Could manure become cost-competitive as a source of energy?

U.S. Sen. Ben Nelson thinks so — with a little federal stimulation.

The Nebraska Democrat has introduced legislation to give tax credits for producing methane — i.e., natural gas — from manure, according to the New York Times’ Green Inc. blog.

That could help out manure-to-biogas producers like Environmental Power subsidiary Microgy or BioEnergy Solutions in California’s Central Valley (see Sixteen Ancient Technologies Reborn). They’re among about 120 projects around the nation now generating enough gas for about 256,000 million kilowatt-hours of power, according to the U.S. Environmental Protection Agency’s AgSTAR program.

Capturing and scrubbing the methane that makes up about two-thirds of the gas emitted from manure could be a big business. The University of Texas estimates there’s enough manure in the country to generate up to 108 million megawatt hours of electricity if its gases are captured, according to a University of Texas study (see Measuring Manure: It Could Provide Nearly 3 Percent of Our Power.

Of course, capturing every last bit of manure’s power potential may not be feasible. But AgSTAR estimates the country could get up to 6 million megawatt-hours of energy out of feasible projects.

The bill would offer a tax credit of $4.27 per million British thermal units (BTUs) of natural gas produced from manure. Natural gas prices have run from as low as $4 per million BTU to as high as $12 per million BTU over the past several years.

It’s the third try for legislation to assist the hundred or more manure-to-gas projects out there — similar proposals failed in 2007 and 2008. But given the billions now directed toward renewable energy, smart grid deployments and energy efficiency in the current version of the stimulus bill working its way through Congress, manure-to-energy backers might have hopes that this year will be different.