Arla farmers close the loop on renewable electricity

Arla and its farmers are closing the loop on the renewable electricity produced on-farm, keeping the power generated within the company value chain.

While some of the company’s dairy farmers engage in biodiversity projects and others provide manure for biogas, many of Arla’s cooperative farmers generate green electricity for their own farms and the public grid, through biogas, wind, and solar.

As Arla is looking to increase its share of renewable energy in its operations, the company and the farm owners have collaborated on an idea for how to keep the farmers’ green electricity in the dairy value chain and provide a better profit for the farmer.

“Arla farmers can help their own company to accelerate the transition to renewable energy while the company can maximise the value of its investments in renewable energy,” said Hanne Søndergaard, Arla’s head of sustainability.

“This demonstrates how we, in our cooperative’s micro food system, can work together to increase the sustainability of our value chain to the benefit of our owners, business, and the environment.”

Technically, the loop is created via the Guarantees of Origin (GO) that are issued for the renewable electricity produced on-farm. A GO is an EU standardised instrument to guarantee that one MWh of electricity has been produced from renewable energy sources and that the carbon reductions are only counted once, by the owner of the GO. The GO is issued to the producer of the energy and is a tradable commodity.

Until now, the farmers’ only option has been to sell their GO as a commodity for resale, either through a utility company or trader. Now, by selling their GOs directly to Arla, the other parties are left out of the transaction and the farmers are rewarded with the full market value that Arla would pay for GOs on the open market.

Arla’s chairman, Jan Toft Nørgaard, commented: “With this opportunity, the green energy that our owners produce can be counted as part of our collective actions to make dairy products more sustainable.

“The full profit for the GOs that we are able to secure for the farmers with this move has no extra cost for the cooperative and is a positive contribution to the business case for Arla farmers who consider investing in renewable energy.”

Arla has lowered its operational emissions by 24% since 2015 and the share of renewable energy used in operations is currently 35%. The company aims to reduce total emissions by 30% from 2015 to 2030 and to be a carbon net-zero dairy cooperative by 2050.

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