A pledge by Smithfield Foods, the world’s largest pork producer, to transform hog manure into a clean natural gas aims to mint hundreds of pig farms in North Carolina into renewable energy gold mines.
The scale envisioned by Smithfield aspires to go far beyond the roughly 40 hog farms in the United States that currently convert swine waste to energy. The concept has been tinkered with for several decades, but it has never taken off on a grand scale because the technology and logistics have been considered too expensive and too experimental for widespread adoption.
There’s no dispute that the science, which relies on releasing microbes to break down hog waste in an airless chamber, is capable of yielding an endless supply of energy-rich biogas. The agricultural fuel that pigs yield is interchangeable with the natural gas that’s most commonly obtained by fracking, a controversial drilling technology that requires injecting chemicals under high pressure to crack underground rock formations and release the gas trapped deep below.
Smithfield’s goal, set in cooperation with the nonprofit Environmental Defense Fund, is to reduce the company’s greenhouse gas emissions by 25 percent by 2025 on hog farms in North Carolina, Missouri and Utah. One of the most potent greenhouse gases, methane is released by animal waste and other organic matter as dead stuff decomposes. At some landfills, the gas is flared off in perpetually flaming torches to keep it from entering the Earth’s atmosphere.
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Smithfield, which controls most of the state’s 9 million hogs, plans to capture the methane, remove impurities, and sell the gas to bidders willing to pay a premium for clean energy. The moonshot appears within striking distance today, as new energy markets have emerged where bidders pay top dollar for biogas derived from animal waste, landfills and other biodegradable refuse.
“This model has the best chance of any that have come along so far,” said Mark Rice, the interim director of the Animal and Poultry Waste Management Center at N.C. State University, who has worked on improving hog waste treatment for two decades. “It’s a higher-than-most probability of success.”
Squeezing energy molecules from swine feces won’t solve all of the hog industry’s image problems, however. When the biogas leaves the farm, hog farmers will be left with voluminous quantities of liquid waste that will have to be sprayed on crop fields as fertilizer, just as farmers do now. Complaints of odors are not likely to dissipate either, because the primary source of the acrid stench neighbors complain about is the hog houses where the animals live, not the outdoor lagoons where the waste decomposes, Rice said.
“This isn’t a total solution,” said Maggie Monast, Environmental Defense Fund’s senior manager for economic Incentives and agricultural sustainability. “It’s good on greenhouse gases but it does not address water quality or odor concerns.”
Smithfield has said its ambitious greenhouse gas project is not a moral exhibit, but a capitalist undertaking contingent on making profit from selling the biogas. The revenue would come from selling the gas and from collecting subsidies that power companies and oil producers are required to pay for the clean fuel.
Experiment in Kenansville
The food processing company has offered few details on how the complex scheme would work financially, and how it can pull off what no one has been able to achieve to date. Part of the trade secret resides in the recent track record of the Optima KV project in Kenansville, which collects hog waste from 60,000 pigs on five farms in Duplin County and turns their poop into enough biogas to power nearly 1,000 residential homes.
Based on Optima KV’s energy output, North Carolina’s 9 million hogs could generate enough biogas to power more than 100,000 homes, if all those pigs could be harnessed for energy production.
In the Optima KV energy model, Duke Energy buys the natural gas for generating electricity at its power plants under a 15-year contract with Optima KV. Duke Energy also pays Optima KV for “renewable energy certificates,” which is clean-energy speak for a subsidy to cover the additional cost of clean energy production. Charlotte-based Duke Energy pays the subsidy to comply with a 2007 state law that requires electric utilities to use renewable resources and to pay extra if the energy costs more to produce. The amount Duke pays for the renewable energy certificates is confidential, under a privately negotiated contract.
Optima KV’s developers say they achieved a historic breakthrough in North Carolina on March 23, when their biogas project became the first to produce natural gas in-state and inject the fuel into a pipeline for general use. Up to that point, all biogas from landfills and other renewable projects in the state had been burned on premises in small generators, or used for industrial heating.
“What results is an exceptional high-purity natural gas,” said Gus Simmons, the manager of the project, which was designed by Cavanaugh & Associates, a Wilmington-based sustainability consulting firm. “Until the Optima KV project, all the natural gas consumed in North Carolina came from somewhere else.”
Smithfield plans to invest millions of dollars in infrastructure: gas purifiers, pipelines, tanker trucks, pipeline right-of-ways, as well as interconnections with existing pipeline networks. The company says it will expand biogas production to 90 percent of its North Carolina finishing operations over the next decade.
