Metrics and indices to assess the life cycle costs and greenhouse gas impacts of a dairy digester

Abstract

Abstract This paper aims to propose consistent Life Cycle Assessment and Life Cycle Costing metrics and indices and to test them to assess an anaerobic digester on a dairy farm. The method is based on a graphic representation of the environmental Life Cycle Impact and economic Life Cycle Cost Differentials. Performance indices are the Internal Rate of Return (discount rate that makes the total cost differential over the lifetime equal to zero), the Breakeven Price of Electricity (unit price of electricity that makes the total cost differential over the life time equal to zero) and the Impact Savings Ratio (the total impact reduction divided by the detrimental impacts generated). A dairy digester producing electricity, chosen as case study yields a substantial carbon footprint reduction close to 0.2 kg CO2e per liter of milk (25% improvement of milk carbon footprint), corresponding to a high Impact Savings Ratio of 34–37. Life Cycle Cost Differentials ranges from −$545 (most favorable) to $808 (least favorable) per cow, depending on electricity price, heat recovery and upfront grant. Economic performances are reflected in the Internal Rates of Return (IRR), that range from −1% to 12%. The Breakeven Price of Electricity ranges from $0.07 to $0.13 per kWh. The effective economic performance is measured by choosing the discount rate equal to the Weighted Average Cost of Capital of the stakeholder. Comparing the IRR to his target rate of return enables the decision maker to check whether its own economic targets are met.