The accelerated growth of the renewable natural gas (RNG) industry has been making headlines in the biomass industry for years. A renewable fuel with incredibly low carbon intensity scores, RNG is an attractive option for companies and utilities pursuing decarbonization. This trend is evident in the 40% increase in RNG facilities in just the past year.Dylan Chase, manager of public relations for the RNG Coalition, describes the incredible growth that the coalition has witnessed since its founding in 2011. At that time, he says, the industry had a total of 31 facilities in North America. Now, the industry boasts a total of 436 facilities planned or under construction across Canada and the United States.There are 300 operational biogas and RNG projects across Canada, which combined produce 22 petajoules of energy, according to Sarah Stadnyk, director of policy and communications with the Canadian Biogas Association. According to data from the Canadian Biogas and RNG Summary Market Report, 28% of the biogas produced in Canada is turned into RNG. A consistent trend throughout the Canadian biogas and RNG industry has been a shift away from using biogas to generate electricity, which still makes up a significant portion of Canada’s existing biogas facilities, and toward biogas to RNG.Stadnyk explains that in the past, feed-in tariff programs supported biogas projects aimed at producing electricity, and those projects are still selling power to provincial power suppliers under power purchase agreements (PPAs). Currently, provincial targets relating to natural gas supply are driving RNG’s growth in Canada. “All the new projects are producing renewable natural gas and selling it to provincial natural gas utilities,” Stadnyk says. British Columbia and Quebec have set targets for a certain percentage of the grid’s natural gas to come from renewable sources. Long-term PPAs provide the needed certainty to keep the industry growing, Stadnyk explains.The trend toward RNG production is also present in the U.S., explains Patrick Serfass, executive director of the American Biogas Council. For the past couple years, roughly 75% to 90% of new biogas projects coming online have been dedicated to RNG production, with around a hundred new projects expected each year.Growth Drivers&nbsp; RNG offers a unique value proposition, with several qualities that offer significant value to those pursuing decarbonization. Serfass explains that RNG is most often more attractive than biogas to power because it fetches a higher price. “Part of the reason for that is that if you need natural gas to make whatever [product you produce], whether you’re making transportation fuel or cosmetics, for example, that [manufacturing] process requires heat,” Serfass says. “You really don’t have any other ... renewable options, besides RNG for heat. It’s incredibly inefficient to use electricity to meet those heating needs, especially when you’re talking about large quantities of heat.”As a fully fungible replacement for natural gas, there are myriad RNG applications because of the natural gas infrastructure engrained in North America’s way of life, installed in schools, homes and offices, Chase explains. Reusing the existing infrastructure has environmental benefits and makes it easier to develop these projects and deliver fuel to end users quickly with the knowledge that there are existing users.The use of compressed RNG as a fuel powering heavy-duty vehicles and fleets constitutes another market opportunity that drives growth. The California Low Carbon Fuel Standard’s 2023 carbon intensity scores for various renewable fuels gave biobased compressed natural gas a CI score of -126.42, making it the fuel with the lowest score by a significant margin.Large vehicle fleets are a significant opportunity for RNG as companies and governments seek a sustainable solution to diesel, Serfass explains. Vehicles running on natural gas can now be found in city bus fleets, Coca-Cola fleets, UPS and FedEx delivery trucks and others. Decarbonizing those vehicles could be as simple as using RNG instead of natural gas. “It is a much bigger leap for a company to totally switch their vehicles to an electric fleet,” he says. “In the case of heavy-duty vehicles, it doesn’t really make practical sense because of the weight and space of the batteries needed to make those electrical.”The two major policy drivers for RNG in the U.S. are California’s LCFS and the Renewable Fuel Standard. Chase calls the LCFS “the gold standard” when it comes to dealing with methane and promoting the use of clean fuels such as RNG. “Aside from providing support for and creating more development of RNG projects, the program has been demonstrably successful in displacing fossil fuels, which is the name of the game when it comes to the energy transition,” Chase says. California’s SB 1440, which requires a certain amount of natural gas to be used by the state’s utilities, has helped drive demand for RNG as well. &nbsp;Feedstock Dynamics&nbsp; Currently, there are four main feedstocks used in the North American RNG industry: wastewater accounts for 4% of projects, food waste makes up 5%, agricultural waste makes up 24% and municipal solid waste (MSW)/landfill gas constitutes the most by far, at 67%.Stadnyk explains that Canadian cities are demonstrating an interest in using anerobic digestion to process source-separated organics (SSO). “On-farm organic waste is so much more prevalent, and without green bin programs and organics diversion, a lot of the food waste is just being sent to landfill,” she says. “However, more and more municipalities are implementing green bin programs, so that’s really good—we’re getting more organics diversion. One consideration is that SSO, the green bin material, can have more contamination, but there are technological solutions available to address that.”One of the fastest-growing sectors, dairy waste RNG developments make up a substantial amount of the industry’s newly producing projects. In 2024, 24% of North America’s RNG came from agricultural and dairy waste, explains Chase. “Dairy farm energy projects are a really critical tool to reduce emissions in the dairy sector, which contributes a significant portion of methane greenhouse gas emissions,” he says.The largest-volume feedstock, MSW, is continuing to grow, according to Chase. “Between July 2023 and July 2024, based [on] our project master list, operational landfill projects increased by 20%, and the total number of landfill projects of all statuses, including those under development, increased by 18%,” he