A bill to subsidize making biogas from cow manure

Sen. Ben Nelson (D-Neb.) has just submitted a bill in the Senate that would establish federal tax credits, loans, and loan guarantees to encourage production of “biogas” from cow manure. Three Republicans are co-sponsoring the bill: Senators Chuck Hagel of Nebraska, Wayne Allard of Colorado, and Larry Craig of Idaho. A similar bill has been introduced in the House. As described by an article in the Omaha World-Herald, the legislation would “help ease America’s addiction to fossil fuels by encouraging a renewable resource.”

Here we go again.

Senator Nelson envisions building a national biogas industry. His motto: “Don’t waste the waste.”

In Nebraska, cattle outnumber people 4-to-1. And cattle produce methane, both via what emanates from the animal in, ahem, gaseous form, and what gets produced in their decomposing manure. The article describes these contributions as “significant,” but the accompanying graph shows that methane from manure accounts for just 3.6 percent of total U.S. methane emissions.

Here’s the upside:

Biogas manufacturing plants could help curb greenhouse gas emissions of carbon dioxide and methane, while improving water quality through better manure management, the senator says.

Moreover:

The plants could help trim America’s oil consumption, pump money into rural towns and help run power plants or possibly futuristic cars.

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Oooooh, futuristic cars! Shiny …

Er, where was I? Oh, yes. Where have we heard that kind of argument before? This excerpt from the article provides a clue:

Nelson has been interested in developing renewable energy since he was Nebraska’s governor in the 1990s and promoted the growth of the corn-based ethanol industry. As a member of the Senate Agriculture Committee, he has supported federal legislation expanding ethanol’s use, along with other biofuels such as soy diesel. “If you look at it, biogas is just the next natural progression … as we continue to look to diversify the whole area of fuel sources,” Nelson said Tuesday.

…

Lately, with ethanol production soaring, cattlemen have become concerned about rising prices for corn to feed their cattle. Nelson’s bill could help defray some costs by generating additional income from sales of manure for biogas.

That’s what troubles me. Subsidies are driving the rapid expansion of the ethanol industry, which is driving up feed-corn prices, so the answer is … yet another subsidy!

“We understand that new industries need some sort of financial support,” he said.

All new industries, Senator, or just certain ones? What about electric bicycles, for example? Oh, right. Not made in the Midwest.

Under Nelson’s proposal, biogas producers could receive a tax credit of $4.27 per million British thermal units (MMBtu) of biogas produced. Given that natural-gas prices are currently running at around $7.70/MMBtu, that’s a pretty generous subsidy — 55% of market value.

It also would offer loans and loan guarantees to help stimulate multifarm collection of manure and transportation to a biogas facility. Manure could be collected by trucks now used to clean out porta-potties. Biogas producers also could receive a federal subsidy when natural gas prices fell below a certain level.

Current biogas plants produce gas that is 60 percent methane and the rest mostly carbon dioxide. The incentives in Nelson’s bill could help finance technology needed to purify it to 90 percent methane, which then could be fed into natural gas pipelines.

Nelson developed his bill in part after talking with owners of the first biogas plant in Nebraska. The E3 Biofuels plant in Mead produces methane from manure gathered at a 30,000-head cattle feedlot onsite. The methane then fuels an adjoining ethanol plant.

To produce methane, animal waste is collected into large tanks. Technicians add byproducts from the ethanol plant and other material to speed up a process known as “anaerobic digestion,” which breaks down the manure into fertilizer and methane-based gas. [my emphasis]

Granted, there is a value to turning methane into usable energy and keeping it from simply dissipating into the air. (It would be useful if somebody produced some figures on cost-effectiveness of Sen. Nelson’s proposal — i.e., the subsidy per tonne of CO2-equivalent emission avoided.) But why do I get the feeling that what this bill is really about is helping the corn-ethanol industry and their associated concentrated animal feedlot operations (CAFOs) to lower their production costs?

Whatever happened to the polluter-pays principle?