Waste Haulers Getting in on Renewable Natural Gas Game

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--After reporting net income of more than $600 million for the third quarter, Waste Management Incorporated (NYSE:WM) (Houston, Texas) said it had committed $500 million for the year for sustainability programs, including renewable natural gas (RNG).

Waste Management recorded an adjusted net income of $645 million for the third quarter, a 21% improvement over year-ago levels. The company noted that its performance was limited somewhat by the "sharp decline" for the price of recycled commodities.

The return on commodities marks a reversal from the first quarter, when the company said it expected to see continued support from that division. While full services are limited to only a few states, the company can recycle everything from boxes to batteries, the latter of which could wind up supporting the electric vehicle business in the United States.

Elsewhere on the environmental front, Waste Management said it was in the midst of a $1.6 billion investment program targeting sustainability, of which $550 million will be spent this year. Apart from recycling, the company said it was keen on expanding its footprint in the arena of so-called renewable natural gas.

The decomposition of organic waste such as food scraps or animal manure yields methane, which is a potent greenhouse gas but a powerful energy carrier as well. By processing this waste stream accordingly, companies such as Waste Management are able to put an alternative to conventional natural gas into the grid for the purpose of electric power generation.

Two of the 17 RNG projects in the Waste Management portfolio are expected to be finished before the end of the year. The company is already powering about half of its gas-powered fleet with RNG.

Renewable natural gas is nothing new. Landfill operators have been capturing methane for the grid for decades, but the push to move away from fossil fuels during the so-called energy transition moved RNG to the center of the conversation on alternative forms of power.

The raw feedstock from landfills or animal waste is only around 50% methane or so and a series of processing steps are needed to remove impurities and improve the methane content to 90% or more.

Gas sourced from landfills or animal waste can easily go into existing infrastructure, incentivizing some of the momentum. U.K. energy giant BP (NYSE:BP) (London, England) earlier this week committed more than $3 billion in cash, plus another $800 million to cover net debt, to acquire Archaea Energy, which operates 50 landfill gas-to-energy facilities across the country. Archaea could see a five-fold increase in RNG volumes by 2030.

"Archaea is a fantastic fast-growing business, and BP will add distinctive value through our trading business and customer reach," Chief Executive Bernard Looney said. "It will accelerate our key bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero ambition."

For BP, RNG, also known as biogas, is one of five growth engines embraced for the energy transition.

So-called renewable gas has a lower environmental footprint overall, though it's currently more expensive than conventional fossil fuels. Until efficiencies improve enough to level the playing field, RNG will still be costly, but may still be competitive in the overall effort to reduce emissions.

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).