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.
Modern dairy farmers are able to do so much more than delivering nutritious milk to the world. While some engage in biodiversity projects and others provide manure for biogas, many of Arla’s cooperative farmers generate green electricity for their own farms and for the public grid.
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.
Explains Hanne Søndergaard, Arla’s head of sustainability: “Arla farmers can help their own company to accelerate the transition to renewable energy while the company can maximise the value of their investments in renewable energy. 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, our business and the environment.”
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.
Said Jan Toft Nørgaard, Arla’s chairman: “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 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.”
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. For more visit arla.com