On September 19, 2016, California Governor Jerry Brown signed Senate Bill 1383 (Lara, 2016 Stats., ch. 395), which is designed to address short-lived climate pollutants (“SLCPs”), including methane gas. In SB 1383, the Legislature found that (1) SLCPs are “powerful climate forcers that have a dramatic and detrimental effect on air quality, public health, and climate change”; (2) that SLCPs create “a warming influence on the climate that is many times more potent than that of carbon dioxide”; and (3) that reducing emissions of SLCPs “can have an immediate beneficial impact on climate change and on public health.” SB 1383 requires the State Air Resources Board (“ARB”) to approve and begin implementing a comprehensive strategy to reduce emissions of SLCPs. That includes a reduction in methane by 40% below 2013 levels by 2030. The reduction target for methane under SB 1383 can be summarized in the following chart:
|Percent Reduction From 2013 Levels
Note: Emission levels are listed in MMTCO2e.
The Short-Lived Climate Pollutant Reduction Strategy Targets Dairy Operations.
The comprehensive strategy described in SB 1383 is the “Short-Lived Climate Pollutant Reduction Strategy” (“SLCP Strategy”) that was released by ARB on March 23, 2017. Senate Bill 605 (Lara, 2014 Stats., ch. 395) directed ARB to begin drafting that strategy, and SB 1383 ordered the ARB to complete that strategy and begin implementing it by January 1, 2018. The SLCP Strategy will inform and will be integrated into the 2017 Climate Change Scoping Plan Update. The SLCP Strategy explains that “an increase in the global average temperature of 2°C (3.6°F) above pre-industrial levels, which is only 1.1°C (2.0°F) above present levels, poses severe risks to natural systems and human health and well-being,” and that “[d]eploying existing technologies and resource management strategies globally to reduce SLCP emissions can cut the expected rate of global warming in half and keep average warming below the dangerous 2°C threshold at least through 2050.”
Scientists have estimated that methane is responsible for about 20 percent of current net climate forcing globally. Manure is responsible for 25 percent of California’s methane emissions. Therefore, the SLCP Strategy is designed to outline the goals, regulations, incentives and other efforts that would, among other things, “[s]ignificantly cut methane emissions from dairy and livestock operations while providing farmers with new, potentially lucrative revenue streams ….”
The State Envisions Collaborative Efforts With Dairies Before Regulations Are Implemented.
SB 1383 requires ARB to adopt regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations. Such regulations would take effect on or after January 1, 2024, if ARB, in consultation with the Department of Food and Agriculture, makes certain determinations.
The SLCP Strategy provides that, before ARB regulates dairy manure emissions pursuant to SB 1383, state agencies will “encourage and support near-term actions by dairies to reduce manure emissions through financial incentives, collaboration to overcome barriers, development of policies to encourage renewable natural gas production, and other market support.” ARB expects a collaborative effort to reduce methane emissions, in which the dairies are active participants. The SLCP Strategy states:
Strong market support and broad collaboration among State agencies, industry, and other stakeholders will be necessary to reduce landfill and manure methane emissions by putting organic waste streams to beneficial use. The State will support early action to build infrastructure capacity and reduce emissions through existing incentives and accelerated efforts to overcome barriers and foster markets. Government agencies and stakeholders will work to foster market conditions to support private sector investment in expanded or new infrastructure, including building markets for compost, soil amendments, and low carbon transportation fuels; overcoming barriers to pipeline injection of biomethane, grid connection for electricity or another best-use alternative; and identifying effective financing mechanisms and levels to reach the goals in this SLCP Strategy.
Ultimately, a combination of incentives, State and private sector collaboration and investment, and regulations will be necessary to capture the value in organic waste streams and ensure lasting emission reductions in order to achieve an economy-wide 40 percent reduction in methane.
However, the state will still create a regulatory environment to force methane reductions at dairies, despite such collaborative efforts. The SLCP Strategy explains:
In coordination with CDFA and local air quality and water quality agencies, ARB will initiate a rulemaking process to reduce manure methane emissions from the dairy sector consistent with the objectives in this SLCP Strategy. As noted earlier, the rulemaking process will involve extensive stakeholder engagement and consideration of multiple factors. The regulations are to be implemented on or after January 1, 2024.
Pursuant to SB 1383, ARB, in consultation with CDFA, will analyze the progress dairies are making in achieving the goals in the Strategy by July 1, 2020, and may make adjustments to those goals if sufficient progress has not been made.
The rulemaking process will first focus on developing measures to require regulated parties to both report and maintain records covering the parameters that affect GHG emissions at California dairies and other livestock operations. Reported information will be used to refine inventory quantification, evaluate policy effectiveness, assess methane reduction progress, and aid in future policy planning and regulatory development. ARB will work with other State agencies and industry groups to improve outreach on new reporting requirements, as well as merge reporting activities with current forms and requirements to avoid duplicative reporting wherever feasible.
Emission control regulations will be designed to support and complement existing programs. In particular, regulatory requirements to achieve large emission reductions from the sector will affect incentives for methane reduction projects, such as the availability and amount of credits under the Cap-and-Trade Program and LCFS.
The Suggested Efforts To Reduce Methane Emissions From Manure Are Not Yet Cost-Effective Or Viable At This Time.
