production to grow 82% between 2023 and 2030, and sees steady global growth coming from the EU and UK, the U.S., China and India. Rabobank’s analysis earlier this year concluded: “More adoption of RNG in the voluntary market, where utilities and corporations are beginning to take on a visible purchasing role, could help the market evolve beyond its traditional transportation sector footprint. These entities are entering the space to help reduce greenhouse gas emissions in their operations, often driven by ESG-related goals and reporting requirements.” Rabobank found that the factory farm gas segment of RNG is at less than 10% of its potential.
One potential avenue of RNG growth is through ship or marine fuel, according to the European Biogas Association. The EBA reported, “there is a potential for the currently highly regionalised RNG markets to have a more global dimension, requiring RNG tracking and certification to cover a more global scope as well.”
One of the largest LNG importing terminals in the Netherlands was approved in 2021 as a responsible RNG storage facility and producer. Much of the RNG it currently imports and stores is from other European countries. Shipping companies are looking to lower their carbon footprint under a new climate strategy from the International Maritime Organization (IMO). For example, the large LNG shipping company Uniper has 2030 targets to reduce emissions and hopes that RNG and hydrogen supply 5-10% of its fuels.
Europe’s carbon market, known as the ETS, is currently extending European carbon pricing to the maritime sector. FuelEU Maritime, a regulation set to reduce the emissions intensity of European shipping, is expected to have a strong impact on the rise of low carbon fuels in shipping. This includes providing an opportunity for RNG-derived bunker fuels, such as bioLNG and bio-methanol.
Why the global commodification of RNG matters
The creation of a global market for RNG, and credits related to RNG production, would not only further lock in the factory farm system of meat and dairy production, it would likely expand it. These digester systems are enormously expensive, making them only economically viable for the largest farming operations. When these large-scale operations can generate income from both the animal (meat or dairy) and the gas from manure, it will be even more difficult for smaller and mid-sized operations to compete. As the factory farm system has grown over the last three decades, it has flooded the market, pushed prices down and many hog, dairy and beef producers out. An expansion of this system, propelled further by payments for factory farm gas, would likely push prices paid to farmers down further. Finally, an expansion of the factory farm gas system would undercut the market for farmers raising animals on pasture or using dried manure systems that emit less methane.
From a climate perspective, there are still many questions about the effectiveness of factory farm gas, including the effect on emissions of expanded herd sizes. In the case of cows, that means more methane emissions tied to enteric fermentation, more nitrous oxide emissions tied to the manure and to nitrogen fertilizer for feed production. Methane leaks from pipelines and the digesters themselves are not well monitored, but there are strong indications that these leaks are under-counted.
Finally, the introduction of credits or certificates for factory farm gas means that fossil fuel companies and potentially other sectors or even countries could attempt to offset their own emissions rather than investing in reducing their emissions. Carbon markets that utilize carbon offsets have repeatedly failed to achieve the emissions reductions needed to slow the climate crisis. Adding factory farm gas, with its flawed carbon accounting, could allow the natural gas industry and other polluters an avenue to continue polluting.
Much larger climate gains could be achieved through more proven options to reduce GHG emissions already on the table (such as shifting to dried manure compost systems, and more diverse, agroecological systems that require less livestock, no manure lagoons and less nitrogen fertilizer). Instead, the industry, including global companies like BP, Exxon, Chevron, JBS and Smithfield, are using new climate policies (and misguided carbon accounting) to expand factory farm gas production by establishing a global market.
Conclusion
The factory farm gas system relies deeply on government subsidies and climate policy. The industry’s effort to turn factory farm gas into a global commodity, where the gas and associated credits can be sold on global markets, would be a decisive step toward locking in and expanding the factory farm system of production worldwide. Allowing companies and governments to purchase factory farm gas credits and certificates instead of reducing their own pollution would incentivize the expansion of the factory farm gas system, and all its economic and environmental harms. This expansion would further aid the fossil fuel industry as it struggles to compete against electric vehicles and truly renewable power sources.
The Trump Administration’s climate denial and expected efforts to thwart federal climate policy is an opportunity for those advocating for climate solutions to reconsider some of the false climate solutions being promoted for agriculture. Climate policies that promote the expansion of the factory farm system should be discarded, starting with a more accurate calculation of the climate footprint of factory farm gas and the elimination of credits or certificates that allow polluters to offset their emissions rather than reducing their emissions. Instead, climate policies should focus on a just transition out of the factory farm system toward agroecological systems that require fewer animals, less concentrated manure, less nitrogen fertilizer and better and more stable markets for farmers.
