RNG industry bands together in response to proposed 2018 RFS

By Marcus Gillette | September 14, 2017

As the predominate supplier of cellulosic biofuel to the Renewable Fuel Standard, renewable natural gas (RNG) is experiencing a growth rate unprecedented in the sector.

But when the U.S. EPA released its draft rule of the 2018 renewable volume obligation (RVO) in May and proposed to lower cellulosic biofuel demand, some onlookers forecasted doom and gloom.

Instead the opposite happened. Thanks in large part to a strong RNG industry response, and a favorable ruling from the U.S. Court of Appeals in Americans for Clean Energy, the RNG market has remained strong and developers have continued to build.  

The RNG industry is answering congress’s call for domestic fuel production to boost U.S. energy security. Communities throughout the country are converting their waste into renewable compressed natural gas (CNG) and liquefied natural gas (LNG), literally fueling freight movement along our nation’s highways.  RNG’s environmental merits compound its attractiveness. Cellulosic biofuels must achieve lifecycle benefits of 60 percent or greater compared to a diesel baseline.

By affirming value of clean, renewable, domestic fuel, the RFS provides a market significant enough to facilitate investments in proven technologies to produce RNG—conditioning biogas to levels that meet pipeline quality and natural gas vehicle fuel standards.

RNG has become America’s cellulosic biofuel. Since receiving eligibility under the RFS as a cellulosic biofuel in 2014, biogas-derived RNG has comprised more than 95 percent of the cellulosic biofuels produced under the RFS. The number of domestic RNG projects has more than doubled in that time.

The release of the 2018 RVO draft rule presented a challenge, and the RNG industry responded.

In May this year, EPA proposed to reduce cellulosic biofuel market demand to 238 million gallons for 2018, down 73 million gallons from 2017’s market of 311 million and representing negligible growth versus the 230-million-gallon standard of 2016.

Mechanically, the lower number stemmed from EPA’s proposed switch from a forward looking project-by-project assessment of the cellulosic biofuel industry to a methodology relying exclusively on historic data to determine an industry rate of growth.  

It is worth noting why this new methodology is problematic. Use of historic data is not the problem; It can provide important information about where we’ve come from and where we’re headed. It’s problematic, however, when you only look back.  By ignoring present market activity, like new project construction and expansion of production at current projects, you run high risk of missing trends. In the case of RNG, the signs of exponential, not linear-growth, are abundant.

Historic data does not tell us that, as of August, there are 16 RNG projects under construction that will come online before the end of 2017, or that there are another 10 currently under construction that are on track to come online in 2018. Historic data can’t tell us that these 26 new facilities have annual capacity of 193 Million Gallons and are scheduled to produce about 130 Million Gallons of new 2018 RFS volume. Nor does historic data tell us that 16 current RFS-registered RNG facilities made investments to grow their production from 118.3 Million Gallons to 139.5 Million Gallons, resulting in another 21.20 Million Gallons of new 2018 RFS Volume.

Why is EPA proposing a new methodology? EPA reported that a primary factor was that the prior data process and methodology lacked transparency. The RNG industry worked with EPA staff to supply data for a project-by-project methodology for the 2014–2017 RVOs and ahead of this draft rule. RNG industry data was previously submitted to EPA as confidential business information (CBI) in consideration of company requests to protect their business interests.

In response, the RNG industry has banded together to meet EPA’s need for transparency, and to facilitate a healthy cellulosic biofuels marketplace for producers. At EPA’s Aug. 1 hearing on the 2018 RVO draft rule in Washington, D.C., and in follow up, the RNG industry has supplied EPA with more than 60 signed project affidavits from producers on anticipated production volume in order to improve market and rulemaking transparency.

RNG industry stakeholders are submitting written feedback to the Draft Rule by EPA’s Aug. 31 deadline, proposing (among other comments) the solution that the proposed new methodology add a factor to account for 2018 volume data from commercial scale RNG projects under construction, storing gas, or waiting on EPA approval using proven pathways and proven technology.

Much is at stake. Each RNG project brings communities between $10 and $50 million in project development investment and 173 direct and indirect jobs. RNG helps deliver on the energy security and environmental objectives that merited bipartisan support in Washington in 2005 and again in 2007. Our lawmakers called for American cellulosic biofuel and the RNG industry responded. Now with American fuel and American jobs on the line, we call upon EPA to administer the RFS in a forward-looking manner that leads into America’s bright clean energy future.