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This document discusses the mechanics of monetizing methane destruction credits from dairy farm digesters. It explains that the number of credits generated each year is related to the number of lactating cows, and credits can be sold on various carbon markets and registries. The revenue generated from credit sales depends on the price, which currently ranges from $1-10 per ton of methane reduced. This revenue can be an additional income stream to improve the financial viability of dairy digesters. The document provides examples of how credit sales could generate between $250,000 to $2.3 million over 10 years depending on future carbon prices. It also reviews different types of carbon purchase agreements that can be established.
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- 1. Mechanics of Monetizing Methane Destruction Credits AgStar National Conference April 27, 2010 Peter Weisberg The Climate Trust pweisberg@climatetrust.org (503)238-1915
- 3. Methane Reduction Annual credits 3-4 x # of Lactating Cows Example: 2,500 cows =8,750 mt CO2e credits per year 10 year project =87,500 mt CO2e over the project life
- 4. Co-digestion Include N2O Temperature Solids separation Digester capture Biogas treatment Methane Reduction: Changes drastically according to
- 5. The Mechanics: Choose a registry Climate Action Reserve Voluntary Carbon Standard American Carbon Registry Regional Greenhouse Gas Initiative Chicago Climate Exchange Current Price $5-6 $2-3 $2-3 $2 $0-1 High Price $9-10 $6-7 $6-7 $3 $7 Types of Buyers 90% Pre- Compliance Voluntary and Pre- Compliance Voluntary and Pre- Compliance Compliance Exchange members
- 6. The Mechanics: Before commercial operation Determine financial viability Establish monitoring plan List project with a registry Upfront Cost = $30,000- $50,000
- 7. The Mechanics: After commercial operation Monitor Verify Sell verified credits Annual costs = $10,000 - $15,000
- 8. Revenue = (Credits)(Price) - (Transaction Costs)
- 9. Digester offset revenue - 2,500 cows; digester reduces 8,750 mt CO2e every year $ = (Offsets)(Price) (Transaction Costs) Price = $6 Year 1 Carbon Sales Profit: $10,000 Year 2-10 Carbon Sales Profit: $40,000 NPV (10 years, 7%) = $250,000
- 10. Future Price Scenario: US Carbon Market Goes Away Source: Trexler. GHG Markets and CCS. May 30, 2007 NPV ($6/mt CO2e) < $250,000
- 11. Future Price Scenario: Political Compromise Achieved Source: Trexler. GHG Markets and CCS. May 30, 2007 NPV ($18/mt CO2e) = $1 million
- 12. Future Price Scenario: Atmospheric Stabilization Source: Trexler. GHG Markets and CCS. May 30, 2007 NPV ($40/mt CO2e) = $2.3 million
- 13. Carbon Purchase Agreement Structures 1) Fixed Price Developer guaranteed revenue Carbon buyer takes on price risk/upside
- 14. Carbon Purchase Agreement Structures 2) Spot Developer sells credits annually after verification Developers takes on price risk/upside
- 15. Carbon Purchase Agreement Structures 3) Hybrid Carbon buyer guarantees to purchase a portion at a fixed price Developer is left to market additional portion The Climate Trust model
- 16. Thank you! Peter Weisberg Offset Project Analyst pweisberg@climatetrust.org (503)238-1915