California’s climate regulators have built a lucrative market around cow manure, and the math behind it is getting harder to defend.
Under the state’s Low Carbon Fuel Standard, fuel suppliers must lower the carbon intensity of transportation fuels over time or buy credits from others that cut emissions tied to fuel use. One major beneficiary is the dairy industry, including farms outside California, which can earn credits by capturing methane from manure and turning it into pipeline-ready gas.
MIT Technology Review reported that California regulators decided in 2024 to extend parts of the program beyond 2050. The state Air Resources Board has also floated a recent proposal that could send more money to dairy operators while loosening requirements on large greenhouse-gas producers, according to the report.
The problem is not that methane cuts are fake. It is that California’s credit system treats different greenhouse gases as if they can be exchanged cleanly on a century-long ledger. Researchers cited by MIT Technology Review argue that this can make near-term methane reductions look like a fair trade for additional carbon dioxide, even though the gases behave very differently in the atmosphere.
How manure becomes a fuel credit
Many dairies store manure in large open lagoons. Microbes break down the waste and release methane, a greenhouse gas with a much stronger warming effect than carbon dioxide in the short run.
A farm can instead install an anaerobic digester, which routes the manure into covered equipment that captures biogas. That gas can be processed into natural gas, sent into a pipeline, and later burned in a vehicle or power plant. Oil companies and other fuel suppliers can then buy Low Carbon Fuel Standard credits from the dairy operator rather than cutting more emissions from their own products.
Burning the biogas still produces carbon dioxide. The climate case for the program is that it can displace fossil natural gas and, at the same time, prevent methane from escaping directly from manure lagoons.
The credit values can be generous. Aaron Smith, an economist at the University of California, Berkeley, said that under California’s program, adding one average biogas-powered vehicle would create enough credits to offset the deficits from 26 comparable gasoline-powered vehicles.
The gas swap is the hard part
California’s system assumes methane has about 25 times the warming effect of carbon dioxide over 100 years, MIT Technology Review reported. That framing compresses two very different climate effects into one tradable number.
Methane is potent, but it breaks down relatively quickly, generally within a couple of decades. Carbon dioxide accumulates, and a substantial share of today’s emissions can keep warming the planet for hundreds to thousands of years.
That means a digester can reduce warming in the near term while the credits it generates allow more carbon dioxide pollution that lasts far longer. Researchers have warned that climate policy cannot rely on trading cuts in short-lived gases for increases in long-lived ones if governments want to hold temperature rise within safer bounds.
Dairy digesters can reduce methane emissions, though MIT Technology Review noted they do not always perform as well as hoped. The larger policy question is whether California should keep paying one industry to clean up enough pollution on paper for another industry to delay its own cuts.
Carbon markets were designed to find cheaper reductions. California’s manure-credit program shows the less tidy version: the atmosphere gets the chemistry, while regulators get the accounting.
This story draws on original reporting from MIT Technology Review.
