TotalEnergies, Vanguard Form RNG Joint Venture

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--French supermajor TotalEnergies SE (NYSE:TTE) (Courbevoie, France) said it reached a joint venture agreement to produce more than 2 billion cubic feet of renewable natural gas per year from U.S. farm operations.

TotalEnergies announced Wednesday that it signed an agreement with renewable natural gas (RNG) company Vanguard Renewables (Weston, Massachusetts) to develop, build and operate 10 new projects that will combine for 2.5 billion cubic feet (Bcf) of annual output.

Three projects with a per-unit capacity of nearly 250,000 million cubic feet are under construction in Wisconsin and Virginia.

"By expanding into this fast-growing market, our joint venture will create value for both companies while benefiting the food and farming sectors, as well as providing a ready-to-use solution to industrial companies willing to decarbonize their energy supply," said Olivier Guerrini, a vice president for biogas at TotalEnergies.

RNG is finding its footing as a low-carbon alternative to natural gas, making it a key component of the energy transition. The decomposition of organic matter--including animal manure--yields methane, which needs to be treated to remove any impurities to reach a near-pure level of 95% or greater.

A recent report from British multinational professional services firm Deloitte found uncaptured methane from municipal waste and wastewater treatment is one of the largest sources of U.S.-based methane emissions. If captured and utilized, methane as RNG could replace about 4.4% of U.S. natural gas demand, Deloitte said.

RNG, meanwhile, is taking up some of the market share previously held by compressed natural gas (CNG) in the transportation sector.

Heavy equipment company Cummins (NYSE:CMI) (Columbus, Indiana) recently introduced a new 15-liter natural gas engine for heavy-duty trucking that can run on RNG. Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington), Federal Express (NYSE:FDX) (Memphis, Tennessee) and United Parcel Service (NYSE:UPS) (Atlanta, Georgia) also are among the growing list of companies turning to RNG to power their fleets. For more information on this trend, see March 8, 2024, article - RNG Finding a Home in the Transportation Sector.

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

"These 10 RNG projects, jointly undertaken by TotalEnergies and Vanguard Renewables as co-investment partners, further reinforce our commitment and ability to deliver on our mission of harnessing the power of waste to decarbonize our planet," said Neil H. Smith, Vanguard's chief executive officer.

RNG, however, is far more expensive than conventional natural gas. Henry Hub, the U.S. benchmark for the price of natural gas, was trading at about $2 per million British thermal units (mmBtu) in early Thursday trading, though Deloitte estimates RNG could run as high as $40 mmBtu.

Tax credits outlined in U.S. President Joe Biden's signature Inflation Reduction Act can cover 50% to 100% of the costs, however, depending on what qualifications are in place.

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).