Released March 15, 2024 | SUGAR LAND
en
Editor's note: The following article is a corrected version.
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Uncaptured methane from municipal waste and wastewater treatment is the third-largest source of the greenhouse gas in the U.S., says a report by Deloitte's Research Center for Energy and Industrials. Optimistically entitled, "A ripe time for municipal gas and waste renewable natural gas partnerships," the report declares, "Strategic partnerships between public gas utilities and waste facilities could position renewable natural gas to play a crucial role in decarbonization and resiliency."
The few (less than a tenth, says Deloitte) landfills that are capturing methane are mostly using it directly to generate electricity for the site itself, or simply flaring it, the report states. Very few (about 2%) of those are upgrading to renewable natural gas (RNG). Using methane directly, or as RNG, could reduce greenhouse gas emissions and monetize this substance, which otherwise is both wasted and polluting.
Where RNG is produced from waste, much of it goes into the natural gas vehicle market, through pipelines. Here, Deloitte sees an opportunity for municipalities to use RNG in a loop, fueling the waste trucks that collect waste for the landfill that creates the gas.
What's the Difference?
Biogas is raw, a product of the decomposition of municipal solid waste (MSW) in a landfill. The Environmental Protection Agency (EPA) describes the process this way: "When MSW is first deposited in a landfill, it undergoes an aerobic (with oxygen) decomposition stage when little methane is generated. Then, typically within less than one year, anaerobic conditions are established and methane-producing bacteria begin to decompose the waste and generate methane."
But this raw product has a relatively low methane density, containing large amounts of carbon dioxide along with other contaminants, making it less energy dense than RNG. Through processing, the carbon dioxide can be removed and the methane condensed into RNG, which is interchangeable with fossil-fuel natural gas.
Open Doors to the Future
A 2023 study found that the nation's largest landfill system, New York City, could replace 27% of its natural gas purchases with "renewable natural gas produced from wastewater biogas co-digested with food waste--more than enough to power the city's entire municipal heavy-duty truck fleet."
Nationally, RNG could replace about 4.4% of natural gas demand, Deloitte says, and more than half the natural gas demand in the chemical sector. But there is a cost, and paying for that involves layers of credits for the buyer and the seller.
How to Pay for RNG
Deloitte notes that the cost of doing this is greater than produced gas by orders of magnitude. "Assuming average annual production of 300,000 MMBtu (million British thermal units) per year for wastewater treatment plants and 700,000 MMBtu per year for landfills, one-year renewable natural gas project costs are, respectively, US$42.65 per MMBtu and US$32.44 per MMBtu, including anaerobic digestion and upgrading equipment installation and operation."
By contrast, the January 28, 2024 Henry Hub price, according to the EIA, was US$1.60 per MMbtu, and at Waha in west Texas, it was US$0.43 per MMbtu--which is very low even for Waha, but it's never been near the RNG prices. Deloitte notes that Inflation Reduction Act tax credits can cover 50-100% of the costs, depending on what qualifications are in place.
In an email, Deloitte researchers clarified how the costs are covered. "The RNG buyer covers the big sales price difference between fossil gas and RNG. Obligated parties in the transportation sector buy RIN (renewable identification numbers) and/or LCFS (low carbon fuel standard) credits for federal and/or state compliance purposes and buyers in the voluntary market outside the transportation sector buy the credits to help them meet decarbonization targets."
And from 2025 through 2027, RNG may qualify for clean fuel production tax credits when used in transportation, Deloitte says.
Utility in Field
Because many states' utilities have low-carbon targets--and California will require them to use 12% renewables by 2030--Deloitte sees benefits to partnerships between RNG production and the utilities that will need them. The report offers a long list of tax credit options, federal and state, that can mitigate the great gulf between natural gas and RNG prices--which would seem to be the only way to "monetize" the renewable fuel.
In Europe, Biomethane Saves the Day
Zoltan Elek is chief executive officer of Landwarme, Europe's leading independent biomethane solutions provider, and notes that Europe's solid waste is handled differently from the U.S. There, the burnable waste is separated from that which can be digested. The former is burned for its energy, while the latter is the source of biogas. This change, which happened in Europe about 20 years ago, was expensive to initiate but has paid off in better harvesting of the landfill's energy sources, Elek said.
He observed that while Germany is the world's top biomethane producer, the U.S. is second on that score. As a whole, Europe produces four times more than the U.S., but individual countries vary in their production levels. Most RNG there goes into the natural gas pipeline system, although there are some extra tax incentives for use in the transportation sector.
And while there are tax credits in Europe for creators and end users, including carbon capture credits, like in the U.S., there is no significant difference in the base price between the fossil gas and renewable. In fact, since the Russian invasion of Ukraine two years ago, biomethane has been cheaper, especially in central Europe. That's because, after the invasion, most European countries banned the use of the Russian gas they had depended on for decades.
"In Central Europe gas prices were, at some points, 20 times higher than the average of the last decade," Elek stated. "And they were much higher than the production costs of any biomethane." Biomethane has also benefitted from the fact that its production costs are relatively stable.
The Future
"If you look at the whole potential for biomethane, there's a number that we can, in Europe, grow to 100 bcm (billion cubic meters per year) and I think the U.S. is on the same level," he predicted. "If you do 100 bcm of biomethane and you do it with CCS (carbon capture and storage), you can generate 150-200 million tonnes of negative emissions--and that's quite huge."
In Europe, a significant amount of biomethane comes from maize and other crops grown specifically for that purpose, he said. Ag-based biomethane does not compete for land with food crops, he said, because most of it uses land that had been removed from food crop production by government programs, similar to those in the U.S., for the purpose of stabilizing food prices.
