Biogas Given Certainty As California Extends Cap-And-Trade Legislation

Last week, California Democrats and Republicans set aside political differences, decisively pushing forward a bill to help fight global climate change.

As part of the bill, more revenue will be available to support methane capture through building anaerobic digesters. Such agricultural projects are key in the bill’s strategy to curb greenhouse gas emissions from the state’s prominent dairy industry.

Under Assembly Bill 398,California’s cap-and-trade program is extended for an additional ten years–through 2030. This program, which sells mandatory pollution permits to industries, uses the proceeds to fight climate change on a variety of fronts. Because of California’s enormous agricultural sector, biogas and dairy digester projects will play a big role in these emission reduction efforts.

California Governor, Jerry Brown, signed the bill into law earlier today, joined by former California Governor, Arnold Schwarzenegger.

This follows a floor vote of two-thirds support from both the State Senate and State Assembly last week, including both the overwhelming majority Democrats in the legislature along with a number of Republicans who represent agriculturally dominant districts in the Central Valley.

Prior to the bill’s passage, funding for all emission reduction strategies beyond 2020 were in doubt, exemplified by the 2016 legislature reducing a proposed $500 million in cap-and-trade appropriation over the next five years for dairy digesters to $35 million with no long term commitment beyond 2017: a fiscal reality given purchases for pollution permits had gone from robust to rare as large polluters and carbon financial markets shied away from their uncertain long term value.

Now, with extension of the cap-and-trade program through 2030 providing certainty for industries and carbon trading markets, an influx of expanded funding for agricultural projects (including anaerobic digesters) from permit proceeds are expected track upwards again.

State agencies have projected a need for 300 dairy digesters by 2030 to meet California’s emissions reduction targets. With the California Department of Farms and Agriculture (CDFA) offering each dairy up to $3 million in grant money to help offset some digester development costs, the 2016 appropriation would have provided funding for about ten digesters. With the 2030 extension, the state can now claim the initial emission reduction targets passed in 2006 under the landmark legislation AB 32 are grounded in reality.