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The dairy industry accounts for 12.5% of agricultural emissions, or about 2% of total national greenhouse gas emissions. This may not sound significant, but for a typical dairy farm milking 300 cows producing 6,000 litres per lactation, this amounts to more than 2,000 tonnes of carbon dioxide equivalent (CO2e).

Most dairy farm emissions are from methane (CH4) and nitrous oxide (N2O). Methane from enteric fermentation is the biggest source of emissions from dairy farms, producing 57% of emissions on an average Australian dairy farm, followed by methane and nitrous oxide from urine and dung (18%). Nitrogen fertilisers cause emissions (6%) through both their production and application in dairy systems.

Farms also emit significant amounts of carbon dioxide through the on-farm use of fossil fuels and electricity (8.9% combined), purchased feeds and concentrates (7.9%) and purchased fertilisers (3.1%). There is a range of pre and post-farm gate activities that generate their own greenhouse gas emissions, which contribute to the dairy industry’s total carbon footprint.

The most important factor in determining a dairy farm’s emissions is simply the amount of milk produced. On this emissions intensity basis (emissions per tonne of product), dairy farms are relatively low emitters.

Although the carbon footprint of Australian dairying is one of the lowest internationally, there is still scope to improve efficiency. The Australian dairy industry has made a commitment to minimising its environmental footprint, including reducing greenhouse gas emissions intensity by 30%.

There are many ways greenhouse gas emissions from dairy farms can be reduced, which includes via management changes to the herd, the feedbase and the soil.

Factsheet - Profitable dairy farming and GHG emissions

The Australian Dairy Carbon Calculator (previously DGAS) is freely available for dairy farmers to identify their sources of greenhouse gas emissions (GHG) on-farm and benchmark their carbon footprint.

The Australian Dairy Carbon Calculator allows farm managers and other users to calculate the impact of adopting different emissions reduction strategies on their total farm emissions and emissions intensity. It can help them work out the strategies best suited to their farming system.

Abatement strategies modelled by the calculator fall into four categories; herd management, feeding management, soil management and farm intensification. Modelling shows that any farm efficiency improvement will lower GHG emissions per tonne of milk solids produced.

Learn how Shawn and Tanya Robbins (Boorcan, VIC) have used the Australian Dairy Carbon Calculator (formerly called DGAS) to identify opportunities for reducing emissions on-farm.

Factsheet - GHGs on dairy farms

Understanding methane sources in dairy

Cows produce and release methane courtesy of their rumen microbes. The methane produced by fermentation in the rumen is largely belched and breathed out by the animal. As a ruminant-based industry, this is something that is hard to avoid.

However, as methane is a high energy source, this represents a significant loss of energy from the production system, with 8% to 10% of gross energy intake lost as methane. Some of this energy can and should be redirected back into production (Eckard 2011).

Methane is 34 times more potent than carbon dioxide in its global warming potential. That potency -combined with the fact that a dairy cow belches about 600 litres of methane each day - make the annual emissions of a cow similar to a family car in terms of its effect on global warming. It is estimated that a quarter of human-caused methane emissions are due to enteric (rumen) fermentation.

Methane production in the rumen of dairy cows is strongly associated with the digestion of forages, so high energy supplements such as grain or the use of total mixed rations reduces methane per litre of milk. As a result, there is roughly 30% difference in emissions intensity between the two extremes of dairy systems. Fully pasture-based systems produce roughly 17.5 tonnes of CO2-equivalent per tonne of milk solids.

Fully lot-fed systems produce roughly 12.5 tonnes of CO2-equivalent per tonne of milk solids. The proportion of an animal's intake that is converted into methane is dependent on both the amount of feed eaten and the characteristics of the animal and the feed.

Reducing methane emissions in dairy

Currently, well-managed dairy farms have few options to reduce methane emissions without significant changes to their farming or feeding system. Making changes to reduce emissions would require analysis of the impacts on productivity and profit. For example, if grain supplementation is increased then three things tend to happen concurrently:

• Pasture consumption per cow goes down
• Milk production per cow goes up
• Stocking rate is increased to take advantage of the extra pasture

In this example, while methane per litre of milk almost certainly falls, methane per cow and per farm can rise. This means that reducing emissions intensity (emissions per litre of milk) is potentially a win:win for the dairy industry. Any improvement in productivity and/or production efficiency is likely to give an associated reduction in emissions per litre of milk.