ARB believes that such efforts can even create “economic value in farming communities.” The SLCP Strategy suggests:
If markets are fully enabled, efforts to reduce methane from manure management at California dairies could lead to billions of dollars of investment and thousands of new jobs, concentrated in the Central Valley. Depending on the strategies pursued to reduce emissions, individual dairies may be able to reduce emissions while generating new revenue streams, and the industry as a whole may be able to meet the targets established in this SLCP Strategy at little or no net cost.
However, ARB recognizes such economic benefits are not a certainty. The SLCP Strategy points out that “revenues in some cases are highly dependent on environmental credit and energy markets, as well as on improving access to the common carrier natural gas pipeline system.” But the state’s regulation of methane emissions will not wait for, or be dependent upon, the achievement of such hypothetical economic benefits. The SLCP Strategy explains that “strategies at dairies that may not include energy production and associated revenues can still reduce emissions at low cost, and may deliver other environmental benefits, as well.” Thus, even if there are no offsetting economic benefits to dairies, the State will pursue the methane reduction plans anyway.
The SLCP Strategy suggests the following manure management changes to reduce methane emissions:
- “[S]witching from flush water open lagoon systems to anaerobic digesters or other systems such as solid manure management practices.” However, “[s]witching to systems such as solid manure management may lead to air or water quality challenges, however, which need to be fully considered.
- “[P]asture-based systems may be a viable option, but tradeoffs can limit their feasibility. … For larger dairies and those in the Central Valley, pasturage would require using significantly more irrigated land, may require supplemental feed, and (in the case of Central Valley dairies) may require construction of shade structures and other infrastructure to alleviate heat exposure-related impacts on animal welfare. Pasture dairies may face potential nutrient management and water quality issues, and are required to maintain the capacity to store liquids from milking parlor operations (chilling milk, cleaning facilities, etc.) for a 100-year stormwater event. Additionally, milk production and feed efficiencies are lower in pasture systems, requiring more cows to produce the same amount of milk. Pasture systems also limit the ability to manage manure as a valuable organic waste resource.”
- “[C]apturing and utilizing manure methane by installing an anaerobic digestion system is more advantageous than avoiding methane emissions through conversion to practices such as a pasture-based dairy model, providing the current barriers can be sufficiently addressed. Captured biogas from dairy manure can be used to power farm trucks and equipment, upgraded for injection into natural gas pipelines, used as a transportation fuel, or used to generate on-site renewable electricity and heat. However, tapping into this resource in California has been complicated in part due to air quality constraints, especially in the Central Valley and Southern California. … [M]anure-management conversions that produce electricity and vehicle fuel are potentially profitable; however, most require significant up-front capital investment.”
Such technologies do not yet exist. The SLCP Strategy recognizes that “some potentially effective strategies are still in the development stage.” Also, ARB recognizes many of these manure management strategies are not cost-effective at this time. The SCLP Strategy explains:
In many cases, converting to solid manure management systems or installing anaerobic digesters at dairies may not yet be cost-effective if the only marketable products are renewable electricity and/or renewable natural gas. If these revenue streams can be augmented with revenues from compost or other soil amendment products, and from environmental credits, these conversions may offer attractive rates of return for farmers and investors. However, markets for these other products need further support before they can offer returns that are reliable enough to help secure project financing.
Strategies to Reduce Emissions From Dairy Cow Burping Are Not Yet Available.
Nearly 20% of the State’s methane emissions come from enteric fermentation (mostly belching) of dairy cows. Such methane is created by microorganisms involved in the digestive processes in the stomachs of dairy cows. While the SLCP Strategy suggests that it is “important to explore strategies to reduce emissions from these sources to meet the State’s 40% economy-wide methane emission reduction target,” the ARB also recognizes that “development of effective control measures face a unique set of challenges.” In fact, “cost-effective and scientifically validated methods for reducing enteric emissions” are not even available at this time. Therefore, the state will “support and monitor research and explore voluntary, incentive-based approaches to reduce enteric fermentation emissions from dairy and non-dairy livestock sectors until cost-effective and scientifically-proven methods to reducing these emissions are available and regulatory actions can be evaluated.”
The Dairy Industry Views The Methane Emission Reduction Strategy As An Existential Threat.
It is not known how the methane reduction that is mandated by SB 1383 will be met. As one agribusiness professor at Cal Poly San Luis Obispo commented: “I really don’t know how they will go about reducing methane emissions by 40 percent.” The general manager of an agricultural trade group concluded that the ARB’s methane plan “threatens the future of the California dairy industry,” and the 40% reduction means “[w]e’re just going to see less dairy in this state”. As one farmer in Sacramento County noted: “In the dairy business, the margins are so slim that something like this will force us out of state.” Dairy farmers complain that the new law, and the money and equipment needed to comply with it, could have a severe economic impact in conjunction with low milk prices, rising labor costs and drought. Methane digesters cost several hundred thousand dollars or more; and although the state has set aside $50 million to help dairies set up digesters, farming groups note that this sum is not nearly enough to equip the state’s roughly 1,500 dairies. Also, digesters require considerable upkeep, and they emit other pollutants like nitrogen oxide and particulate matters, which environmental groups are also targeting for reduction. Thus, as the Wall Street Journal points out: “[T]he regulators acknowledge that most ideas involve environmental trade-offs and are not cost-effective without substantial government subsidies and regulatory credits that can be sold to fossil-fuel producers.” An official with Western United Dairymen concluded that the methane reduction requirements “just makes it more challenging. We’re continuing to lose dairies. Dairies are moving out of state to places where the costs don’t exist.”
Glen Hansen is Senior Counsel at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.