Regulating the production of
"bio-gold"

Current and likely advancements to regulation of digestate from Western Canada's biogas industry

In the era of climate change, biogas development offers an important opportunity to reduce carbon emissions while producing digestate as a valuable by-product that can support food security. This emerging industry is critical to managing our global waste crisis, while also helping transition towards a circular economy – by converting wastes, through anaerobic digestion, into a valuable fossil fuel substitute (biogas) and nutrient-rich fertilizer (digestate).

Our global waste crisis is on the rise, with municipal solid waste ("MSW") expected to increase to approximately 2.2 billion tonnes globally by 2025, coupled with a hefty management cost currently estimated at USD $375.5 billion.^[1] MSW typically consists of wastes such as food waste, paper, glass, metals, plastics, textiles, and yard trimmings. The organic fraction of MSW aggravates climate change by increasing greenhouse gas ("GHG") emissions and polluting soil and water when subject to uncontrolled decomposition.

Traditional MSW treatment options include composting (which requires large expanses of land), incineration (which results in toxic emissions and ash residue), and landfilling (which creates GHG emissions and pollutes local ecosystems). With the addition of anaerobic digestion, a valuable new treatment option has been presented that can convert those wastes to valuable resources.

In this article, we provide a brief overview of the regulation of digestate, or 'bio-gold,' in Western Canada and federally, and look to the European Union to gain insight on how further policy and regulation in Canada will likely develop in the near future.

So what is digestate?

Digestate is a by-product of anaerobic digestion, a process through which bacteria breaks down organic materials, such as food waste and manure, in the absence of oxygen. When an anaerobic digester processes organic material, it produces a gas, called biogas, as well as a liquid and solid digested material, called digestate.^[2] Digestate is physically and chemically different from the organic material used to produce it.^[3] It can be used as animal bedding, a nutrient-rich fertilizer, a foundation material for bio-based products such as bioplastics, or as organic-rich compost.^[4]

Turning waste into bio-gold

Digestate has many beneficial uses, particularly for the agricultural sector. The traditional fertilization of soil with mineral fertilizers and manure has led to pollution and environmental degradation. As a rich source of nitrogen, phosphorus, potassium, and sulphur, digestate is an excellent replacement for these fertilizers. Digestate can also stimulate soil metabolic activities and improve soil ecosystem function, while reducing weeds and risks of leaf burn, and being easier to mix, pump and seed, all while emitting less odour than many traditional fertilizers.^[5]

Inadvertent regulation of digestate in western Canada

British Columbia

In British Columbia, digestate is regulated by the Code of Practice for Agricultural Environmental Management (the "Code")^[6] under the Environmental Management Act.^[7] The Code applies to all agricultural operations in BC, from small hobby farms to large commercial operations. The Code outlines requirements for the use of digestate focused on protecting the environment and human health, and includes requirements for storage and application to land.^[8]

BC's Code also specifies requirements for nutrient management plans, which are required for the application of digestate to land that meets certain criteria. For example, a person who applies nutrient sources to a field must have a nutrient management plan if the field is part of an agricultural operation having a land base totaling 5 hectares or more, if the result of a nitrate test for the field is 100 kilograms of nitrate per hectare or more, and if the field is located in a vulnerable aquifer recharge area set out in Schedule B of the Code.^[9] These plans must be created by qualified professionals and updated regularly.

Alberta

In Alberta, digestate is regulated under the Standards and Administration Regulation (the "Regulation")^[10] enacted pursuant to the Agricultural Operation Practices Act (the "Act").^[11] Digestate is either classified as a "compost" or "manure" under this legislation, depending on the feedstock it was produced from. Similar to British Columbia's Code, Alberta's Regulations sets out requirements for the application of digestate to land, storage requirements, and nutrient management plans.^[12]

A key difference between these western regimes is with respect to enforcement: under British Columbia's legislation, conservation officers are generally responsible for the enforcement of the Code. In Alberta, however, the Natural Resources Conversation Board is tasked with the regulatory functions and enforcement of the Act.^[13]

Government of Canada: Regulating the import, export and commercial sale of digestate

Whereas provincial regulation of digestate focuses on its use and storage, federal legislation focuses on its import, export, and commercial sale, by way of the Fertilizers Act (Canada)^[14] and the Fertilizers Regulation.^[15] These statutes, which are generally enforced by the Canadian Food Inspection Agency, set out the requirements for the sale, importation, and exportation of digestate, including packaging and labelling specifications, requirements for vendors to be authorized to sell digestate, and measures to protect human health and the environment.

