MAKING GREEN WHILE GOING GREEN

By Martha Kammoun , Brian Teaff and Michael Recchia

Growing interest in Renewable Natural Gas plays has our team taking a closer look at the profitability and sustainability merits of making natural gas from animal manure , landfill gas , food waste , or wastewater .

I- What is it ?

Renewable Natural Gas ( RNG ), or biogas , is natural gas that comes from decomposing and purifying organic matter . It can be used for a variety of purposes , including generating electricity and heating for power plants and as various types of fuels .

II- Is it money ?

Likely . RNG projects are at an interesting intersection : a proliferation of government incentives , an uptick in recycling mandates and landfill bans , and a wide variety of financing options . For savvy RNG investors , this can translate into double-digit rates of return resulting from an increase in profit channels , fueled by growing demand and topped off with ease of financing .

Government Incentives – Several federal and state incentives are rewarding the use of renewable fuels . At the federal level , the Renewable Fuel Standard ( RFS ) program was enacted to reduce greenhouse gas emissions and reduce dependence on imported petroleum . It is implemented by the Environmental Protection Agency ( EPA ) in consultation with the U . S . Departments of Agriculture and Energy . The RFS program requires a certain volume of renewable fuel ( set by statute through

2022 for each of the four categories of renewable fuel : biomass-based diesel , cellulosic biofuel , advanced biofuel and total renewable fuel ) to replace or reduce the quantity of refiners ’ or importers ’ petroleum-based transportation fuel , heating oil , or jet fuel . Each refiner or importer is required to comply with a specified renewable volume obligation ( RVO ), which can be met through the purchase of a credit called a renewable identification number ( RIN ).

Several states also have adopted similar programs , such as California ’ s Low Carbon Fuel Standard and Oregon ’ s Clean Fuels Program . These programs typically assign a carbon intensity ( CI ) value to each individual transportation fuel based on its fuel pathway ( i . e ., how it is made and delivered in the state for use in a vehicle ). Sometimes a state will even recognize the CI value assigned by another state ( e . g ., Oregon accepts a fuel ’ s CI value approved by the California Air Resources Board , with modifications to reflect the fuel ’ s destination to Oregon ). Other states , such as New York , New Jersey , Nevada , New Hampshire , Colorado and Washington , have included RNG as an option for complying with their respective regulatory mandates to increase production of energy from renewable resources , or are contemplating the adoption of RNG-related policies . Incentives can range from sales and use tax exemptions for RNG equipment , to RNGinfrastructure development through utility cost-recovery measures .

These incentives help alleviate the “ Green Premium ,” a term coined by Bill Gates to describe the additional costs associated with zero-carbon solutions ( such as RNG ) by comparison to their fossil-fuel counterparts ( such as conventional natural gas ). bracewell . com