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The U.S. Department of Agriculture (USDA) has extended a moratorium on loans for anaerobic digesters, many of which are issued to large farms that turn animal waste into gas, until the end of 2026, citing “persistent and growing concerns.”
of This week’s directive Extended previous pause announced in January Federal loan guarantees for new anaerobic digester projects have been suspended due to large loan delinquencies and project failures.
The hold period was scheduled to expire on April 14, allowing the loan program to restart.
This extension threatens to stall the industry’s momentum. There is Estimation There are 394 fertilizer-based digesters in operation in the United States, with more than 70 under construction. This has increased by 55% over the past 10 years.
Anaerobic digesters use bacteria to break down large amounts of animal waste and convert it into “biogas,” a mixture of primarily methane and carbon dioxide. Biogas is refined into renewable natural gas (RNG) and can be used in some vehicles and as a natural gas replacement. The digester can also break down other farm wastes such as food residue and crop residue.
Biogas proponents argue that such digesters are climate-friendly and reduce methane emissions from manure produced by concentrated animal feeding operations (CAFOs) and spread on land as fertilizer.
But critics say these facilities are prone to leaks, encourage the addition of more animals to already crowded farms and are too reliant on federal and state loans and grants.
JR Clayes, administrator of the Rural Business Co-operative Service (RBCS), which manages loan guarantees for such projects, said in a directive this week that the decision to suspend new loan guarantees was based on “continued and significant risks identified during the initial review.”
“Continuing to insure high-risk projects threatens the long-term stability of the program and its ability to fulfill its mission,” he wrote.
“Continuing to insure high-risk projects threatens the long-term stability of the program and its ability to fulfill its mission.” – JR Claeys, Department of Agriculture
In addition to anaerobic digesters, the moratorium also includes financing programs for “managed agriculture” such as vertical farming, hydroponics, aeroponics, and aquaponics.
Craze wrote that the agency found that financial institutions lacked the underwriting expertise for this “volatile sector” and that high loan delinquencies, “cash flow deterioration, and financial instability” were prevalent among projects.
“The delinquency rate within the biodigester portfolio is 28%,” he wrote. “This comes on top of realized losses.”
The original USDA directive suspending loan guarantees cited $102.6 million in delinquent loans for anaerobic digesters, but did not name the delinquent companies.
However, New Lede in February analyzed the following: USDA renderlens portal Four anaerobic digester loans totaling $102.6 million were found to be delinquent. $100 million of that belonged to a biogas project in Wisconsin called BC Organic through two loans granted in 2021 under the Biden administration.
BC Organic is 181 to 360 days behind on loans that originally totaled more than $104 million. The only delinquent USDA loans for anaerobic digester projects are $891,179 to Dovetail Energy LLC of Ohio and $696,492 to Ringler Energy LLC of Ohio, according to the portal.
“The more we learn about this issue, the more surprised we are that the project is stalled in the first place,” said Patrick Serfas, executive director of the American Biogas Council.
“While most biogas projects are operating smoothly, the four projects that are experiencing difficulties are in no way reflective of the performance of the industry as a whole,” he said. “The fact remains that anaerobic digestion is one of the most effective means of processing fertilizers. It captures methane, reduces odors, helps protect water quality, and turns environmental challenges into solutions.”
This moratorium extension was praised by environmental groups, who had petitioned prior to the original moratorium: USDA It sought to exclude anaerobic digesters, which turn animal waste into gas, from the agency’s Rural America Energy Program (REAP), arguing that such funding causes pollution and benefits large factory farms.
“While most biogas projects are operating well, the four that are experiencing difficulties are in no way reflective of the industry’s overall performance.” – Patrick Serfas, U.S. Biogas Council
Renewable energy grant programs are designed to help farmers and rural communities pursue clean energy, energy independence, and efficiency.
“The USDA’s latest extension of its moratorium on loan guarantees for manure digesters recognizes what petitioners have made clear: manure digesters are a losing investment,” Earthjustice Senior Associate Counsel Kara Goad said in a statement. Earthjustice was one of more than 30 organizations that sent petitions.
“The USDA should end support for manure digesters and redirect funding to projects that benefit small farms, rural communities, the environment, and taxpayers,” Goad added.
The USDA will draft updated guidance and risk mitigation methods before reinstating loan guarantees for anaerobic digester projects, according to Craze’s instructions.
“Our goal is to ensure stronger underwriting standards and reduce risk for both lenders and borrowers,” he said.
Featured image: USDA Rural Development Rural Business and Cooperative Services Administrator JR Claeys at the March event. (Credit: USDA)
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Brian Bienkowski is the editor-in-chief of The New Lede. He is a veteran journalist with over 15 years of experience covering the environment and human health. Prior to joining TNL, he served as senior editor at Environmental Health News for nearly a decade, overseeing the newsroom and two local bureaus. He was also the founder, producer, and host of the EJ podcast Agents of Change from 2020 to 2024.
Bienkowski has received multiple awards for her editing and reporting, including honors from the Healthcare Journalists Association, Columbia School of Journalism, Hunter College, and the Environmental Journalists Association. He has a master’s degree in environmental journalism from Michigan State University and lives in northern Michigan.
