The best-known feed additive for reducing methane emissions from burping cows, Bovaer (3-NOP), has just been given the green light for use in lactating dairy cattle in the US. But who will pay for it, and what will drive widespread adoption?
Bovaer (3-nitrooxypropanol, which inhibits an enzyme involved in methane production in ruminants), developed by DSM-Firmenich and marketed in the US by animal health partner Elanco, is now commercially available in 64 countries with additional approvals expected.
“While we participated in many pilots in the first year after approval, in some of the more advanced countries, and after successful completion of those pilots we are now seeing the transition to repeat use and scale-up,” says DSM-Firmenich.
In the vast majority of cases, the company says, “the companies that benefit from Scope 3 emissions reductions absorb Bovaer’s costs. They do this as individual companies or divide the costs among a consortium. In some cases they also integrate the reduction into a premium product with a value proposition around sustainability.
“A pilot was recently launched in Brazil to also explore the potential of the carbon credit market as an alternative source of financing.”
Challenges to rapid adoption
In terms of the biggest challenges, it says: “Despite having over 100 tests available, we are finding that individual companies still want to test/pilot before scaling up, and this takes time.
“In many regions, but also within some companies, there is also uncertainty about how methane reduction will be accounted for and which local standards may apply. This uncertainty is slowing large-scale adoption.”
Historically, meanwhile, few “incentive systems have been put in place to recognize producers/farmers for strong sustainability behaviors, and these take time to build and implement,” the company adds. “So we cannot connect to a system; Rather, we need to find support in building an ecosystem.”
Monetization of methane reduction in livestock
In the U.S. market, says Katie Cook, Elanco’s VP of livestock, Elanco has been instrumental in establishing an incentive system, creating “a self-sustaining carbon input market for U.S. agriculture.”
Speak with AgFunderNews after the FDA gave Bovaer the green light in the US and Elanco inked a deal with DSM Firmenich to expand distribution in North America, Cook said Elanco has developed tools that help quantify methane emissions reductions and generate carbon credits.
“Look up is an online tool that helps quantify greenhouse gas emissions reductions. It uses on-farm data and peer-reviewed science to identify the key drivers of a company’s carbon footprint and then track the progress of sustainability efforts, such as the use of Bovaer.
“For example, we go to the farm, the producer enters data, for example: ‘I have 1,000 cows and I give them that much Bovaer per day.’ That is then fed into a calculator that has been validated by a third party who, based on this data, says this is x number of tonnes of CO2e emissions reductions.”
This data can in turn be fed into other systems that could enable the generation of carbon credits, said Cook, who said Bovaer can achieve an average of 30% reduction in enteric methane emissions in lactating dairy cows.
“We work with a number of different organizations, but Athish is the one that is the most advanced that we have partnership with. So Athian is a carbon-setting marketplace, the first for livestock here in the US.
“We work with producers who essentially give us a data release saying they can let us upload their data to Athian, who then works with a third-party verifier who goes to the farm and checks: have the animals actually been fed Bovaer? Was the data collected correctly? Are the calculations correct?
“There is a protocol around Bovaer and Uplook that has been validated by the Athian Scientific Advisory Board and external auditors. The discount is verified and then Athian creates credits that a buyer such as Nestlé, Starbucks or Danone can then purchase from Athian, who then returns these dollars to the producer.”
“By participating in voluntary carbon markets and securing USDA and state conservation programs, dairy producers have a scalable sustainability practice with the potential to generate annual returns of $20 or more per lactating cow by feeding Bovaer..” Katie Cook, VP livestock sustainability, Elanco
$20 return per lactating dairy cow
According to Cook, “If you look at the total value proposition today, it’s a return of $20 or more per year per lactating dairy cow that the producer would get for feeding Bovaer. About 50% of the return will come from a carbon marketplace like Athian, and the remaining 50% will come from government incentives.
“So there was about $89 million in it RCCP Grants awarded last year to dairies, cooperatives and trade groups to reduce methane emissions. So that will be the first tranche of dollars that will be available to producers beyond the carbon market. As these types of government incentives disappear, the expectation is that we will have a more robust carbon market with more players and more opportunities for producers.”
So far, 150 farms have registered
So how excited is the US dairy industry about using Bovaer now that it has received the regulatory green light?
“We have already registered 150 farms with Uplook and that number is growing every day,” said Cook. “So that’s the first strong indicator of their willingness to participate. They are already submitting data without getting any credit for it because they want to make sure they have resolved all the issues so they can be ready to implement Bovaer as soon as the product is available.”
But some farmers are skeptical, she said. “It’s a new marketplace that no one has participated in yet, so there are still a lot of questions, like: How do I get paid? How often do I get paid? These are the pieces we are working on as we get the RCCP subsidies in place and get the carbon market off the ground. Right now we’re in that weird in-between period, but we expect to have products available this summer.
“There are always kinks when you start something new, but we have a really good group of manufacturers who are ready to implement and willing to learn with us so we can make this scalable for broader industry adoption .”
‘Scalable credible carbon credits’
That said, the driving force behind these initiatives in many markets will be large CPG companies under pressure to reduce Scope 3 emissions by cutting greenhouse gases in their supply chains, she said, and Bovaer will be a be an important part of that toolkit.
“More than two-thirds of Fortune 500 companies have made Scope 3 commitments; they need scalable solutions so they can take the lead.”
While other enteric methane reduction solutions such as Asparagopsis (red seaweed) comes to market, she said: “Bovaer is the only FDA-reviewed feed ingredient with a methane reduction claim. It has more than 70 peer-reviewed studies. More than 100 tests have been conducted on farms, so we have a lot of credibility. Moreover, it is highly scalable. We built an ecosystem around it to not only get it to the farm, but also to help create scalable, credible carbon credits.”
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