Possible options for reducing methane on dairy farms include:

• Herd-based strategies, such as reducing herd size, reducing the number of unproductive animals, animal breeding and/or rumen manipulation
• Feed-based strategies, such as maximising diet quality/digestibility, pasture breeding and diet (feeding fats, oils and tannins)

Under current Australian Government policy, farmers are not accountable for on-farm emissions.

Understanding nitrous oxide sources in dairy

Nitrous oxide (NO2) emissions on dairy farms can be up to 25% of total farm emissions. However, three distinctly different processes contribute to this total:

• Indirect emissions which the farmer has little or no influence over. These include NO2 emissions associated with the production of farm inputs such as nitrogen fertiliser or purchased grain, silage or hay. Other than for feedlots, this indirect source of NO2 is usually the largest on dairy farms, accounting for up to 50% of total NO2 emissions. Options for dairy farmers to reduce these indirect emissions are very limited.
• Direct emissions from dung and urine, including those NO2 emissions from deposition of dung and urine on pastures and those associated with effluent management systems. Options to reduce NO2 emissions from these sources, beyond what would currently be included as normal best practice, are relatively limited but are the subject of current research.
• Direct emissions from the use of nitrogen fertiliser. This is the smallest contributor to dairy farm NO2 emissions, often less than 20%. Because of the cost, farmers are already focused on minimising the losses from nitrogen fertiliser, so current best practice is delivering most of the available emission reductions. However, if the use of nitrification inhibitors proves to be effective under Australian conditions, then blanket application of nitrification inhibitors to all nitrogen fertilisers during production may be a viable option. If this strategy reduced NO2 emissions from fertiliser by 30% annually, then total dairy farm emissions would be reduced by approximately 1.5%.

Reducing nitrous oxide emissions in dairy

Current farming systems that are operating at or near best practice management of cows and pastures already minimise nitrogen losses and maximise dairy production. If nitrous oxide is to be significantly reduced, new options and strategies will need to be developed and tested.

Possible options for reducing nitrous oxide emissions on dairy farms include:

• Herd and feeding strategies, such as feed conversion efficiency, nitrification inhibitors, diet and effluent management
• Soil-based strategies, such as improved drainage and irrigation and fertiliser management

Using effluent to offset fertiliser use can result in significant savings. Each tonne of nitrogen fertiliser applied to pastures emits 1.9 tonnes of CO2 equivalent directly and 2.3 tonnes of CO2 equivalent indirectly. In addition, the manufacture of fertiliser (urea) emits 1.9 tonnes of CO2 equivalent.Therefore a one-tonne reduction in the use of nitrogen fertiliser will reduce emissions by 6.1 tonnes of CO2 equivalent.

Similarly, reducing phosphorous and potassium fertiliser use by one tonne would save 4.6 tonnes of CO2 equivalent and 0.3 tonnes of CO2 equivalent, respectively, due to the reduction in emissions from manufacturing.

In an average farm system, reducing the time spent in the dairy and yard by 10%, with cows instead spending this time on pastures, would reduce emissions by around 10 tonnes of CO2 equivalent per annum.

The extent to which financial incentives via the Emissions Reductions Fund offered to farmers to reduce greenhouse gas emissions may change the economics of any of these options remains to be determined.

Practices to reduce nitrous oxide through nitrogen management

Nitrogen fertiliser use is essential in most dairy systems but the low efficiency of its use means that more than 60% of nitrogen added to pasture systems is lost to the environment.

With nitrogen efficiency often below optimum in dairy systems, there are a number of practical ways farmers can better match their nitrogen fertiliser applications with pasture demand, other inputs and prevailing conditions, thereby reducing input costs.

Practical advice on soil and fertiliser management is available via the Fert$mart website.

Key points to consider in nitrogen management:

• Poor nitrogen fertiliser management increases greenhouse gas emissions and wastes money
• Strategic use of nitrogen – when plants will respond and when extra feed is needed – saves money, time and emissions
• Poor irrigation and soil management practices will lead to loss of nitrogen from the system, including some as nitrous oxide

Suggested practices for nutrient management:

• Use best practice nitrogen fertiliser management to reduce nitrogen loss and improve nitrogen use efficiency and therefore profitability of nitrogen use
• Avoid high rates of nitrogen fertiliser, especially when soils are warm and close to field capacity
• Use best practice soil and irrigation management practices to make the best use of water, reduce soil inundation and minimise loss of nitrogen from the soil
• Reduce grazing on wet soils when urine patches will be most likely to emit nitrous oxide
• Nitrification inhibitors on fertiliser, fed to cows, or applied to pastures as a spray can reduce soil nitrogen loss as nitrous oxide

Download Fact sheet: Getting more out of your nitrogen and reducing emissions

Download Case study: Getting nitrogen fertiliser right: more profit, fewer emissions

Applying best practice management to improve herd longevity, fertility, transition cow management and health can have major effects on lifetime cow productivity, and therefore profitability and farm emissions intensity.

