Like many large businesses, dairy company Arla Foods has grand plans to reduce its greenhouse gas emissions and the firm aims to be carbon net zero by 2050.Around 85% of Arla’s total emissions come from the co-operative of 10,000 farms it has across Europe, a combination of the methane and nitrous oxide from the cows themselves, as well as from the fuel needed for milking and other operations.It is hoping one of the ways it will get there is by harnessing one of its most readily-available resources: the manure produced by the half a million cows on its U.K. farms alone.It is in the middle of a three-month trial looking at the viability of turning manure into fuel for its delivery trucks, working with two farms to collect the raw material that would usually be used by farmers as a fertilizer.The manure, combined with other materials such as food waste, are put into an anaerobic digester that acts like a cow’s stomach, to produce gas, which is then cleaned and liquified into fuel that Arla then uses to power two of its milk trucks. Currently, Arla is running the trial with two of its farms in Buckinghamshire, a county northwest of London, said Graham Wilkinson, the company’s agriculture director.”We collect it off two farms as part of the trial … but we’ve got 2,500 (U.K. farms) to go in the longer term, so there’s definitely the opportunity to scale up. We’ve got plenty of cow manure,” Wilkinson told CNBC by phone.The U.K. pilot follows a 2019 trial in Sweden, where Arla’s farms have the potential to produce biofuel that is equivalent to 54 million liters of diesel [source]. That trial showed that running a truck on biofuel is cheaper than using diesel, but the vehicles themselves are more expensive, Wilkinson said. “The ambition would be to go down this (biofuel) route and for it to be more financially viable than diesel. We need to think differently from diesel anyway,” he added.”For every liter of diesel that … we replace with biofuels, we actually reduce our carbon emissions by (about) two kg … So you’re actually having a sort of double positive (effect) on our emissions,” Wilkinson added.Peter Cade | The Image Bank | Getty ImagesThe anaerobic production process also produces a substance called digestate, which farmers can use as a natural fertilizer for crops. Usually, they’d spread slurry and manure directly on to crops, but that is very watery, Wilkinson explained. “(There’s) a tougher consistency within the digestate, which actually (has) more nutrients. So, ultimately, what (the farmers) get back is of a higher value,” he said. Eventually, Wilkinson would like to get to a point where farmers wouldn’t have to use nitrous oxide-rich manufactured fertilizer that currently contributes to carbon emissions.As well as benefiting the environment and farmers, another long-term aim is to save money, in an industry where the price paid for milk fluctuates. Farmers called for shoppers to boycott U.K. supermarkets over dairy prices in 2015, while Sardinian producers poured sheep’s milk into the streets during a 2019 protest.”Throughout our whole supply chain we are relentlessly looking at how we do things, and how we can simplify it … the potential with this (biofuel trial) … is it could be another example of where we could actually take cost out and benefit our farmers at the same time,” Wilkinson stated.Transforming manure into biofuel is not brand new: a renewable natural gas facility that uses manure from 33,000 dairy cows opened in Oregon in December, while Ugandan firm Green Heat International is turning agricultural waste into energy to help power homes in the country.Luke Sharrett | Bloomberg Getty ImagesBig energyCreating energy from food waste is something that oil company Phillips 66 hopes to be able to do on a huge scale. It is planning to spend around $800 million to turn its San Francisco refinery in Rodeo, California into a renewable fuel plant, which it claims would be the world’s largest.Phillips 66 announced the plan in August and if it gets approved by authorities, the “Rodeo Renewed” project would produce 680 million gallons of biofuels a year and is likely to begin production in 2024. The raw materials include used soybean and cooking oil and other fats (known as renewable “feedstocks”) and would be delivered to the plant via its existing marine and rail terminals, said Joe Gannon, senior advisor for external communications at Phillips 66, in an email to CNBC.”Due to the facility being the largest in the world, the feedstocks will be sourced both domestically and internationally and are currently under evaluation to ensure reliable supply and minimization of impact to the environment,” Gannon stated.Infrastructure is also something Arla is keen to have more of, and Wilkinson wants government backing in building anaerobic digestion (AD) facilities. “We’re relatively confident that from a financial perspective it is a viable option, but if we haven’t got the AD (anaerobic digester) facilities to be able to utilize, then that’s where we need support,” he told CNBC.