THE SOURCE - Winter 2017 - 22

reductions compared to traditional diesel
and petroleum fuels. Driving a vehicle
with 100 percent RNG can reduce its GHG
emissions by more than 80 percent.
The gravitation to using RNG for
transportation fuel has been largely
compelled by market-driving programs
at the federal and state levels, such as the
U.S. Renewable Fuel Standard (RFS) and
California's Low-Carbon Fuel Standard.
RNG qualifies as a cellulosic biofuel
under the RFS, meaning it achieves
lifecycle benefits of 60 percent or greater
compared to a diesel baseline. The
California Air Resources Board calculated
the lifecycle benefits of producing RNG
from some waste sources to be carbon
negative, meaning the process effectively
sequesters GHG emissions.
Here's where RNG's environmental
merits meld with project economics.
RNG's place in clean fuel programs
adds a sizeable price-premium onto the
commodity value of RNG. The resulting
revenue from production can assuage
the cost of required project capital, and
create a sizeable revenue source after the
investment payback period.
The credit attached to each gallon
(ethanol gallon equivalent) of RNG
fuel - called a D3 RIN (Renewable
Identification Number) - was trading
recently for just over $3.00 per gallon.
Even when calculating in an adjustment
for any market variance, when added to a
commodity price of $2.64 per mmbtu, this
equates to an approximate revenue of $27
to $36 per mmbtu of RNG production.
On the other hand, the costs
associated with RNG project construction
and interconnection are difficult to
approximate into a narrow range due to

pressure swing adsorption, water
scrubbing, membrane separation, and
cryogenic techniques - the extent of
processing applied upgrades the gas to
different quality benchmarks.
That biogas can become a
medium-Btu biogas stripped of some
trace contaminants and water, but
maintaining the relative mix of CO2
and methane (CH4). Conditioned
further, it becomes biomethane, a
high-Btu gas that is predominately
methane after the biogas is upgraded
to remove most of the contaminants
and a majority of the CO2 and nitrogen
(N2) found in biogas. To be blended
into the pipeline, the gas must become
RNG: biomethane that is upgraded
to pipeline quality or vehicle fuel
standards such that it may blend with,
or substitute for, geologic natural gas.
RNG blended into the pipeline has
historically been contractually tied to
generating electricity through longterm power purchase agreements (PPA).
However, recent market opportunities
have increasingly driven RNG to enduse as transportation fuel, blended into
natural gas vehicle fuel as renewable
compressed natural gas or liquefied
natural gas (R-CNG and R-LNG,
respectively) to power heavy-duty (HD)
buses and vehicle fleets.
In addition to providing a waste
management solution, RNG's
environmental merits compound its
attractiveness. Companies like UPS, FritoLay, FedEx and Ryder and bus fleets like
Los Angeles Metro are committing to fuel
hundreds of their fleet vehicles with RNG,
taking advantage of the fuel's remarkable
Greenhouse Gas (GHG) and CO2

Manufacturers of
Professional Lubrication
Products since 1960

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22 THE SOURCE | THE VOICE AND CHOICE OF PUBLIC GAS
788780_DUALCO.indd 1

15/01/16 2:57 PM

an array of site-specific factors. In 2016,
the two-year average for investment
into an RNG project was calculated at
$16 million per project, but with a wide
range. Projects may require $5 million
or $50 million in capital investment and
financing, dependent on factors like
distance to pipeline, quantity of waste
and proportion of organics, biogas
quality, and existing facility technologies
in place, for example. Stated a different
way, the estimated cost to develop
a project and produce RNG can be
estimated at $8 per mmbtu.
It's important to remember that
such costs also mean investment dollars
that are carried forward through our
communities. In addition to injecting
investment dollars into local economies
across the country, each RNG
project provides up to 173 direct
and indirect jobs.
Despite the large spread between
potential revenue and cost, financing a
project remains challenging. Traditional
financing institutions rarely incorporate
the value of credits due to perceived
regulatory risk. Projects that are not
self-financed often must find the right
equity investor(s). A payback period
within a few years is often required. Most
often, negotiations take place prior to
project construction to reach agreement
on division of RIN proceeds between
contract parties (financier, project
developer / operator, credit
marketer, etc.).
Still, despite such challenges, the
growth of the RNG industry and its
ongoing traction remain impressive.
As of the end of August, there are 44
U.S. projects generating RNG under
the RFS spread across over half of the
United States. Another eight projects are
operational. There are 19 projects under
construction, and an additional five that
have undergone substantial development
and could be flowing gas by the end of
next year. Volumes of RNG production
under the RFS have grown from less than
50 million gallons (EGE) in 2014 to over
250 million gallons expected for 2017, and
350 million or more projected next year.
Given the combination of
environmental benefits and economic
opportunity offered by RNG production,
it's not hard to see why.