Greenhouse gas emissions are at their highest per kilogram of milk solids when cows are fed poor-quality diets. High-quality, high-digestibility feed will maximise milk production and minimise greenhouse gas emissions per kilogram of milk solids.

Suggested feeding management practices for feed efficiency:

• Monitor and supplement diets to ensure nutritional requirements are met when pasture quality is low
• Use low-protein, high-energy supplements when pastures are high in nitrogen to improve milk production efficiency, avoid excessive dietary nitrogen and minimise nitrous oxide emissions
• Include fats and oils as feed supplements to increase milk production if dietary fat levels are below 2–3%, to reduce methane emissions
• Maximise diet digestibility to reduce methane production*
• Balance energy and protein contents to minimise nitrous oxide emissions from urine
• Pasture breeding** may offer improvements in feed quality and in rumen methane or urinary nitrogen production.

*While improvements in diet quality can reduce methane emissions per litre of milk produced, they often act to increase total farm methane emissions. This is because milk production per cow increases, but cow numbers often go up to take advantage of the higher quantity and quality of feed. Thus, making changes to reduce emissions would require analysis of the impacts on productivity and profit.

**Traditionally, pasture breeding has focused on increasing dry matter yields and the longevity of sown pastures. These are still vital traits, but now that the ability to manipulate plant genes has dramatically increased, plant breeders in Australia are working on mechanisms that significantly increase the digestibility of pasture species. Though many years away, increasing the digestibility of ryegrass is being investigated, with studies on fescue and C4 grasses to follow.

Although effluent management comprises typically only 8% of total farm greenhouse gas emissions, managing effluent storage and re-use to minimise emissions can provide broader benefits for on-farm efficiency, profitability and the environment. By viewing effluent as a valuable source of nutrients rather than a waste product, there are opportunities to save money on fertiliser, improve soil fertility and condition and minimise the risk of water pollution, as well as reduce emissions.

There is currently limited opportunity to establish forestry plantings with the intent of gaining a credit for the sequestered carbon. Dairy farms are usually small, intensively managed properties with little of the land class where government modelling indicates that forestry plantings for carbon sequestration may be economic, that being marginal and lowly productive farmland.

On the other hand, many dairy farms have small areas, including riparian zones, where revegetation for conservation purposes is already encouraged and common. An additional benefit from carbon sequestration may be available for existing or new plantings in these spots.

Shelter belts also provide a good opportunity to reduce the farm greenhouse gas footprint.

What is soil carbon sequestration?

Soil carbon sequestration is the process of transferring carbon from atmospheric carbon dioxide into plant material, some of which is added to the soil carbon store as dead plant material or animal waste.

Soil is a complex mixture of organic compounds at different stages of decomposition. Soil organic carbon is divided into different ‘pools’ that are classified according to their rate of decomposition, as shown in Figure 1 below.

The amount of carbon in the soil depends on:

• The climate and soil fertility: fertile soils in high-rainfall zones or under irrigation can support high levels of plant growth and therefore have the potential to return large amounts of organic matter to the soil. The proportion of organic matter returned to the soil that is used for respiration by soil organisms depends on the soil temperature (higher temperatures, more respiration) and soil water content. The climate and soil therefore set the upper limit for soil carbon sequestration.
• The agricultural production system: more carbon tends to build up under pastures than under crops.
• Management: When soils are ploughed or otherwise disturbed, soil carbon previously protected from microbial action is decomposed rapidly. Systems that encourage the addition of plant litter to the soil, such as stubble retention or lax grazing, have some potential to increase the soil organic matter pool and eventually the soil carbon content, but the rates of change are slow.

Reducing demand can be realised through implementation of some/all of the following actions:

• Insulation (against heat gain or loss)
• Utilising natural attributes. For example, re-installing the first stage heat exchanger has the potential to save about 5,000kWh and $1,060 per year
• Sizing systems to suit
• Reducing/avoid wasting. For example, turning off lights when not needed
• Utilising renewable energy sources.

Improving efficiency can be realised through implementation of new technologies, such as LED lighting and variable speed drive (VSD) pumps, better design, improved maintenance and/or use of high-efficiency motors.

