California could lock in disastrous dairy methane rules, advocates warn

One of California’s biggest sources of methane pollution — its massive dairy industry — operates almost entirely without regulation. In fact, not only do the state’s largest dairies face no penalties for emitting methane, they can actually profit handsomely from those emissions.

If the staff of the state’s air regulator get their way in an upcoming meeting, the loophole that has created this situation could stick around for decades to come.

Under state law SB 1381, which passed in 2016, California must reduce emissions of methane — a greenhouse gas that is shorter-lived but far more potent than carbon dioxide — 40 percent below 2013 levels by 2030. To meet that goal, the California Air Resources Board (CARB) places emissions limits on several of the state’s main sources of leaking methane, including landfills, wastewater treatment plants, and the oil and gas industry.

But the state’s dairy industry, which emits enormous amounts of methane, has so far been exempt from such regulations — that is, until this year, when SB 1381 permitted CARB to start working on those rules.

Now, in anticipation of an early November meeting, CARB board members have instructed agency staff to develop a formal plan for doing just that.

“We were given a task in SB 1383 to take a deeper look at whether or not it’s necessary to do something different in order to reach our methane targets,” CARB Chair Liane Randolph said at a September CARB meeting.

At the same November meeting, the board will also consider changes to the state’s Low-Carbon Fuel Standard, which mandates that fossil fuel importers, refiners, and wholesalers purchase credits to reduce the carbon intensity of their operations.

Credits are sold by providers of low-carbon fuels or transit options, from biofuel makers to electric vehicle charging operators. The $4 billion-per-year program’s aim is to make polluters help pay for the state’s transition to cleaner forms of transportation.

So, what do dairy farm methane regulations have to do with low-carbon fuels?

Under the LCFS program, dairy farmers can generate credits by using anaerobic digesters to capture the methane that seeps out of their manure lagoons and turn it into renewable natural gas, or RNG. Credits produced in this way are counted as carbon-negative, meaning they’re treated as if they remove carbon from the atmosphere. That makes them very attractive to the fossil fuel firms that need to reduce the on-paper carbon-intensity of their operations.

This is a lucrative situation for the biofuel sector as well as for the state’s politically powerful dairy industry; some researchers have found that certain dairies may make as much revenue from selling LCFS credits as they do from selling milk. Meanwhile, RNG project developers and oil and gas companies are investing billions of dollars in dairy biogas projects earning money through the program.

But this subsidy goldmine would crumble if CARB regulated dairy emissions in the same way it regulates other major sources of methane in the state. Energy analysts, climate scientists, and environmental justice advocates who have long opposed how LCFS treats dairy biogas believe that would be a good thing. They say the rules create a perverse incentive that subsidizes air and water pollution from mega-dairies, undermines the clean-transit goals of the LCFS program, and threatens to infect even larger federal clean fuels incentive programs for decades to come.

That’s why, according to these groups, it’s essential that CARB staff respond to the board members’ directive by putting together a robust plan for regulating methane emissions from dairy farms. However, last week CARB staff instead proposed amendments to the LCFS program that could undermine the long-awaited regulatory push before it even begins.

The proposed change? To exempt any dairy methane digester projects that now exist, or that break ground before 2030, from being subjected to any ​“law, regulation, or legally binding mandate requiring […] greenhouse gas emission reductions from manure methane emissions.”

Advocates who’ve been fighting to regulate factory farm methane emissions described this move as an attempt to shield the dairy biogas industry from state regulatory oversight.

“This is another example of a rogue staff that has an agenda,” Tyler Lobdell, a staff attorney for nonprofit Food & Water Watch, told Canary Media. ​“That agenda is to appease the financial interests in big ag and these factory farm gas developers at all costs — including by ignoring direction from their own board.”

CARB spokesperson Dave Clegern disputed this characterization of the impact of the proposed change in LCFS rules. ​“There is nothing that would preclude regulating all dairies in the LCFS amendments,” he told Canary Media in an email.

Advocates disagreed with that assessment, however. ​“The point we’re making is not that it’s precluding CARB’s ability to regulate, because they do have that authority,” said Nina Robertson, a senior attorney for nonprofit legal advocacy group Earthjustice. ​“The point is that the potency and effectiveness of the regulation will be eliminated.”

Treating dairy methane as a pollutant, or as a fuel? 

To understand how this proposed amendment would undermine CARB’s regulatory power, it’s important to grasp how the LCFS program now treats dairy methane projects, said Jamie Katz, staff attorney with the Leadership Counsel for Justice & Accountability, a nonprofit working with communities living near dairies in the San Joaquin Valley.

Today, CARB offers dairy biogas producers at least one 10-year ​“crediting” period during which they can generate and sell credits subject to generous avoided methane crediting rules, Katz explained. The idea is to encourage investment in low-carbon fuel projects by giving them some certainty on recovering costs.

Once that 10-year period is up, projects can seek out a 10-year extension of those same terms. They can repeat the process again 10 years later. If granted, these extensions allow projects to earn money on steady terms for up to three decades.

If CARB regulates dairy methane emissions, the opportunity to extend these terms could disappear. Current LCFS rules bar livestock or landfill methane-capturing operations from seeking additional crediting periods if laws or regulations limiting methane emissions from those industries are put into effect.

In other words, ​“if CARB were to implement regulations, you get to finish out your 10-year crediting period, and then you’re done,” Katz said.

But advocates fear that the recently proposed amendment from CARB staff would preempt these crediting period rules and allow dairy methane projects built over the coming years to lock in favorable terms until 2050 or later.

“That effectively means that dairy digester projects that break ground before 2030 would be able to get up to two or three avoided methane crediting periods,” even if state law requires livestock operators to reduce their methane emissions, Katz said. Or, in other words, dairies that break ground on digester projects and seek an LCFS pathway would operate under a totally different regulatory standard than other dairies.

The perverse impact of dairy biogas on climate policy

Under the LCFS program’s current rules, dairy biogas is flooding the state with an alternative fuel whose usefulness as a climate solution is dubious at best, critics say. Regulation-proofing dairy methane digester projects would lock in this status quo for decades — and be a disaster for California climate policy, advocates say.

As an example of how critics say current LCFS rules warp environmental and economic reality, take the cases of electric trucks or clean hydrogen: Right now, fuel-burning trucks or fossil fuel-based hydrogen can be considered cleaner than EV trucks or hydrogen made with carbon-free electricity — so long as the operators of those gas trucks or dirty hydrogen projects purchase LCFS credits from dairy biogas projects.

That’s because LCFS considers RNG produced by livestock manure methane projects to be carbon negative. The argument in favor of this treatment is that without these biogas projects, methane — which is far more potent than CO2 over a 100-year period — will continue to flood into the atmosphere from the manure lagoons at commercial dairy operators.

Paying dairies to capture methane they create may be one option for mitigating these emissions. But critics say LCFS’s approach has undermined the alternative option of regulating dairies to drive them to take action to reduce methane emissions. They also point out that the negative carbon intensity metrics created to justify this treatment are not based in reality — dairy biogas projects do not actually remove greenhouse gases from the atmosphere.