Business is Booming for RNG, but That May Just Be the Business Side

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Business is booming for renewable natural gas (RNG) given some of the government subsidies available, White Plains, New York-based OPAL Fuels said in announcing a forecast for 50% production growth in 2023.

OPAL last year brought three RNG projects online and achieved net production of 2.2 million British thermal unit equivalents, a 38% increase over 2021 levels. For the transportation sector, among the hardest to clean up, the company said the volume sold through its fuel station services increased by 41% relative to 2021.

"OPAL Fuels has continued to execute on its strategic and operational goals," said Co-Chief Executive Officer Adam Comora. "After bringing three RNG projects online in 2022, we now have seven in operation, six under construction and a growing advanced development pipeline."

For this year, OPAL is expecting production growth to more than 50% of 2022 levels.

Renewable natural gas isn't necessarily renewable, but it does provide a novel solution to cleaning up the waste stream.

The decomposition of organic matter gives off methane during the process. That organic matter can come from waste deposited in landfills or it can come from animal manure. All those in theory "recycle" that organic matter through a series of purification processes into energy.

Surprisingly enough, the U.S. Environmental Protection Agency (EPA) finds landfills are the third-largest source of methane emissions, beating even abandoned coal mines. Methane not only constitutes the elemental components of conventional natural gas, but it's also a potent greenhouse gas with far more warming potential than carbon dioxide.

The methane that's derived from the decomposition of organic matter is typically only around 50% pure and it needs to be treated to remove any impurities to reach a near-pure level of 95% or greater.

U.S. supermajor Chevron Corporation (NYSE:CVX) (San Ramon, California) already includes RNG in its group of low-carbon options for industries like transportation that require complex processes to decarbonize. The company said RNG could cut emissions from livestock by 258 million tons and keep that waste out of rivers and other water supplies.

Both OPAL and Chevron boast of either a home-based fleet of vehicles or arrangements with companies such as UPS to power vehicles on RNG. Other uses include sending that RNG onto the grid. The U.S. Energy Department said RNG is comparable to conventional natural gas and thus suitable as an alternative.

"The development of RNG projects can benefit the local economy through the construction of RNG processing and fueling station infrastructure and sale of natural gas-powered vehicles," the EPA adds. "National, state and local incentives may be available depending on the end use, such as credits for production of RNG used for vehicle fuel."

For companies like OPAL, those incentives are supporting its bottom line. The New York-based company said it could benefit from some of the clean-energy perks outlined in the Inflation Reduction Act, which was padded with substantial credits to support the so-called energy transition.

"More importantly, the flexibility of OPAL Fuels' vertically integrated business platform continues to maximize value for stakeholders, reduces volatility from environmental credit pricing and provides optionality as public policy and markets continue to evolve," the company's co-CEO said.

Some members of the environmental advocacy community, however, are calling foul. The Sightline Institute, a non-profit organization championing a sustainable future, says RNG is nothing more than greenwashing.

"By marketing RNG as a 'renewable' solution to greenhouse gas emissions, the gas industry is drumming up excitement for a product it cannot deliver," it said.

Meanwhile, even if it's described as renewable, it is still composed largely of methane and carries the same concerns as conventional fossil fuels. The EPA, however, adds that most of the harmful emissions are captured on site.

Elsewhere, Sightline claims RNG is substantially more expensive than conventional natural gas. Henry Hub, the U.S. benchmark for the price of natural gas, is trading near $2.20, while Sightline puts the mean price for RNG at closer to $18 per million British thermal units (MMBtu).

RNG, however, is nothing new. Municipalities for decades have used emissions from landfills as a source of power. But advancements are accelerating and as niche alternatives from fusion to hydrogen gain traction, it, like natural gas, may be an attractive alternative despite lingering concerns.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).