The first step is to start measuring energy use and potential areas of inefficiency. Undertaking an energy audit would provide a good first assessment, as well as identifying goals, for potential energy savings. Alternatively, farmers should consider assessing the costs of the three main cost components – hot water, milk cooling and milk harvesting – against regional benchmarks.

The most commonly identified savings were associated with:

• Improved functioning of equipment for milk cooling, including function of the plate-cooler and the compressors on the vats and using cooler water sources
• Pre-heating hot water for hot water systems, using heat exchange units (where appropriate) and using correct water temperatures
• Installing VSDs on vacuum pumps.

In addition to energy savings, for some farms there were further dollar savings to be made with electricity billing arrangements and changeover to time of use contracts. Although these do not reduce energy use, they can substantially reduce total bills.

With costs falling and take-up rising of solar and other renewable energy systems, businesses are increasingly interested in storing the energy they produce to maximise its benefit and reduce their bills.

Renewable energy's main challenge is that its use is restricted to when the renewable resource is available (when the sun shines or the wind blows). Storage allows more of that renewable energy to be retained so it can be used on-site at a later time and further reduce electricity consumption from the mains power grid.

Unfortunately, given the complexity of renewable energy and storage technology, there is no easy or quick way to answer the question of "how much storage do I need at my site and what will it cost?"

The only way to properly answer this question, which maximises the chance of implementing a cost-effective project at any given site, is to undertake a feasibility analysis. This analysis would take into account that site's specific consumption patterns, electricity tariffs and solar resource.

It is important to note that renewable energy and storage technologies continue to evolve, with storage prices predicted to drop dramatically in the coming decade.

Individual businesses should seek expert advice to see whether renewables and storage is a viable option for that farm.

Some large dairy farms and feedlots may produce sufficient manure from dairy effluent to make biogas generation from methane an option.

Despite dairy farm waste being a good resource for biogas production, there are currently few working examples of biogas technology in Australia’s dairy sector. Biogas technology not only supplies renewable energy, but in addition the technology can simplify waste management, reduce odour and greenhouse gas emissions and improve fertiliser value of manure and other by-products.

Biogas technology does not have to be complex or difficult to operate, but it does need to be tailored to the specific needs of the farm in terms of farm management, waste characteristics and biogas use.

Before developing methane capture and use projects, the following questions need to be answered:

• What type of anaerobic digester suits the operation?
• How much biogas will it yield?
• How do the costs and benefits compare with conventional alternatives?

Climate change is a global problem that requires a global solution. Countries have agreed to a collective goal of limiting global average temperature rise to less than 1.5°C above pre-industrial levels.

In mid-2015, the Australian Government announced its emissions reductions target of 26% to 28% below 2005 levels by 2030. Australia will meet its 2030 target through the Emissions Reductions Fund, which includes incentive payments for emissions reduction activities managed by the Clean Energy Regulator.

The Emissions Reduction Fund is a voluntary scheme that aims to provide incentives for a range of organisations and individuals to adopt new practices and technologies to reduce their emissions.

The first Emissions Reduction Fund auction took place in April 2015. In that year, more than 47 million tonnes of carbon abatement was contracted at an average price per tonne of abatement of $13.95. Through that auction, the Government committed $660 million to 144 projects to reduce emissions in Australia. The emissions reductions from those projects will be delivered over 10 years, which means that reductions purchased in the first auction will contribute not just to Australia’s 2020 target, but to the 2030 target.

Tracking of Australia's emissions is made publicly available here.

The Government has published a range of methods that help businesses, communities and landholders to plan and undertake projects. The methods explain how to carry out a project, including how emissions reductions can be measured and the reporting requirements during the life of the project.

There are currently two Emissions Reduction Fund methods relevant to dairy:

• Reducing greenhouse gas emissions by feeding dietary additives to milking cows
• Animal effluent management method

Further information on methods available to dairy farmers can be accessed here.

Dairy Australia is working alongside other livestock industries to increase the opportunities for dairy farmer participation in market-based incentives for emissions reduction, such as the Emissions Reduction Fund.

Participation in the Emissions Reduction Fund is voluntary, so there is no pressure on dairy farmers to get involved. Current dairy industry modelling suggests that well-managed dairy farms have few options to profitably reduce emissions of methane and nitrous oxide.

As new methodologies are developed for the dairy industry beyond this project, these too will be incorporated into existing industry tools, such as the Australian Dairy Carbon Calculator, as appropriate.

Details on how to participate in the ERF can be found here.