http://www.dualco-inc.com http://www.dualco-inc.com

Table of Contents for the Digital Edition of THE SOURCE - Winter 2017

A Vision from Our Industry: Listen, Define, Allocate, Execute
First Person
APGA Events
Q&A: Chairman Chatterjee
Furnace Rule Update
Delivering the Needs of Customers Through Legislative Action
Reaching Your Future Customers
Whistling In The Dark: Shortcomings of Natural Gas Indices Persist
Growth in Renewable Natural Gas
Legislative Outlook
The Pipeline
Marketing Matters
At Last
THE SOURCE - Winter 2017 - intro
THE SOURCE - Winter 2017 - ebelly1
THE SOURCE - Winter 2017 - ebelly2
THE SOURCE - Winter 2017 - A Vision from Our Industry: Listen, Define, Allocate, Execute
THE SOURCE - Winter 2017 - cover2
THE SOURCE - Winter 2017 - 3
THE SOURCE - Winter 2017 - 4
THE SOURCE - Winter 2017 - 5
THE SOURCE - Winter 2017 - 6
THE SOURCE - Winter 2017 - 7
THE SOURCE - Winter 2017 - First Person
THE SOURCE - Winter 2017 - 9
THE SOURCE - Winter 2017 - APGA Events
THE SOURCE - Winter 2017 - Q&A: Chairman Chatterjee
THE SOURCE - Winter 2017 - Furnace Rule Update
THE SOURCE - Winter 2017 - 13
THE SOURCE - Winter 2017 - Delivering the Needs of Customers Through Legislative Action
THE SOURCE - Winter 2017 - 15
THE SOURCE - Winter 2017 - Reaching Your Future Customers
THE SOURCE - Winter 2017 - 17
THE SOURCE - Winter 2017 - Whistling In The Dark: Shortcomings of Natural Gas Indices Persist
THE SOURCE - Winter 2017 - 19
THE SOURCE - Winter 2017 - 20
THE SOURCE - Winter 2017 - Growth in Renewable Natural Gas
THE SOURCE - Winter 2017 - 22
THE SOURCE - Winter 2017 - Legislative Outlook
THE SOURCE - Winter 2017 - 24
THE SOURCE - Winter 2017 - The Pipeline
THE SOURCE - Winter 2017 - Marketing Matters
THE SOURCE - Winter 2017 - 27
THE SOURCE - Winter 2017 - At Last
THE SOURCE - Winter 2017 - 29
THE SOURCE - Winter 2017 - 30
THE SOURCE - Winter 2017 - cover3
THE SOURCE - Winter 2017 - cover4
THE SOURCE - Winter 2017 - outsert1
THE SOURCE - Winter 2017 - outsert2
THE SOURCE - Winter 2017 - outsert3
THE SOURCE - Winter 2017 - outsert4
THE SOURCE - Winter 2017 - outsert5
THE SOURCE - Winter 2017 - outsert6
https://www.nxtbook.com/naylor/PGAQ/PGAQ0218
https://www.nxtbook.com/naylor/PGAQ/PGAQ0118
https://www.nxtbook.com/naylor/PGAQ/PGAQ0417
https://www.nxtbook.com/naylor/PGAQ/PGAQ0317
https://www.nxtbook.com/naylor/PGAQ/PGAQ0217
https://www.nxtbook.com/naylor/PGAQ/PGAQ0117
https://www.nxtbook.com/naylor/PGAQ/PGAQ0416
https://www.nxtbook.com/naylor/PGAQ/PGAQ0316
https://www.nxtbook.com/naylor/PGAQ/PGAQ0216
https://www.nxtbook.com/naylor/PGAQ/PGAQ0116
https://www.nxtbook.com/naylor/PGAQ/PGAQ0415
https://www.nxtbook.com/naylor/PGAQ/PGAQ0315
https://www.nxtbook.com/naylor/PGAQ/PGAQ0215
https://www.nxtbook.com/naylor/PGAQ/PGAQ0115
https://www.nxtbookmedia.com