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July 23, 2014                                                                                                            202-224-7433

umer Proposal Would Create Jobs, Help Greek Yogurt & Cottage Cheese Industries & Protect The Environment – Many Other Renewables Already Receive Tax Credit, Schumer Bill Would Add Biogas to the List

Schumer: Biogas Tax Credit Would Be Major Boon To Many of Our Most Important Upstate NY Industries

Today, on a conference call with reporters, U.S. Senator Charles E. Schumer announced he is pushing a tax credit that would encourage the construction of biogas facilities across Upstate New York, which Greek yogurt makers, cottage cheese producers, and the entire dairy industry could use to turn hundreds of millions of pounds of waste into renewable energy, a new source of revenue, and hundreds of jobs. As part of the process of separating proteins from milk – used to make Greek yogurt, cheese and other dairy products – dairies produce tons of a byproduct called whey, which is potentially damaging to the environment and a waste product that they must dispose at a high cost to their business. Schumer explained that bio-digesters can productively turn whey into biogas, a renewable energy source, and many dairy processors and Greek yogurt producers would be interested in constructing such facilities on their properties if the market conditions were more favorable. In addition, other agricultural and food processing waste streams could be used or even combined with whey byproduct for biogas, such as manure from dairy farms. Therefore, Schumer is pushing a Biogas Tax Credit, which would add biogas to the list of renewable energy sources that receive a 30 percent tax credit for the construction of new facilities.

“As the Silicon Valley of Greek yogurt and the nation’s capital of cottage cheese, Upstate New York produces a lot of whey that could very easily be turned into renewable energy. But more biogas facilities are needed around Upstate New York to turn this vision into a reality,” said Schumer. “That is why I am proposing a new biogas tax credit, which would make the costs of opening up a new biogas plant more affordable and lead to more facilities sprouting up across the state. Pairing biogas with our upstate yogurt and dairy industry is a no-brainer – it is environmentally-friendly and economically-friendly. Expanding this tax credit for biogas is the right thing to do if we want to create jobs, and simultaneously grow two hugely important industries in Upstate New York: dairy and renewable energy.”

"Farms are an underutilized resource for energy production and biogas offers a clean and renewable option for energy generation and economic development right in our backyard. I appreciate Sen. Schumer sponsoring the Biogas Investment Tax Credit Act, which will help address the cost barriers associated with installing these systems on more farms in New York. This will also help to  spur more investment in local clean energy production," said Dean Norton, President of New York Farm Bureau.

“This tax credit will help ignite interest among farmers who are considering investing in digesters to help develop a new revenue stream for their farms, while also benefitting the environment at the same time by reducing methane emissions. We commend Senator Schumer for his continued leadership on behalf of dairy farmers in New York and across the nation,” said National Milk Producers Federation CEO Jim Mulhern.

Schumer explained that when proteins are separated from milk in the process to produce Greek yogurt, cottage cheese and many other cheeses, and ice cream, a natural byproduct called “whey” is generated. Unlike the whey created during the cheese-making process, sometimes called “sweet whey,” the whey created during the process of making more acidic types of dairy products – like cottage cheese or Greek yogurt – is called “acid whey.” The contents of acid whey, more so than sweet whey, can be damaging to the environment if it is not properly disposed. Due to the volume of whey byproduct generated by larger dairy processors, especially in the Greek yogurt industry which uses a large amount of milk, processors across Upstate New York spend millions to dispose of it. For example, the Alpina plant in Batavia processes over a half a million pounds of skim milk each week and roughly 70% of that becomes acid whey. However, this acid whey – as well as many other byproducts that dairies produce – could be turned into a source of renewable energy, biogas.

“Alpina Foods is committed to the environment and the communities in which we operate, which is why we have supported biogas from the beginning of our operations in the U.S.,” said Alpina Foods Industrial Director Roger Parkhurst. "It is important to us to have responsible avenues for the use of acid whey, a byproduct of strained Greek yogurt manufacturing. Senator Schumer's legislation will provide the incentives for farms and other dairy manufacturers to also take advantage of this environmentally responsible alternative. Helping manufactures turn waste into power and jobs is a win-win for New York State and the environment.”

