Swedish agriculture is responsible for about 13 percent of total Swedish greenhouse gas emissions. The emissions from agriculture primarily consist of methane and nitrous oxides from land use and animal production. As it is difficult to measure these emissions with precision at the farm level, there are presently no instruments (taxes, fees or quantitative regulations) applied to reduce them. An alternative strategy could be to pay farmers for specific activities for which the effects on emission can be quantified. An example of such an activity is the production of biogas from manure, which would reduce methane emissions. Accordingly, a subsidy per unit of biogas produced could create incentives to reduce agricultures’ emissions of greenhouse gasses. However, producing biogas from manure generates emissions of other substances that have detrimental effects on the environment and human health which have to be accounted for when determining the size of the subsidy.

The working paper attempts to quantify and value the net environmental effect that would arise from the production of biogas from manure using the information in the literature. It is shown that present knowledge is not sufficient to determine whether this net effect is positive or negative. This implies that it is not possible to determine if biogas production from manure should be subsidised or taxed, and demonstrates the need for further research in this area.