Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd University of East Anglia ENV 4 Supervisor: Julian Parfitt Advisor: Chris Vincent 2000 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd Abstract Hypothesis: The current financial climate works against the installation of anaerobic digesters on farms in the UK. However, if environmental benefits such as emissions of greenhouse gases are internalised, this technology may appear economically viable. Project Design: The economics of establishing an anaerobic digester at a specific pig farm in Norfolk were investigated. A sensitivity analysis was undertaken by a series of cost benefit analyses, to study how the financial situation changes according to various factors. A monetary value was placed on the emissions reductions, and this was included in a new figure for ‘annual benefits’. Values were found by calculating the reduction of: Carbon dioxide emissions from electricity generation, avoided by energy production from this carbon-neutral renewable resource. (cid:20)(cid:12) Nitrous oxide emissions from the application of fertiliser, avoided by the increased availability of nitrogen for plants from digested slurry. (cid:21)(cid:12) Carbon dioxide emissions from electricity generation, avoided by the decreased demand for the production of energy-intensive fertiliser. (cid:22)(cid:12) Methane emissions from slurry storage, avoided by the containment of the slurry. Nitrous oxide and methane were converted to carbon dioxide equivalents. The current market price of carbon dioxide emission reductions from BP Amoco’s internal market was used. It was considered how internalising these external benefits would affect the financial viability of a digester at the farm, and also the economics of digesting the pig slurry from farms in Norfolk with more than 1000 pigs. Main results: The digester was most likely to be profitable if there was a developed market for the fibre. Internalising the environmental benefits resulted in the net present value (NPV) of the farm digester increasing from £13351 to £475311. If the government paid 50% grants for 60 digesters in Norfolk, the environmental benefits would give this investment a NPV of over £3.5 million, although if the savings from avoided carbon dioxide from fertiliser production were not factored in, the NPV is negative. Conclusion: The results found here support the hypothesis. 1 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd Contents Page 1 Hypothesis page 5 2 Introduction page 5 2.1 The Resource page 5 2.2 The Technology page 6 2.2.1 Types of Digester page 6 2.3 Feedstocks page 9 2.4 The Products page 10 2.4.1 Biogas page 10 2.4.2 Liquid Fertiliser page 11 2.4.3 Soil Conditioner page 11 2.5 Current Problems Involving Agricultural Pollution page 12 2.5.1 Air Pollution page 12 2.5.2 Water Pollution page 14 2.5.3 Heavy Metals page 14 2.5.4 Odour page 14 2.6 The Benefits of AD page 15 2.7 The Current State of the AD Industry page 17 2.7.1 World-Wide page 17 2.7.2 In Europe page 18 2.7.3 In Britain page 18 2.8 Legislation Affecting AD page 18 2.9 Farming Trends page 20 2.10 Objectives of the Study page 20 2.11 Terminology page 21 2.11.1 Pig Terms page 21 2.11.2 Financial Terms page 21 2.11.3 Energy Terms page 21 2.11.4 Other Terms page 22 Part 1: The Economic Viability of an Anaerobic Digester at a Specific Pig Farm 3 Aim page 23 4 Introduction page 23 5 Method page 24 2 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd 5.1 Discount Rate page 25 5.2 Sensitivity Analysis page 26 5.3 Values for the CBA page 27 5.3.1 Capital Costs page 27 5.3.2 Operational Costs page 30 5.3.3 Annual Savings page 31 5.3.4 Annual Benefits page 35 5.3.5 Other Factors page 37 6 Results page 37 6.1 Baseline Scenario page 37 6.2 Digester Price page 39 6.3 Fibre Sales page 40 6.4 Operational Costs page 41 6.5 Variations in Slurry Disposal Costs page 42 6.6 Gate Fees page 43 6.7 Efficiency of Bacteria page 44 6.8 Electricity Price page 45 Part 2: The Environmental Benefits of Anaerobic Digestion of Pig Slurry Produced in Norfolk 7. Aim page 47 8. Method page 47 8.1 Emission Reduction from Electricity Generation: Method page 47 8.2 Emissions Savings from Reduced Fertiliser Use: Method page 48 8.3 Reductions in Methane Emission: Method page 49 8.4 Cost-Benefit Analysis with Internalised Environmental Benefits: Method page 50 8.5 Cost Effectiveness of Digesting Norfolk’s Slurry: Method page 51 9 Results page 53 9.1 Quantity of Available Slurry: Results page 53 9.2 Emission Reduction from Electricity Generation: Results