3.1. Optimisation of Manure Resources
In Figure 2
, the results for the two alternatives farm scale plant
and centralised plant
relative to the no biogas
alternative are plotted for all the farms in the region (without using the objective function). The x
-axis is the yearly profit for the farmer and the y
-axis is the annual global warming potential for the handling of the manure. The blue dots refer to farm scale plant
and yellow to centralised plant
The environmental and economic results for the region when the objective functions were applied are shown in Figure 3
and Figure 4
. When the objective function for minimising GHG emissions (without considering economic cost and income) was used, the optimisation model chose the centralised plant
alternative for all the farms included in the model. This is because the biogas from the centralised plant is upgraded and used as a fuel for transport. The benefits of the avoided emissions from the production and use of diesel compensates for the additional transport and the extra emissions from upgrading the gas to fuel quality. The benefits of the avoided emissions from heat generated from electricity are far fewer, which makes the farm scale biogas plant less preferred than the centralised biogas production.
When the objective function for maximising the economic profit of the farm was used, the optimisation model chose the farm scale plant alternative for 10 of the 50 farms in the model and the centralised plant alternative for 40 of the farms. The optimisation model did not choose the no biogas alternative for any of the farms, indicating that biogas production is profitable for all the farms in the region.
In the farm scale plant alternative, the governmental support for manure represented on average 70% of the income, and the avoided costs for heat represent about 30%. In the centralised plant alternative, the proportion of the governmental manure support that the farm kept (25%) was in average 27% of the income, while storage rent was 73%. The average annual economic result was 56% lower for the farm scale plant alternative than for the centralised plant alternative.
Of the 10 farms where the model chose the farm scale plant alternative, six were cattle farms categorised as small and four were combined farms (two categorised as small, and two as large). These farms received relatively high governmental support for manure in the farm scale plant alternative. Due to current legislation, the model calculates the support per animal when manure is used for biogas production at the farm. When manure is supplied to a centralised plant, the support is calculated based on dry matter in the manure supplied, and it is assumed that the farmer pays 75% of the support to the biogas plant. The model chose the centralised plant alternative for all the pig and cattle farms that are categorised as large due to high income from storage rent.
When applying the overall optimisation objective function, taking into account both environmental impact and economic profit, the CO2
-emissions are regarded as a cost. Agriculture is not subject to the European emissions trading system. Use of the CO2
quota price does, however, indicate the choice that farmers would be likely to make if they had the option of choosing between paying for the emissions or reducing them by using manure for biogas production. Use of the CO2
quota price for 2016 when applying the overall optimisation function produces identical results to those found when the economic profit optimisation function is applied. This indicates that the CO2
quota price would be too low to affect the farmers’ decision. If the price increases, the share of farms supplying manure gradually decreases from 10 farm scale plants in the region at 7.8 Euro/tonne CO2
(which was the quota price in 2016 [47
]) to seven at 46.9 Euro/tonne CO2
(which is a suggested CO2
-tax for non-quota sectors in Norway [48
]) and three at 150 Euro/tonne CO2
, as shown in Figure 5
3.2. Sensitivity Assessment
The following aspects were tested in the sensitivity assessment: energy carriers and heat demand on the farm, the economic support system, agreements between the farmer and the centralised plant, the transport distance to the centralised plant and high costs for the farm scale alternative. Results from the sensitivity assessments are shown in Table 4
3.2.1. Energy Carrier and Demand on the Farms
The literature showed a large variation in energy demand on the farms. In the sensitivity assessment, the values for heat demand per animal were set to a minimal and maximal value (see Section 2.3
). When assuming a minimal heat demand on the farms, the optimisation model chooses the farm scale plant
alternative for only five of the farms when optimising the economic profit. If the centralised plant
alternative did not exist, the no biogas
alternative would be the most profitable for nine of the farms. When assuming a maximal heat demand, there are no changes in the results when compared with the original results. The heat demand on the farm does not affect the results for minimising GHG emissions.
To be able to discuss the results from the model outside a Norwegian context, an assessment when assuming a fossil energy carrier on the farms was assumed. Substitution of heat from oil combustion reduced the emissions for the farm scale alternative, but not enough to change the results when applying the objective function of minimising the emissions. This can be explained by the large share of biogas used to heat the farm scale biogas reactor.
