Denmark: renewable electriticy on Arla’s Farms

The Denmark headquartered dairy cooperative Arla and its farmer owners are closing the loop on the renewable electricity produced on farm in a move that reduces the carbon footprint of Arla’s milk, secures farmers a better price for their power and gives the dairy cooperative direct access to more green electricity certificates, according to Arla. As Arla is looking to increase its share of renewable energy in its operations, the company and the farmer 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. In Arla’s operations, emissions have been lowered 24 per cent since 2015 and the share of renewable energy used in operations is currently 35 per cent. A continuous increase is part of the ambition to reduce total emission by 30 per cent from 2015 to 2030 and to be a carbon net zero dairy cooperative in 2050. Technically, the loop is created via the Guarantees of Origin (GO) that are issued for the renewable electricity produced on the farm. Until now, the farmers’ only option has been to sell their GO as a commodity for resale, either through a utilities company or a trader. Now though, by selling their Guarantees of Origin 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. A Gurarantee of Origin (GO) is a EU standardized instrument to guarantee that one MWH of electricity has been produced from renewable energy sources and that the carbon reductions is only counted once – by the owner of the GO. The GO is issued to the producer of the energy and is a tradable commodity, which is often sold together with the green energy, e.g. to a utilities company that typically resell them to companies who want to reduce their carbon footprint. Some farmers sell the GO separately to traders, who will sell it with a profit on the open market. Arla already buys GO’s in the open market for approximately one third of its total electricity use in its operations. If Arla buys the GO’s directly from the farmer owners at market value, the full profit stays with the electricity-producing farmer and Arla has the right to claim the ownership of the CO2 reductions in its dairy chain.

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