The Big Oil And Big Ag Ponzi Scheme: Factory Farm Gas

Generated Summary

This report by Food & Water Watch examines the increasing trend of Big Oil and Big Agribusiness forming partnerships to profit from factory farm gas, also known as “biogas” or “renewable natural gas” (RNG). The study, which focuses on the U.S. agricultural landscape, investigates how these corporations are investing heavily in factory farm gas projects and how public investments are driving this trend. It reveals that the investment in factory farm gas is part of a greenwashing strategy by these industries to rehabilitate their public image amidst growing concerns about their roles in climate change, pollution, and the unjust factory farm system. The report further highlights the environmental and economic implications of this shift, arguing that it ultimately undermines the transition to sustainable food systems and renewable energy.

Key Findings & Statistics

• Private investment in factory farm gas tripled from 2017 to 2021, rising to over $1.6 billion.
• Between three of the largest oil companies in the U.S., there are five joint ventures with these types of factory farm gas companies, and they own or finance up to 143 digesters or upgrading facilities.
• The number of planned and operational factory farm gas facilities jumped by over a third in 2021 compared to 2020.
• Chevron has committed over half a billion dollars to factory farm gas as of September 2021.
• Chevron’s most notable partnership is with California Bioenergy, or CalBio. Their current collaborations include more than 80,000 cows, and they view the other 1.8 million cows in California as opportunities to grow rather than scale back – factory farms.
• BP invested more than $50 million into its venture with Clean Energy Fuels, in which the pair develops, owns, and operates projects at dairies.
• BP also has a 15-year agreement with CleanBay Renewables to buy gas made from poultry litter, to then sell in California.
• Shell purchased the largest factory farm gas producer in Europe, Nature Energy, for $2 billion in November.
• Smithfield has centered its greenwashing efforts on factory farm gas, proclaiming that it will use up to 100 percent of its hogs on company-owned factory farms in four states to generate this gas.
• Across the U.S., the number of planned and operational factory farm gas facilities jumped by over a third in 2021 compared to 2020.
• An industry around designing and building digester projects has sprung up alongside this money, with the top independent firms growing 300 percent from 2019 to 2020.
• In a study of a California digester, more than 90 percent of the digester’s revenue came from selling government-endorsed environmental credits.
• The market brought in only $149,000, while federal and state programs generated a staggering $1.9 million.
• At least 71 programs across 31 states are offering financial incentives for anaerobic digesters, including corporate tax credits and grant programs.
• The 2022 Inflation Reduction Act (IRA) further expanded financial incentives for biogas, signaling steady federal support. The IRA extended the Section 48 Energy Investment Tax Credit to include a 30 percent credit for “qualified biogas properties” the same amount given to wind and solar. This could be hiked up to 50 percent if projects are sited in “high energy areas” or brownfields, which are already unduly burdened by environmental injustices. These credits include factory farms, which will benefit immensely. The legislation also invested $2 billion into the USDA’s Rural Energy for America Program (REAP), providing loans and grants to biogas facilities and farmers.
• Livestock production accounts for 36 percent of all methane emissions in the U.S. Big Oil and Big Ag call their factory farm-derived biogas a “transformational opportunity” and “carbon negative” fuel.
• Factory farm gas fails to address enteric fermentation, which contributes more to overall emissions than manure. Enteric fermentation occurs in the digestive systems of ruminants like cattle and produces methane as a by-product. This alone accounts for 27 percent of U.S. methane emissions, while manure management contributes livestock’s remaining 9 percent.
• Research shows that methane emissions along the supply chain are significantly underestimated – as much as double previous estimates.
• If digesters were installed at every dairy farm in the nation, they would not reduce the agricultural sector’s greenhouse gas emissions by even 25 percent.
• Methane leaks could be as high as a 15 percent loss rate, with the potential to release significant amounts of methane annually.
• As an end-use, burning factory farm gas produces the same pollutants as any fossil fuel source of energy.