3.2.2. Economic Support System
In common with many other European countries, the Norwegian government has introduced economic incentive systems to increase biogas production. As described in Lyng et al. (2017), the economic incentives are predominantly aimed towards increasing biogas production, and not towards end use of biogas [8
]. The importance of the incentive systems for the increase of manure to biogas production was evaluated by removing the support and applying the objective function for economic profit maximisation.
When removing investment support, the model suggested the farm scale plant alternative in the case of only five farms, which are small combined and cattle farms. This indicates that investment support is an important driver for increasing farm scale production of biogas. If the centralised biogas plant alternative was not available, the no biogas alternative would be more profitable than farm scale biogas production for 15 of the farms.
If the support per tonne manure was removed, the model suggested the centralised plant alternative for all farms. This is due to the income from storage rent. It is an unlikely scenario, as the centralised farm may not be willing to pay storage rent without receiving compensation for the manure treatment through the sharing of the manure support. If the centralised plant alternative did not exist, the use of manure for biogas production would not be profitable for any of the farms when the manure support was removed.
3.2.3. Agreements between Farmer and Centralised Plant
In the model, the agreement between the farmer and the centralised plant is that the farmer pays 75% of the governmental support for manure, and that the centralised plant pays for storage of digestate through a storage rent per tonne biofertiliser returned. The centralised plant covers the transport costs. These assumptions were based on an agreement between one such plant in Norway and surrounding farmers. Other agreement systems are possible. The significance of the type of agreement selected was tested by removing the storage rent income, and by shifting the transport cost from the centralised plant to the farmers.
When removing storage rent income, the model chose the farm scale biogas plant for all the farms. If the farm were to cover the transport costs, the model reduced the number of farms that supplied manure to the centralised plant from 40 to 3. This indicates that the agreement between the farmers and the centralised plant is of great importance when a farmer makes the decision on whether to supply manure to a centralised plant.
When the transport costs were assumed to be covered by the farmer, the centralised biogas production was chosen for three of the farms, while farm scale production was chosen for 47. The three farms comprised one small farm with a very short transport distance to the centralised plant, and two with a relatively small transport distance and large amounts of manure.
3.2.4. Transport Distance
The average transport distance from the farms to the centralised plant is 19 km, which is a short distance when compared with the distribution of farms in other regions in Norway. A sensitivity assessment was performed by increasing the transport distances and evaluating the effect on the result when using the objective functions for minimising greenhouse gas emissions and maximising the profit for the farms. The transport distance does not directly affect the economic profit for the farmer, as the centralised plant is assumed to cover the transport. In this sensitivity assessment, it was therefore assumed that the farmer covered the transport costs.
When increasing the average transport distance between the farms and the centralised plant, and applying the objective function of minimising emissions, the centralised biogas production alternative remained the most desirable option for all plants up to an average transport distance of 40 km (see Figure 6
). With an average distance of more than 40 km, the amount of farm scale biogas plants steadily increased. For those farms situated furthest from the centralised biogas plant, the farm scale biogas plant option led to the largest reduction in greenhouse gases. The transport distances for those plants were, however, more than 100 km. This shows that in a global warming perspective, manure can be transported long distances if the centralised plant is contributing to substituting diesel in the transport sector.
Assuming that the farmers have to cover the transport costs, the farm scale plant alternative became more profitable than supplying manure to the centralised plant for all the farms with an average distance of 40 km or more from the plant (the shortest distance is 15 km and the largest distance is 96 km). This implies that the transport costs are significant. Even if the farmers do not have to pay for transport, the transport cost is likely to affect the profitability for the farmers. The centralised plant would probably reduce the storage rent payment accordingly.
3.2.5. High Costs for the Farm Scale Alternative
The cost data used for farm scale biogas production in this paper are for a specific technology. Other technologies will have different investment and operational costs, however, finding transparent cost data for farm scale biogas technologies is challenging. The importance of the costs for farm scale production was tested by assuming that the Capex and the Opex was twice as high and applying the objective function for profit maximisation. When the investment costs of farm scale biogas production were increased by 100%, the model suggested the farm scale alternative for three farms. If the large-scale plant did not exist, the model suggested the no biogas alternative for 23 of the farms in the region. When the operational costs of farm scale biogas production were increased by 100%, the model suggested the farm scale alternative for five of the farms in the region. If the centralized plant did not exist, the no biogas alternative would be the most profitable for nine of the farms.