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) platform 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 more than 200,000 current and future projects worth $17.8 trillion (USD).
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Uncaptured methane from municipal waste and wastewater treatment is the third-largest source of the greenhouse gas in the U.S., says a report by Deloitte's Research Center for Energy and Industrials. Optimistically entitled, "A ripe time for municipal gas and waste renewable natural gas partnerships," the report declares, "Strategic partnerships between public gas utilities and waste facilities could position renewable natural gas to play a crucial role in decarbonization and resiliency."
The few (less than a tenth, says Deloitte) landfills that are capturing methane are mostly using it directly to generate electricity for the site itself, or simply flaring it, the report states. Very few (about 2%) of those are upgrading to renewable natural gas (RNG). Using methane directly, or as RNG, could reduce greenhouse gas emissions and monetize this substance, which otherwise is both wasted and polluting.
Where RNG is produced from waste, much of it goes into the natural gas vehicle market, through pipelines. Here, Deloitte sees an opportunity for municipalities to use RNG in a loop, fueling the waste trucks that collect waste for the landfill that creates the gas.
What's the Difference?
Biogas is raw, a product of the decomposition of municipal solid waste (MSW) in a landfill. The Environmental Protection Agency (EPA) describes the process this way: "When MSW is first deposited in a landfill, it undergoes an aerobic (with oxygen) decomposition stage when little methane is generated. Then, typically within less than one year, anaerobic conditions are established and methane-producing bacteria begin to decompose the waste and generate methane."
But this raw product has a relatively low methane density, containing large amounts of carbon dioxide along with other contaminants, making it less energy dense than RNG. Through processing, the carbon dioxide can be removed and the methane condensed into RNG, which is interchangeable with fossil-fuel natural gas.
Open Doors to the Future
A 2023 study found that the nation's largest landfill system, New York City, could replace 27% of its natural gas purchases with "renewable natural gas produced from wastewater biogas co-digested with food waste--more than enough to power the city's entire municipal heavy-duty truck fleet."
Nationally, RNG could replace about 4.4% of natural gas demand, Deloitte says, and more than half the natural gas demand in the chemical sector. But there is a cost, and paying for that involves layers of credits for the buyer and the seller.
How to Pay for RNG
Deloitte notes that the cost of doing this is greater than produced gas by orders of magnitude. "Assuming average annual production of 300,000 MMBtu (million British thermal units) per year for wastewater treatment plants and 700,000 MMBtu per year for landfills, one-year renewable natural gas project costs are, respectively, US$42.65 per MMBtu and US$32.44 per MMBtu, including anaerobic digestion and upgrading equipment installation and operation."
By contrast, the January 28, 2024 Henry Hub price, according to the EIA, was US$1.60 per MMbtu, and at Waha in west Texas, it was US$0.43 per MMbtu--which is very low even for Waha, but it's never been near the RNG prices. Deloitte notes that Inflation Reduction Act tax credits can cover 50-100% of the costs, depending on what qualifications are in place.
In an email, Deloitte researchers clarified how the costs are covered. "The RNG buyer covers the big sales price difference between fossil gas and RNG. Obligated parties in the transportation sector buy RIN (renewable identification numbers) and/or LCFS (low carbon fuel standard) credits for federal and/or state compliance purposes and buyers in the voluntary market outside the transportation sector buy the credits to help them meet decarbonization targets."
And from 2025 through 2027, RNG may qualify for clean fuel production tax credits when used in transportation, Deloitte says.
Utility in Field
Because many states' utilities have low-carbon targets--and California will require them to use 12% renewables by 2030--Deloitte sees benefits to partnerships between RNG production and the utilities that will need them. The report offers a long list of tax credit options, federal and state, that can mitigate the great gulf between natural gas and RNG prices--which would seem to be the only way to "monetize" the renewable fuel.
In Europe, Biomethane Saves the Day
Zoltan Elek is chief executive officer of Landwarme, Europe's leading independent biomethane solutions provider, and notes that Europe's solid waste is handled differently from the U.S. There, the burnable waste is separated from that which can be digested. The former is burned for its energy, while the latter is the source of biogas. This change, which happened in Europe about 20 years ago, was expensive to initiate but has paid off in better harvesting of the landfill's energy sources, Elek said.
He observed that while Germany is the world's top biomethane producer, the U.S. is second on that score. As a whole, Europe produces four times more than the U.S., but individual countries vary in their production levels. Most RNG there goes into the natural gas pipeline system, although there are some extra tax incentives for use in the transportation sector.
And while there are tax credits in Europe for creators and end users, including carbon capture credits, like in the U.S., there is no significant difference in the base price between the fossil gas and renewable. In fact, since the Russian invasion of Ukraine two years ago, biomethane has been cheaper, especially in central Europe. That's because, after the invasion, most European countries banned the use of the Russian gas they had depended on for decades.
"In Central Europe gas prices were, at some points, 20 times higher than the average of the last decade," Elek stated. "And they were much higher than the production costs of any biomethane." Biomethane has also benefitted from the fact that its production costs are relatively stable.
The Future
"If you look at the whole potential for biomethane, there's a number that we can, in Europe, grow to 100 bcm (billion cubic meters per year) and I think the U.S. is on the same level," he predicted. "If you do 100 bcm of biomethane and you do it with CCS (carbon capture and storage), you can generate 150-200 million tonnes of negative emissions--and that's quite huge."
In Europe, a significant amount of biomethane comes from maize and other crops grown specifically for that purpose, he said. Ag-based biomethane does not compete for land with food crops, he said, because most of it uses land that had been removed from food crop production by government programs, similar to those in the U.S., for the purpose of stabilizing food prices.
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) platform 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 more than 200,000 current and future projects worth $17.8 trillion (USD).
