by Brad Pleima (BioCycle Magazine/EcoEngineers) With prices for renewable electricity low in many states, biogas producers are turning to the renewable natural gas marketplace. This road map is a valuable navigation tool. — There is a national trend to reposition biogas-producing assets into renewable fuel production facilities. Biogas is typically used to produce thermal energy, electricity, or is sometimes just flared. With Renewable Identification Numbers (RINs), California Low Carbon Fuel Standard (LCFS) credits, Oregon Clean Fuel Program (CFP) credits, and rapidly developing voluntary carbon markets, interest in converting biogas to renewable natural gas (RNG) and injecting into a commercial natural gas pipeline is at an all-time high.
The primary driver behind many of these projects is monetization of the environmental attributes of the RNG produced. Generating RINs and LCFS credits combined with the commodity value of the natural gas can lead to very attractive payback periods, often less than 3 years. Depending on the feedstock used to generate RNG, values can range from $9 to $80 per MMBtu. But these projects do not come without significant complexities including: understanding the regulatory environments of the Renewable Fuel Standard, LCFS program, and other carbon markets; understanding which RIN D-code can be generated and a facility’s carbon intensity (CI) score for placement into California; and, other common hurdles such as feedstock procurement, pipeline access, construction and operation of facilities, and compliance.
The goal of this article is to help project developers, investors, utilities, agriculture and food production industries, and municipalities, better understand the regulations driving new RNG projects, how projects get done, and outline how some common project complexities can be addressed.
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Most RINs produced by RNG facilities will generate RINs, immediately separate the RINs from the fuel, and sell the RINs to obligated parties, i.e., a producer will generate the RINs equivalent to the volume of fuel dispensed as compressed natural gas (CNG) or liquified natural gas (LNG) for transportation use, immediately separate the RIN from the fuel, sell the fuel downstream or to a gas marketer, and then sell the RINs to the obligated parties. RINs are classified by fuel types such as biodiesel, ethanol, renewable natural gas, and other approved renewable fuels. RIN classifications are further broken down according to the type of feedstock and processes used to create those fuels, along with the calculated reduction of greenhouse gas (GHG). These classifications are called D-codes.
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Biogas to RNG can fall into the D5 or D3 RIN category depending on the feedstock processed. RNG produced from cellulosic feedstocks can generate D3 RINs while non-cellulosic feedstocks like fats, oils, sugars, starches, and most food wastes can generate D5 RINs. High demand exists for cellulosic biofuels and D3 RINs due to supply constraints. USEPA-approved D3 RIN pathways include renewable compressed natural gas produced from the following biogas sources (40 CFR Part 80, Subpart M 80.1426, Table 1):
• Landfills
• Municipal wastewater treatment facility digesters
• Agricultural digesters including ag residues and manures
• Separated municipal solid waste digesters
• Other cellulosic feedstocks with greater than 75 percent cellulosic content
All other feedstocks are classified as “other waste digesters” and are eligible for D5 RINs. Many digestion facilities process both cellulosic and non-cellulosic feedstocks.
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Under the RFS program, RNG can be injected into the natural gas distribution grid anywhere in the 48 contiguous states and qualify as an eligible renewable fuel, as long as an equivalent volume of CNG or LNG is used as transportation fuel at any point along the interconnected distribution grid. READ MORE