OPAL Says Market Ripe for RNG

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The top brass at OPAL Fuels (NASDAQ:OPAL) (White Plains, New York) said in the company's second-quarter earnings report that the market is conducive to sales of renewable natural gas (RNG), a product typically derived from landfills.

OPAL in its second-quarter earnings report said its production of RNG was up 50% from first-quarter levels and 42% higher than year-ago levels.

"Market fundamentals continue to be strong for the capture and productive use of biogenic methane emissions," said Adam Comora, the company's co-chief executive officer.

The decomposition of carbon-based organic matter yields methane gas, along with impurities that need to be removed before the product is considered pipeline-ready.

The U.S. Environmental Protection Agency (EPA) finds that RNG projects in general can help keep harmful emissions from escaping into the atmosphere. Methane gas has a far greater warming potential than carbon dioxide (CO2), so keeping emissions low can have near-term environmental benefits.

"Replacing traditional diesel or gasoline with RNG can significantly reduce emissions of nitrogen oxides and particulate matter, resulting in local air quality benefits," the EPA added.

Deloitte's Research Center for Energy and Industrials adds that RNG could replace about 4.4% of natural gas demand and more than half the natural gas demand in the chemical sector. From 2025 through 2027, RNG also may qualify for clean fuel production tax credits when used in transportation.

To that end, OPAL said that its sales for RNG for use as a transportation fuel increased sequentially by 70% and 82% year-over-year.

The company has five RNG projects under construction, including a facility in New Jersey as part of a joint venture with South Jersey Industries (SJI). On Friday, OPAL said that construction began on the SJI collaboration.

That would be the second tie-up between OPAL and SJI following its Atlantic RNG project, which would draw on the emissions from a solid-waste landfill in Egg Harbor Township, New Jersey. That facility should begin commercial operations by early next year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Alternative Fuels Project Database can learn more from a detailed project report.

Deloitte's study on RNG, however, found that RNG is considerably more expensive than raw natural gas. For landfill-based RNG, the cost can run as high as $32 per million British thermal unit (MMBtu), compared with $2.20 per MMBtu for U.S.-traded natural gas.

Deloitte notes that tax credits outlined in the Inflation Reduction Act can cover 50% to 100% of the costs, depending on what qualifications are in place.

OPAL declared net income during the second quarter of $8.6 million, compared with a net loss of $2.7 million during the same period last year.

OPAL last year brought three RNG projects online and achieved net production of 2.2 MMBtu, 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.

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