November 30, 2022

Carbon markets may help dairymen diversify income opportunities

MADISON, Wis. — Carbon markets and carbon credits may be an opportunity for dairy farms to diversify their revenue stream.

“There are a lot of questions about carbon markets and carbon credits and I think it’s a really promising potential for dairy,” said Jamie Vander Molen Boehl, vice president of sustainability initiatives and outreach for Newtrient.

“There are two opportunities when we talk about reducing carbon on farms — capturing carbon and avoiding emissions,” said Boehl during a presentation at the World Dairy Expo.

Consumers are driving the carbon discussion, Boehl said.

“Consumers are expecting brands to have sustainability commitments to help them achieve sustainable lifestyles,” she said. “Seventy percent of consumers want to see company sustainability practices be more visible and 81% of global consumers said it’s important to implement programs.”

As a result, companies are setting aggressive environmental goals. In addition, there are increased regulations on some sectors.

“California has aggressive transportation goals to become carbon neutral by 2045,” Boehl said.

“The increase in support from government programs is really exciting because that’s showing support,” she said. “Government funding won’t necessarily build markets, but it will help get markets started and get the tools and technical assistance that farms need to access these markets.”

Some farms are participating in a carbon credit market in California.

“California’s Low Carbon Fuel Standard is the largest regional carbon credit market and it has been successful in driving carbon reduction across the state,” Boehl said.

“There are 50 to 60 digester projects that are being built and a lot of those are feeding into the renewable natural gas pipeline to help reduce carbon emissions in California.”

Similar programs are developing in Oregon, New Mexico and Washington.

“This is something to keep an eye on over the next several years,” Boehl said.

The first round of projects has been selected for the Partnerships for Climate-Smart Commodities program.

“That includes seven dairy projects totaling over $240 million,” Boehl said. “That’s how they can help develop the adoption of climate-smart practices and you’ll see more programs coming out of that funding.”

Dairy farms have several opportunities to reduce carbon.

“Feed production, manure management practices, enteric methane and energy are all areas where you can capture carbon credits,” Boehl said.

Boehl visited a farm in Washington State that is using biofilter technology.

“They have worm beds that completely eliminate a traditional manure lagoon and they are mitigating up to 30,000 metric tons of carbon dioxide,” she said.

A project in Florida is replacing fossil fuel with biogas.

“That’s one of the biggest opportunities today,” Boehl said. “As much as 10% of the renewable natural gas in the California pipeline could come from dairy digesters in the future.”

However, there are some challenges with carbon markets.

“A survey by Trust in Food found that 97% of farmers are not ready to participate in carbon markets, 7% said they haven’t heard of carbon markets and 31% are evaluating and waiting to see what happens with the markets,” Boehl said.

Carbon markets are complex to navigate, Boehl said.

“Markets that exist today came online in the last five years or less, so they are very new,” she said. “There are a lot of inconsistencies between the markets that needs to be navigated.”

A lot of programs are developing and there is criticism of the environmental benefits from environmental groups.

“There’s no one organization monitoring this and ensuring all the carbon credits are verified and credible,” Boehl said. “There is no universal precise measurement of reductions and contract duration varies quite a bit.”

Boehl encourages dairymen to evaluate and question solutions, as well as consider the impacts on their farm.

“It is good to question everything and have an expert you can talk to,” she said. “Keep your options open and take your time to explore these markets because the opportunities for dairy to provide carbon reductions are increasing.”

A lot of the focus today is on carbon, Boehl said, but there are markets developing around water and biodiversity.

“There will be opportunities in the future to monetize other environmental benefits coming off your farm,” Boehl said.

“Record, record and record because the more you are recording, the easier it is to get into conversations,” she said. “Talk to a farmer who is doing it.”

Newtrient provides support and services to dairy farmers, including farm assessments.

“We have technical experts that work with farms and provide expert recommendations,” Boehl said.

The company has evaluated over 300 technologies.

“We want to work with a farm and help them make the best decision,” Boehl said. “We can help you look at opportunities and help you think about taking the next step.”

Martha Blum

Martha Blum

Field Editor