TerraPass project spotlight: the Haubenschild dairy farm

haubenschild.jpgThe Wall Street Journal ran a nice piece (subscribers only) on one of the projects TerraPass funds, the Haubenschild dairy farm in Princeton, MN. I’ve met with Dennis Haubenschild, and he’s as passionate as can be about conservation and renewable energy. His dedication is particularly impressive considering that running a family-owned farm takes no small amount of effort and energy.

Below is a lengthy excerpt of the WSJ article, but first two points of clarification on issues that might otherwise be confusing:

  1. When the article says that Dennis had been “waiting 20 years” to sell his credits, that does not mean either that his methane digester has been in operation for 20 years or that the credits are old. Rather, it just means that Dennis has been tinkering in one way or another with forms of renewable energy for 20 years. His early experiments were with solar energy, because he couldn’t secure financing for the methane digester he wanted to build. More recently, carbon offsets have made the methane digester feasible.
  2. The claim that there are “no restrictions” on how farmers use the funds from offsets could be misinterpreted as meaning that farmers aren’t actually required to reduce any emissions. This would be incorrect. To generate an offset, the farmer first has to create a real reduction in CO2 emissions. Once the offset is created, the farmer can sell it, and the proceeds are his revenue to keep. Saying that there are “no restrictions” on the proceeds is like saying that there are no restrictions on what the farmer does with the proceeds from selling milk. It’s true, but the farmer does actually have to produce the milk.

OK, hopefully that’s clear. Here’s a portion of the article:

Dennis Haubenschild, a longtime environmentally conscious farmer, wants his business to be carbon neutral or sustainable. However, he found it difficult to gain investors’ interest in purchasing his farm’s carbon credits, especially because it is too small to sell them on the Chicago Climate Exchange, or CCX. Companies and municipalities join the CCX and voluntarily agree to reduce greenhouse gas emissions. Members who reduce emissions by more than 1% each year can sell surplus carbon credits on the exchange, or bank them.

Mr. Haubenschild says his Princeton, Minn., dairy farm was the first in the Midwest to create electricity from cow manure, and that he hires an auditor each year to verify his carbon credits. An environmentalist since his college days in the 1970s, Mr. Haubenschild had been waiting 20 years to partner with a company that would purchase his credits or act as an intermediary between the farm and outside investors. Then came TerraPass.

Mr. Haubenschild teamed up with TerraPass, a for-profit company that sells carbon offsets to consumers, three years ago. TerraPass purchases the 90-100 tons of carbon credits a week that Haubenschild Dairy Farm produces, and sells them to individuals.

Contracts are trading at around $4 per metric ton of carbon dioxide on the CCX. That adds up to roughly $19,750 per year in offset income for Mr.Haubenschild.

“I’ve been trying to be able to sell carbon credits since the Chicago Climate Exchange started,” he said, “and it took a company like that to make it happen. It would take four-to-five dairies, probably six dairies, my size to have a seat on the exchange.”

As more for-profit companies get into the carbon-offset market, small U.S. farms are benefiting from sales of carbon credits, as well. The concept works this way: small farms sell carbon credits to companies, which resell the credits to consumers and businesses. Part of that money goes toward renewable energy projects, and part of it becomes profit. There are generally no restrictions on how farms use the funds, though some reinvest them in their biomass projects.

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  1. jill - March 7, 2007

    I read the WSJ article and didn’t pick up on your concerns. Perhaps I’m not a discerning enough reader, but the sentences in question seemed quite simple and straightforward. I know you’ve felt in the past that you’ve been misinerpreted, or that what you’re doing has been misunderstood, but in this case I don’t think you need to worry. If I were a farmer and reading the WSJ, I’d find out about the whole thing, including your part in it. And if I were you, I’d stop apologizing before the fact.

  2. Adam Stein - March 7, 2007

    OK, good. I wasn’t really trying to apologize for anything, but I’m glad the article was clear. I do have some experience with this sort of thing, though, and it is easy for people to take slightly vague statements in weird directions.

  3. Maren - March 7, 2007

    So how long HAS the methane digester been in operation? How can purchasers of those offsets be guaranteed that Dennis wouldn’t really have installed the digester anyways, whether now or in a few years? It sounds like he was pretty much on the track to do so!

  4. Adam Stein - March 7, 2007

    The digester was installed in 1999. You can read all about it here:
    The recent date of construction is one additionality test. A second one is that the finances of the digester don’t allow it to pay for its own operation. Without offsets, Dennis would be running it at a loss, which is not something working farms can generally afford to do.

  5. maureen - March 8, 2007

    built in 1999
    were you guys even out of high school then?

  6. Adam Stein - March 8, 2007

    Tom wasn’t even diaper trained until 2001.

  7. Anonymous - March 9, 2007

    Can you tell me how the carbon credits are calculated for such a farm? Are these renewable energy credits from producing his electricity? Does TerraPass calculate it or the Chicago Climate Exchange?


  8. Adam Stein - March 9, 2007

    The carbon offsets from the farm come from the destruction of methane, not from the electricity generation, although this is a great side benefit.
    TerraPass doesn’t perform any of the calculations. I believe they are performed by environmental consultants and then registered with the CCX. Tom will chime in if I’ve misspoken.

  9. John - November 26, 2007

    Very interesting. How often is the price paid for the carbon credits adjusted? I note, for example, that today’s price on CCX is about $1.70-$1.75 per metric ton.
    Also, does the farm get credits both for the estimated methane that might have escaped to the atmosphere from the storage lagoon (and is now being diverted), or only for the quantity of methane burned to generate power? (I wonder, for example, if a solids recovery system was installed before the lagoon — which would also reduce methane emissions from the lagoon — would the farm also be eligible?)
    PS – It’s a wonderful service that you provide, working with farmers who are too small to directly work with CCX.

  10. Adam Stein - November 26, 2007

    Hi John,
    I believe the price on CCX changes daily, but we aren’t trading anywhere near that actively. Because of the overhead of all the verification we do, we tend to buy in large blocks a handful of times each year.
    Carbon credits are generated from actual methane burned, not from estimates. The methane capture system is metered, so the readings are quite accurate.
    – Adam

  11. Heather - May 25, 2008

    Here I am, sifting through months (years?) of unread and partially-read Terrapass e-mails, articles, links, feedback, heated dialogue, etc… definitely feeling productive about it, in an educational sort of way… this (#6) was the first actual laugh-out-loud moment (to Adam’s credit, and certainly not at Tom’s expense) 😉 So, thanks for the comic relief – and many kudos for all of your blogging, clarification and reclarification!