page 53 9.3 Emissions Savings from Reduced Fertiliser Use: Results page 54 9.4 Reductions in Methane Emissions: Results page 55 3 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd 9.5 Cost-Benefit Analysis with Internalised Environmental Benefits: Results page 57 9.6 Cost Effectiveness of Digesting Norfolk’s Slurry: Results page 59 10. Discussion page 61 11 Conclusion page 64 12 Afterword page 65 13 Acknowlegements page 65 14 Glossary page 66 12. References page 67 4 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk 1 Hypothesis The current financial climate works against the installation of anaerobic digesters on farms in the UK. However, if environmental benefits such as emissions of greenhouse gases are internalised, this technology may appear more economically viable. 2 Introduction Anaerobic digestion (AD) is the microbial decomposition of an organic matter in the absence of oxygen to produce ‘biogas’, consisting of methane (CH ), carbon dioxide (CO ) and water. 4 2 The undecomposed solid matter (the ‘digestate’) can be separated into fibre and a liquor. The biogas can be used for heating water or to produce electricity. It is a renewable energy and therefore reduces CO emissions. The fibre is a soil conditioner, and can be sold as an 2 alternative to peat. The liquor is rich in nutrients and is used as a substitute to inorganic fertiliser. The use of this technology therefore has many benefits, and could play an important role in the move towards sustainable development. 2.1 The Resource There are over 700 000 pigs in Norfolk, 10 % of the total for England (MAFF, 1998). This means a potential annual biogas yield of 9.5 million m3 and an electricity output of 12.8 GWh. An increasing number of pigs are kept in outdoor accommodation where their waste is mostly left on the ground and decomposes aerobically. There are two basic management systems for pigs living indoors: straw-based and slurry-based. The manure that arises from straw-based systems is not often used as a feedstock for AD because the straw needs chopping and it may cause pipe blockages (Higham, pers comm). Slurry-based systems were more popular in the 1970s, but are now on the decline due to perceived welfare problems (Dunnings, pers comm). With this system, the muck and urine fall through slats in the floor and are collected in a lagoon below. The storage conditions of this slurry favour anaerobic conditions, and this type of decomposition causes an odour nuisance for those living in the vicinity of the farm. The slurry 5 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd has a high Biological Oxygen Demand (BOD) which can result in ground water pollution. AD can reduce the odour from slurry by up to 80% (Practically Green website), and creates an integrated management system which lessens the likelihood of pollution. It has been estimated that the total accessible energy resource from wet livestock waste is around 3 TWh/year or 1-2% of UK electricity demand (ETSU, 1994, pp230-232 cited in Tipping, 1996). 2.2 The Technology AD occurs in four stages: 1. the organic matter is hydrolysed to soluble compounds 2. the soluble compounds are fermented to volatile fatty acids 3. acetogenesis forms hydrogen, CO and acetate 2 4. methanogenesis produces biogas. This process is shown in Figure 1. 2.2.1 Types of digester The most common on-farm digester in the UK is the continuously stirred tank reactor digester (CSTR). This involves an above-ground vessel that is usually circular to facilitate mixing. They are initially filled, and waste is removed and added regularly. They can be stirred with a rotating blade or by recirculation of the biogas. The latter type is becoming more popular due to its increased reliability. (Chesshire, pers comm). In Europe the CSTR also predominates, making up 35% of digesters. The next biggest group are the plug flow digesters. These are not stirred. Waste is added regularly at one end and overflows at the other. 