Cattle, ethanol, and biogas: Does closing the loop make economic sense?
The recent surge in US ethanol production has led to an increase in the amount of byproduct feed available to cattle producers. The impetus behind the increase in ethanol production is US policy to increase the production and use of renewable fuels. Manure from cattle production can also be used to produce a renewable fuel: methane. By co-locating a cattle feedlot with an existing ethanol plant, there may be synergies between ethanol, methane and cattle production. Byproduct from the ethanol plant can be fed to feeder cattle, manure from the cattle used in methane production, and the methane used as an energy source in the ethanol plant. Alternatively, methane can be used to generate electricity. We investigate the economic advisability of these systems. Using cost estimates for construction and operating a feedlot and anaerobic digester for methane production, we project revenues and costs over a 20-year time period. Our findings are consistent with studies that have considered just cattle production and methane production. The investment required to build a slatted-floor feedlot and concrete anaerobic digester cannot be justified under existing economic conditions. An increase in renewable fuel/electricity subsidies of at least $0.053 per kWÂ h or $72 per 1000Â m3 of methane are required to just break even when methane is used to produce electricity or is burned for thermal energy, respectively.
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- Jeffrey R. Stokes & Rekha M. Rajagopalan & Spiro E. Stefanou, 2008. "Investment in a Methane Digester: An Application of Capital Budgeting and Real Options," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(4), pages 664-676.
- William F. Lazarus & Margaretha Rudstrom, 2007. "The Economics of Anaerobic Digester Operation on a Minnesota Dairy Farm," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 349-364.
- 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, 09.
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