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

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.

Citation

Gloy, B.A. and Dressler, J.B. (2010), "Financial barriers to the adoption of anaerobic digestion on US livestock operations", Agricultural Finance Review, Vol. 70 No. 2, pp. 157-168. https://doi.org/10.1108/00021461011064932