17% of the AD units in Europe are of this sort (AD-NETT website). Pig slurry is not deemed suitable for this type of digester, due to its lack of fibre. (AgStar, 1999, p1-3) In more temperate climates, a lower level of technology can be applied with an unheated covered lagoon digester. Research and Development projects often point to the increased yields obtained from more advanced AD technologies, such as two-stage digesters. In one step digestion of solid wastes, problems may occur if the substrate is easily degradable. A population increase of the faster growing bacteria at the beginning of the process can lead to a build up of volatile fatty acids, a pH drop, and inhibition of the whole process. This is not a problem for substrates such as plant 6 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd matter, where the presence of tough vegetable matter such as lignin means that hydrolysis is the rate limiting step. Mesophilic CSTR digestion of silage showed a slightly better performance than the two-stage process (Edelmann et al 1999). Figure 1: The Stages of AD 7 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd The practical running of these new technologies remains unproven in the field. Two-stage digesters can become in effect two separate normal digesters (Chesshire, pers comm). In practice, low technology digesters can be more reliable and therefore more economical. Roger White, owner of a pig slurry digester in Britain, has taken out all the more technical parts of his digester as they have failed, and now measures the temperature with a thermometer tied to a stick. Digestion can operate at three different temperature ranges, each with distinct types of bacteria. Figure 2 shows the proportions of digesters in Europe at different temperatures. Figure 2: Temperature Range of Digesters in Europe (Source: AD-NETT website) 8% 5% psychrophilic 5-15 C mesophilic 25-45 C 87% thermophilic 55-70 C Mesophilic digestion tends to be more robust and tolerant than the thermophilic process, but gas production is less, larger digestion tanks are needed, and sanitation, if required, is a separate process. Residence time in thermophilic digesters is shorter, and they generally offer higher methane production, faster throughput and a higher level of pathogen and virus destruction. However, they do need more expensive technology, greater energy input and a greater degree of operation and monitoring (AD-NETT website). A study by the University of Manchester found that thermophilic reactors generated similar amounts of biogas and methane per gram of total solids removed, but batch times were typically only 64% of those for a mesophilic reactor. The overall result of these differences was that the thermophilic process was 1.5-2.5 times more efficient than the mesophilic process. (University of Manchester,1987) 8 Internalising Environmental Benefits of Anaerobic Digestion of Pig Slurry in Norfolk Rachel Boyd However, the extra energy needed to heat the digester is not always balanced by the increased yield. Because of this, another study found that thermophilic digesters were always less satisfactory than mesophilic digesters. (University College, Cardiff, 1986) In particularly cold countries such as Canada, there has been some interest in psychrophilic anaerobic digestion. Experiments with conventional mesophilic and thermophilic digestion in Canada had not been successful due to high capital and operational costs. AD units were not energy efficient during sub-freezing winter temperature. Psychrophilic AD was found to be effective, reducing the pollution potential of pig slurry by removing 59-78% of the soluble chemical oxygen demand (Masse et al, 1999). 2.3 Feedstocks It is possible to use a variety of feedstocks in a digester. These can come from agriculture, communities or industry. Agriculture accounts for the largest potential feedstocks and most current applications. Energy crops, algal biomass and harvest remains may be used as well as animal wastes. Biodegradable Municipal Waste (BMW) can come from communities near the digester, and can be treated there instead of landfilled. A large variety of wastes from industry can be used, including those from food processing, the sugar industry, the cosmetic industry and from slaughterhouses/ rendering plants. (Steffen et al, 1998, p3). Municipal Solid Waste (MSW) as a whole can also be digested, however the main problems concern contaminants such as glass that may damage the digester and greatly decrease the value of the compost. Large capital costs lessen the attraction of this type of waste management system. The use of source-separated BMW decreases the likelihood of contamination, but perhaps not by enough to convince the consumer that the compost is a viable alternative to peat. One of the main concerns would be the effect of heavy metal contamination on plants. Figure 3 shows the proportion of different types of the predominant feedstocks of digesters in Europe. Digesters are usually fed with more than one feedstock. The predominant feedstock was that defined as contributing more than 50% for each plant (AD-NETT website). 9