The Fertilizers Regulation sets out a general prohibition regarding the manufacture, sale, import, or export of any fertilizer that contains any substance in quantities that present a risk of harm to human, animal, or plant health, or the environment. Some fertilizers and most supplements require registration and a comprehensive pre-market assessment prior to their import or sale in Canada. Products that are exempt from registration are still subject to regulation and must meet all the prescribed standards at the time of sale or import. The pre-market assessment consists of a detailed, science-based evaluation of product safety information and labelling. These assessments focus on product safety towards humans, plants, animals, and the environment.^[16]

The future of digestate in Canada – Looking to the European Union

Market opportunities for digestate have thus far been largely overlooked in Canadian policy. This is reflected in the fact that current policies and guidelines throughout Canada generally focus more on biogas, with regulation of digestate being somewhat inadvertent by regulating it similarly to compost, manures, or chemical fertilizers. Other jurisdictions worldwide are, however, beginning to develop digestate-specific legislation and policy, and we can expect Canada to follow suit.

Europe is leading the way globally on digestate regulation and guidelines. Importantly, the European Union is currently largely dependent on imports for most chemical fertilizers. Approximately 30% of those chemical fertilizer imports have previously come from Russia. The recent Russian halt to fertilizer exports threatens supplies for European farmers, creating an opportunity for the use of digestate. Further, current EU energy and climate policies are focused on creating a circular economy. As a result, many European countries have established financial incentives for the production of renewable energy. This helps enhance the economic feasibility of biogas projects, and thereby digestate.^[17]

At present, digestate in the EU is regulated under the Animal By-Products Regulation^[18] and the Fertilizer Regulation, which contain similar storage and application requirements to their Canadian counterparts.^[19] Additionally, the EU's Nitrates Directive is a critical policy instrument for the management of digestate and its impact on the environment. It sets out the goals that all EU member states must achieve in regard to digestate, and focuses on the protection of water quality, including by designating nutrient vulnerable zones.^[20]

Beginning in 2022, EU Member States must implement the Fertilizing Products Regulation (the "FPR").^[21] The FPR supports digestate production by allowing the recycling of separately collected bio-waste to make organic fertilizing products, including digestate. The FPR has radically changed the requirements for fertilizer producers, traders and farmers in the EU to certify fertilizers, allowing producers to obtain a certification which permits the sale of fertilizers, including digestate, across borders within the EU. Moreover, the FPR includes additional safety requirements for digestate, particularly for organic pollutants, impurities, and stability, allowing for consistent protection across borders.

Key take-aways

So what can biogas facility operators do in this evolving legal landscape?

First and foremost, operators should consider applicable provincial laws when contemplating the application and storage of digestate. Then, to sell, import or export digestate, federal labelling, packaging, and health and environmental requirements must be complied with.

We can expect that new requirements in the EU will focus on human health, safety and environmental protection from digestate production and use, with digestate-specific regulations likely released in the near future. It will be important to keep an eye on the developments in the EU, as these will likely be considered by Canada in future policy and regulations on digestate, including permitted input materials and ecotoxicological thresholds. Finally, if certification is ultimately adopted federally in Canada, similar to the EU's FPR, it may open up markets while promoting consistent quality of digestate across Canada.

Gowling WLG has experienced lawyers that can assist with navigating the regulatory regime and construction requirements for biogas facilities (and requirements for the application, use and sale of digestate). Please feel free to contact any member of our team for assistance with your biogas / digestate project.