The total cost is unknown, but it could be stratospheric. A single biogas project built in 2011 at the Loyd Ray Farms in Yadkinville, powered by 8,600 pigs, cost a total of $1.7 million. This project, created by Duke Energy, Duke University and Google, generates power on-site with a 65 kilowatt generator, said Matt Arsenault, program manager at Duke University’s Carbon Offsets Initiative.
And the system, a demonstration project, doesn’t turn a profit, Arsenault said. The anaerobic digester was designed and built by Cavanaugh, the same company that’s involved in the Optima KV venture.
Smithfield will have the advantage of massive scale when it yokes together hundreds of hog farms in a giant biogas production network. But Smithfield owns fewer than 100 finishing farms, where hogs are matured for slaughter, so the company’s biogas ambitions will largely depend on the cooperation of independent farmers who grow pigs for Smithfield.
“We would buy that gas and we would take the risk in the renewable energy market,” said Kraig Westerbeek, senior director of Smithfield Renewables. “We feel most farmers will decide to participate. ... It’ll be hundreds of farms.”
The independent farmers would have to agree to purchase, operate and maintain the equipment that is used to turn manure into energy. The equipment would either be a polyethylene cover for an outdoor hog waste lagoon, or an anaerobic digester — the two common ways of collecting the waste and trapping the gas.
“I’m excited about it — it’s another source of income to farmers,” said Elwood Garner, co-owner of E&J Farms in Warsaw. “There’s some good return for investment there. They’re willing to give you a 10-year contract on your gas.”
Garner was among a group of independent contract growers for Smithfield who heard a presentation this month, consisting of nearly 2 hours of overhead-projector slides and discussion, from Smithfield executives at the company’s Warsaw office. Based on what he heard from the executives, Garner estimates a lagoon cover could cost him around $200,000, and an anaerobic digester could cost up to $250,000.
He hasn’t decided which option makes more sense, and won’t have to make a decision until Smithfield notifies him that it’s ready to develop biogas infrastructure in his area, which could be more than a year from now. But from what he has been able to piece together, he estimates his biogas output from 5,280 hogs filling his 2.5-acre waste lagoon would make between $60,000 and $70,000 in revenue a year.
One benefit of a lagoon cover is that it protects the pit from overflowing during heavy rains, an issue farmers are sensitive to in the wake of Hurricane Florence, which caused several dozen lagoons to overflow and spill pathogen-infested fluids into nearby waterways. A digester, on the other hand, has the advantage of being more efficient in producing gas.
Getting energy from hog waste has been so lackluster in North Carolina that that state has never met its goal, set by the legislature in 2007, to generate a portion of electricity from fuel derived from swine waste. That requirement became effective in 2012 and has been delayed every year, but Duke Energy and Dominion Energy now say they will satisfy a portion of the goal this year for the first time.
The state’s electric utilities expect to generate 0.02 percent of their retail electricity sales from swine-waste-derived energy this year. Their energy sources: a dozen manure-to-energy projects, half of which are out of state, said Jay Lucas, a utilities engineer with the Public Staff, a state agency that represents the public before the N.C. Utilities Commission.
When fully phased in, North Carolina’s swine waste provision will require electric utilities to get 0.2 percent of their retail sales from pig poop, 10 times more than they hope to achieve this year. That’s something that is not possible with today’s production levels, but a goal that would be easy to reach with hundreds of hog farms participating, Lucas said.
It’s not clear how much of Smithfield’s biogas bonanza will be reaped by North Carolina’s electric utilities. About 80 percent of all biogas produced in the United States is used as a vehicle fuel, under a market created in 2005 through the federal Renewable Fuel Standards program, said Marcus Gillette, a spokesman for the Coalition for Renewable Natural Gas.
That program requires big oil producers to subsidize the production of biofuels, and biogas credits for transportation are currently in greater demand and therefore have greater financial value than the credits paid for producing electricity, said Patrick Serfass, executive director of the American Biogas Council.
Another potential market for Smithfield is California’s Low Carbon Fuel Standard, which calls for a 10 percent reduction in greenhouse gas emissions in transportation fuels by 2020. The California standard allows petroleum importers, wholesalers and refiners to meet the state’s goal by producing low-carbon fuels, or by paying low-carbon subsidies to independent producers of biofuels and biogas.
“Renewable energy markets provide an opportunity for these projects to work,” Smithfield’s Westerbeek said. “Ultimately, it’s up to the utilities whether they’re willing to pay for that gas or not, or whether it goes to the other markets.”
Natural gas is used as a transportation fuel by municipal bus fleets and by delivery trucks operated by FedEx and UPS, among other users, Gillette said.
“It costs more but it’s worth it,” Serfass said. “What is the value of making sure the agriculture industry in North Carolina is sustainable? What is the value of being able to recycle food waste and organic waste in the state?”