Bio-digesters can break down acid whey using an anaerobic process to create biogas – a renewable energy source much like natural gas composed of mostly methane. Biogas can be chemically upgraded to be included in the natural gas supply or simply burned to create electricity. Schumer noted that given the large number of yogurt and cheese producers in New York, the potential for biogas is substantial, but may be held back by the high capital costs associated with constructing new facilities. Schumer’s proposal, the Biogas Investment Tax Credit Act, would encourage the construction of plants across the state that can turn whey, as well as other biomasses, into biogas. Specifically, Schumer’s proposal would provide a tax credit equal to 30% of the cost of building a biogas plant. Schumer explained that this tax credit would encourage many dairy farmers, yogurt plants, and cheese plants in Upstate New York to invest in constructing a biogas processing plant at their facility because it would enable them to turn their whey byproduct or manure into energy that could be used to offset on-site energy needs or sold back to the grid at a profit. In addition, this tax credit would also encourage many independent biogas companies to construct biogas facilities next to yogurt or dairy farms since they would have a plentiful source of whey or manure nearby to create biogas.

In addition to biogas’ ability to offset energy costs and promote a more diversified energy system, Schumer also said that these new biogas facilities would be a tremendous benefit to the Upstate New York economy. Specifically, he noted that biogas plants serve as a method of waste and sewage disposal, saving costs for farms and dairy producers. In addition, each new biogas plant that is constructed would create jobs and help the existing dairy industry grow even faster.

Schumer noted that there are already examples of biogas plants cropping up around the state in major dairy production areas. One of these plants is Synergy Biogas in Wyoming County – built, owned and operated by a company called CH4 Biogas – which converts food waste from local dairy processors into energy. In fact, one of the dairy processing companies that sends its waste to this plant is Batavia-based Greek yogurt manufacturer Alpina Foods. Under Schumer’s proposal, companies like CH4 Biogas would be more likely to build these plants, and more dairy processers like Alpina would send their whey to these new biogas facilities.

"We are pleased that the Senator is pushing for legislation that recognizes the vital role that Biogas plays in the U.S. Economy,” said Lauren Toretta, President of CH4 Biogas LLC. “Biogas facilities provide a source of clean, base load renewable energy as well as providing much needed jobs to local communities. We thank Senator Schumer and his fellow Senators for their continued leadership and support in recognizing Biogas as a priority for a green energy future."

During the call, Schumer cited a number of statistics that demonstrate the untapped potential for biogas in New York. Below is a list of the number of dairy farms per region as well as the number of dairy processing plants per region, all of which would be able to send large amounts of whey to a biogas plant. In total, the number of Upstate New York dairy farms is 35,635, and the total number of Upstate New York dairy processing facilities is 125. Schumer also provided a county-by-county breakdown of this information:

• In the Capital Region, there are 4,860 dairy farms and 17 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 14,714 tons.

• In Western New York, there are 4,850 dairy farms and 5 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 26,121 tons.

• In Central New York, there are 5,225 dairy farms and 23 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 21,202 tons.

• In the Rochester-Finger Lakes area, there are 6,410 dairy farms and 12 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 17,738 tons.

• In the Southern Tier, there are 7,555 dairy farms and 27 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 14,769 tons.

• In the North Country, there are 4,420 dairy farms and 17 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 8,395 tons.

• In the Hudson Valley, there are 2,315 dairy farms and 14 dairy processing facilities. From 2007-2013 there was an estimated potential methane generation from biogas sources of 28,246 tons.

In addition, Schumer noted that, according to the National Renewable Energy Laboratory, New York State as a whole has the potential to produce 263,082 tons of methane from a variety of biogas sources, including organic waste, making it the state with the seventh-highest untapped methane potential. Schumer said this is no surprise given the fact that New York is one of the nation’s dairy leaders, including ranking first in cottage cheese and Greek yogurt production, and third in milk production.

A bill to establish a biogax tax credit has already been introduced in the House of Representatives, by Congressmen Ron Kind (D-WI) and John Lewis (D-GA). Schumer noted that similar tax credits exist – called Investment Tax Credits (ITCs) – for investments in other forms of renewable energy. Schumer’s proposal would just be adding biogas to the list of renewables eligible for a 30% tax credit.