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Financial barriers to the adoption of anaerobic digestion on US livestock operations

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  • Brent A. Gloy
  • Jonathan B. Dressler

Abstract

Purpose - Anaerobic digestion (AD) of livestock waste is a potential source of renewable energy and can reduce the methane emissions associated with livestock waste storage. Because AD is capital intensive, lenders will play a key role in the adoption of this technology. The purpose of this paper is to describe some of the barriers that currently make lenders reluctant to finance AD systems and provide recommendations for public policies that would reduce these barriers, making financing more available and encouraging farmers to adopt digester systems. Design/methodology/approach - This paper describes some of the barriers that currently make lenders reluctant to finance AD systems and makes recommendations for public policies that would reduce these barriers, thus making finance available. Findings - AD systems face a number of financial barriers which make lenders reluctant to finance them. Many of these barriers can be overcome by adopting policies and programs designed to improve the understanding of the financial situation associated with AD adoption and establishing markets that reward livestock operations for achieving the benefits associated with AD installation. Some of the more important potential solutions include developing mechanisms to collect and analyze data associated with AD system economics and developing markets that reward livestock operations for producing the non‐market outputs of renewable energy and methane emission reductions. Originality/value - The ability to attract financing is a key barrier to the widespread adoption of anaerobic digester systems. This paper describes these challenges and identifies solutions which would reduce these barriers and lead to greater adoption of AD on the US livestock operations.

Suggested Citation

  • Brent A. Gloy & Jonathan B. Dressler, 2010. "Financial barriers to the adoption of anaerobic digestion on US livestock operations," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(2), pages 157-168, August.
    • Handle: RePEc:eme:afrpps:v:70:y:2010:i:2:p:157-168
    DOI: 10.1108/00021461011064932
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    References listed on IDEAS

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    1. Clark P. Bishop & C. Richard Shumway, 2009. "The Economics of Dairy Anaerobic Digestion with Coproduct Marketing," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 394-410, September.
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    1. Vergara, Sintana E. & Damgaard, Anders & Horvath, Arpad, 2011. "Boundaries matter: Greenhouse gas emission reductions from alternative waste treatment strategies for California's municipal solid waste," Resources, Conservation & Recycling, Elsevier, vol. 57(C), pages 87-97.
    2. Borchers, Allison M. & Xiarchos, Irene & Beckman, Jayson, 2014. "Determinants of wind and solar energy system adoption by U.S. farms: A multilevel modeling approach," Energy Policy, Elsevier, vol. 69(C), pages 106-115.
    3. T. Chen & M. Liu & Y. Takahashi & J.D. Mullen & G.C.W. Ames, 2016. "Carbon emission reduction and cost--benefit of methane digester systems on hog farms in China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 59(6), pages 948-966, June.
    4. Edwards, Joel & Othman, Maazuza & Burn, Stewart, 2015. "A review of policy drivers and barriers for the use of anaerobic digestion in Europe, the United States and Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 815-828.
    5. Li, Xue & Mupondwa, Edmund, 2018. "Commercial feasibility of an integrated closed-loop ethanol-feedlot-biodigester system based on triticale feedstock in Canadian Prairies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 401-413.

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