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Report: Lower environmental footprint for land-based salmon

Industry-leading research team also shows that land-based production can be cost competitive with traditional net pens.

A new research report from the US-based Conservation Fund’s Freshwater Institute has revealed that at scale, land-based production of Atlantic salmon could have a lower carbon footprint than an equivalent Norwegian net pen operation.

Research by the teams at SINTEF and the Freshwater Institute also suggests that -- capital costs withstanding -- production costs can be matched by taking Atlantic salmon operations on land close to markets.

The research was based on producing 3300 metric tons of head-on gutted (HOG) Atlantic salmon from eggs to US market (wholesale) using two different production systems -- land-based closed-containment recirculating aquaculture systems (LBCC-RAS) technology and open net pen (ONP) technology -- and taking into account all elements of production and live delivery to market.

The results of the carbon footprint analysis by SINTEF confirmed that production of feed is the dominating climate aspect for both production methods, but also showed that energy source and transport methods are important.

But salmon produced in LBCC-RAS systems close to a US market that use an average US electricity mix have a much lower carbon footprint than fresh salmon produced in Norway in ONP systems shipped to the same market, with airfreight hiking its footprint to 15.22 kg CO2eq/kg salmon HOG versus 7.41 for land-based.

Removing delivery, however, reduces the ONP-produced salmon to 3.39 kg CO2 eq/kg salmon live-weight compared to 7.01 for LBCC-RAS.

One driver behind the research was the limitations to growth for current Norwegian ONP production, Brian Vinci, director of engineering services for the Freshwater Institute, told IntraFish.

“The Norwegian industry and government discuss production of 5 million metric tons by 2050, but future regulations to address issues such as sea lice and the impact on wild Atlantic salmon populations could limit production growth,” he said.

 

Table 1: Input factors and assumptions used in the financial analysis of two production models (LBCC-RAS system and ONP system) for a 3300 MT HOG Atlantic salmon farm

Input factors

 

ONP system

 

LBCC-RAS system

 

Feed ($/kg)1.481.50
Farm labor (# person)610
Farm labor ($/person/year)125,00045,000
Processing labor (# person)-6
Processing labor ($/person/year)0.38/kg*37,500
Livestock ($/smolt or US$/egg) smolt)1.530.30
Electric ($/kWh)0.170.05
Oxygen ($/kg)-0.20
Wellboat cost ($/kga)0.92-
Bicarbonate ($/kg)-0.35
Management ($/year)-500,000
Other operating cost$0.43/kg fish-
Insurance ($/kga)0.020.02**
Tax level28%28%
Equity ratio30%40%
Interest loans3.0%6.0%

*whole fish weight

**first year is $0.04/kg

 

In a price comparison, total production costs for the two systems are relatively similar, said Vinci, with LBCC-RAS only 10 percent higher than the ONP system on a head-on gutted basis ($5.60/kg compare to $5.08/kg).

Without interest and depreciation, the two production systems also have an almost equal operating cost ($4.30/kg for ONP versus 4.37 US$/kg for LBCC-RAS), but – as anyone who has ventured into land-based production knows -- capital costs of the two systems are not similar, with land-based systems costing approximately 80 percent more upfront than ONP systems at an estimated average of $54 million.

However, explains Vinci, the LBCC-RAS model system selling salmon at a 30 percent price premium -- which the Freshwater Institute has done successfully through a partnership with Wegmans during its annual salmon harvest -- is comparatively as profitable as the ONP model system with a profit margin of 18 percent versus 24 percent, respectively, even though its 15-year net present value is negative and its return on investment is lower than ONP system (9 percent versus 18 percent, respectively).

"The comparison is done on a small-scale farm operation, and though the up-front cost of a large-scale LBCC-RAS could make it difficult to compete with the production cost of a well-functioning larger scale Open Net Pen production, the increasing cost of necessities such as sea lice treatment and the high prices of the licences to produce salmon in sea make the controlled environment of LBCC-RAS more competitive,” added SINTEF Senior Advisor Trond Rosten.

The full report can be found here.