Other Important Findings

• The marriage of Big Oil & Gas with Big Agribusiness is sweeping the nation, and the report contends that it is a dangerous form of corporate consolidation.
• The term “biogas” or “RNG” is part of the industries’ greenwashing strategy, as “renewable” does not necessarily indicate low emissions or beneficial impacts.
• Smithfield alone has three joint ventures, and other Big Ag names, like Perdue and Tyson, are just beginning to enter the factory farm gas bonanza.
• Chevron considers itself “well positioned” to be a “U.S. market leader in RNG.”
• Chevron’s most notable partnership is with California Bioenergy, or CalBio.
• BP is similarly embedded in the factory farm gas market, saying to investors that part of its strategy to drive higher returns is to “grow biogas production and marketing.” One of BP’s most prominent joint ventures was with Archaea Energy and Aligned Digesters, which formed in June 2020 to develop four new dairy projects in the California Central Valley.
• Shell is sponsoring projects in Idaho, Oregon, and Kansas, plus a fueling distribution site in California.
• These projects entail covered manure “lagoons,” or massive cesspools filled with liquid effluent.
• Smithfield and Dominion Energy will pay for the dangerous infrastructure to inject gases into pipelines, but farmers are on the hook for digesters and lagoon covers, extremely expensive technologies.
• Public money funds these private profits.
• The federal Renewable Fuel Standard is similar to the LCFS. Petroleum refiners or importers must obtain credits, known as renewable identification numbers, or RINs, to meet renewable fuel targets set by the U.S. Environmental Protection Agency (EPA).
• New proposals in the works would allow for even more expansion in the biogas industry, by allowing new credits to be generated from burning factory farm gas in inefficient generators to produce electricity.
• Industry groups are aware of these changes and expect massive expansions to go along with them.
• Methane from poultry manure is less than 6.1 percent of that generated from cow and hog manure.
• Factory farm gas will never scale up enough to replace fossil or fracked gas, enabling such a friendly relationship between Big Ag and Big Oil.
• When looking at all potential feedstocks, national assessments find that the available waste streams could only account for around 7 percent of U.S. natural gas consumption.
• The report argues that moving away from the factory farm model toward a more sustainable food system is crucial.
• Factory farm gas will worsen local air and water quality.

Limitations Noted in the Document

• The document primarily focuses on the financial and strategic partnerships between Big Oil and Big Agribusiness.
• The report may not fully capture all the complexities of the biogas industry, including specific technological variations or regional differences in implementation.
• The analysis is based on the information available at the time of the report’s creation, and the industry landscape is constantly evolving.
• The report does not provide data on the lifecycle emissions of factory farm gas compared to other energy sources.
• The research is limited to the scope of the Food & Water Watch’s investigation and may not include all relevant data points.
• The report does not delve into the full scope of impacts of factory farm gas on workers and communities.

Conclusion

The report concludes that the increasing investment in factory farm gas represents a dangerous trend for the climate and local communities. The alliance between Big Oil and Big Ag, driven by public incentives and greenwashing efforts, entrenches fossil fuel infrastructure and delays the transition to genuinely clean energy. The report points out the negative impacts on vulnerable communities, worsening air and water quality, and the potential for accidents and health issues associated with factory farm gas production. The report highlights the need to address these crises by transitioning away from the factory farm model towards a more sustainable food system and halting fossil fuel energy infrastructure, instead of supporting the current trajectory of “biogas.” The report suggests that the expansion of factory farm gas is tied to the status quo factory farm system, resulting in more pollution rather than reducing emissions. The document cites that the companies openly admit that incentives are the reason for digester profitability and as of 2023, Big Oil is already rolling in record profits as this government money continues to pour in. The conclusion emphasizes the importance of combating Big Ag and Big Oil’s greenwashing to protect the climate and communities. The report highlights that the industry is expanding by putting more pressure on small and mid-sized farmers, and the money follows a similar trail. The final thoughts are that the push to create more pollution in the name of green energy is unacceptable, and we must change now. They recommend that Congress must pass the Farm System Reform Act, stop subsidies for digesters, ban fracking, and all levels of government must stop approving new gas infrastructure.