says. “At the same time though, landfills’ share of total gas production fell from 72% to 67% of the total, due in part to advances in the dairy RNG arena.” Although the share of production has shrunk, the total number of landfill gas projects continues to grow. Chase also explains that technological developments, such as Waga Energy’s WAGABOX, could help expand the landfill gas sector due to a design that fits well with the needs of small to mid-size landfills.With so many sources, organic waste will always be present. However, transforming these materials into biogas is a beneficial, closed-loop method to utilize them, Stadnyk explains.Limiting Factors&nbsp; There are not many factors limiting RNG’s growth potential, according to Serfass and Chase. The amount of organic material available to convert is the only limiting factor, explains Serfass.Policy, in many cases, is often the “missing piece” when it comes to pushing growth of RNG to the next level, Chase says. “RNG is ready to go, and that’s why California, which has created the right policy supports, is off like a rocket in terms of displacing diesel in its transportation supply and growing development of projects that capture methane emissions,” he says. “That’s why it’s the gold standard. It’s a bit of a no-brainer; you set up the policy supports, the infrastructure is already in place, most people want to reduce emissions and don’t want dirty air and climate change impacts, so your resistance is not going to be overwhelming.”Missing policy is a limiting factor for the Canadian market, as a lack of investment tax credits that could support investments in the national biogas and RNG industry reduces potential investment, Stadnyk explains.Potential Growth&nbsp; The potential for sourcing energy from biogas and RNG in Canada could reach 544 petajoules by 2050 with the most favorable policies, while delivering significant GHG reductions, according to Stadnyk. “By 2030, it would be 26.7 megatons reductions, and by 2050, it would be 40.2 megatons, delivering 55% of Canada’s methane pledge,” she says.Digestate is an untapped market in both the U.S. and Canada. In the Canadian market, Stadnyk explains, most digestate, such as that made on farms, is used locally on crops. “There isn’t really a strong revenue pathway right now for digestate, but we’re hoping that will change,” she says.Another source of potential growth moving forward is the opportunity in voluntary markets. These markets arise from companies looking to reduce their greenhouse gas emissions voluntarily, often to meet environmental, social and governance (ESG) criteria put forward by investors. Fund managers deciding to only include stocks from environmentally responsible companies in their investment portfolios has driven interests in choosing environmental responsibility, leading companies to buy RNG rather than conventional natural gas to make their products, Serfass explains.Cosmetic brand L’Oreal is an example of a company that has integrated RNG into its process in order to pursue decarbonization. “You can’t make cosmetics very well without heat—you need gas to provide heat—but if you want to lower your carbon footprint, you have to buy renewable gas,” Serfass says. “So, that ... is driven by investors and by consumers choosing to buy sustainable products, and that is really driving the growth of the voluntary RNG market. It really is voluntary; there’s no compliance there, there are barely any laws on the books.”CO2 utilization could be another opportunity for RNG projects. As many of the ethanol plants that currently provide merchant CO2 used for beverages and food processing start pursuing carbon capture and sequestration, a demand for CO2 may emerge, Serfass explains. The tax credits available to those who can sequester their CO2 are becoming more lucrative than the costly transportation associated with selling it on the merchant market. This could increase the price of CO2 as more ethanol plants shift toward sequestration, opening the door for biogas projects, including RNG, to sell their captured CO2 on the merchant market.Advocacy Priorities&nbsp; Public education regarding RNG’s value, how it works and why it is useful is a key focus of the RNG Coalition moving forward, and an important element that impacts the voluntary market’s role in encouraging the growth of RNG. The public perception of a clean energy solution’s “impact and viability” influences corporate entities’ decision making when selecting a decarbonization strategy, Chase explains. Although there may be some critics of RNG who challenge its use, categorizing it as an imperfect solution and claiming that it cannot replace the entire gas supply, these criticisms are a way of “throwing the baby out with the bathwater” when looking for ways to reduce dependence on fossil fuels, he says.Chase believes it is key to emphasize RNG’s value as a significant molecule with a critical role to play in the energy transition, due to its potential to decarbonize heavy industry and serve as a feedstock for bio-LNG, clean hydrogen and biomethanol.Stadnyk and her team promote awareness through their two microsites, which make available self-assessment tools and case studies aimed at educating rural and municipal communities about the benefits of biogas and RNG.On the policy front, Serfass would like to see guidance come out from the U.S. Department of Treasury for the Inflation Reduction Act in order to make the tax credits useful to the industry. “We think the more flexible the tax credits can be—especially 45Z—to encompass all renewable fuels or renewable sources of electricity, &nbsp;the better. It’s in the country’s best interest to be inclusive of all the renewable energy technologies out there,” he says.As a way to utilize methane emissions created in so many aspects of modern life, Chase adds that it is an essential component of the energy transition. &nbsp;“Increasingly, RNG will be a global story, as it’s at the nexus and center of the modern way of life, whether it be here in the U.S., in Europe or anywhere else where molecules are burned.” Author: Katie Schroeder&nbsp; Associate Editor, BBI International&nbsp; Katie.schroeder@bbiinternational.com

2024-09-30 - State of Play (Biomass Magazine)

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Policy, decarbonization goals, technological advancements and abundant feedstocks have helped drive the enormous growth the renewable natural gas industry has experienced over the past decade-plus, and potential is still vast. 

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