The U.S. renewable natural gas (RNG) industry is growing fast, with 78 projects up and running in North America (72 in the U.S.) and 54 more in the works across the U.S. The RNG Coalition, a trade association supporting the development and deployment of these projects, is pushing to see that number double by 2025.

If the growth trajectory happens, it could mitigate methane while bringing business opportunities to landfills, which produce most of the RNG sold in North America.

But significant industry growth would bring both opportunity and challenges, and, in fact, already has. Key to ongoing success is effective advocacy and policy that provides market stability, says Johannes Escudero, RNG Coalition CEO.

Waste360 sat down with Escudero to discuss policies that have shaped the market to date, how they have done so far and what policy work needs to happen for the industry to gain more traction. He also talks about activity in California and why he believes policy there matters to the RNG industry at large.

Waste360: How does policy impact markets and, ultimately, potential growth of RNG projects?

Johannes Escudero: Markets depend on public policy support in that policies create, expand or eliminate markets. Markets support the development, deployment and utilization of RNG, which enables obligated parties to meet requirements prescribed by national, state and provincial renewable energy and fuel programs.

Ultimately, public policy recognition of the ultra-low carbon profile and greenhouse gas emissions reduction potential of RNG on a lifecycle basis drives its use. RNG derived from landfill gas, wastewater, livestock and agricultural/farm waste are fuel pathways that achieve greenhouse gas reductions of 60 percent or greater compared to the baseline for diesel. This environmental benefit distinguishes RNG as one of the cleanest and most valuable fuel options under the Renewable Fuel Standards program (RFS). This value—underwritten by public policy—enables RNG developers to secure financing to construct new projects.

These policies are working. Since 2014, RNG production for transportation has increased almost 10 times. Today, RNG comprises nearly 95 percent of all cellulosic biofuel qualified under the RFS program.

Waste360: How has reclassification of RNG as a cellulosic biofuel opened avenues for its use in the transportation niche? And what states are taking the lead?

Johannes Escudero: Since RNG was reclassified as cellulosic biofuel under the RFS program, it can be produced from certain feedstocks to generate D3 cellulosic biofuel Renewable Identification Numbers—the environmental credits generated when RNG is used for transportation fuel.

State programs, like California’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program, have also provided a stimulus for RNG production and delivery to the transportation fuel market. Under these regional programs, RNG derived from landfills and wastewater has a carbon intensity comparable to power used to charge the states’ electric vehicles. Similar policies are under development in Ontario, Canada.

Waste360: What is going on in California, and what is the relevance of activity there to the industry at large?

Johannes Escudero: Much of the nation and world looks to California’s policies when they consider renewable energy, clean fuels or climate change policies. If public policy is not right in California, we risk living with the consequences everywhere else.

Unfortunately, until certain regulatory issues are resolved, a majority of RNG projects will continue to be developed elsewhere across the country. Specifically, if the California Public Utilities Commission does not reduce the current siloxane standard to a range that can be consistently and reliably detected and measured by laboratories, in-state RNG projects will only be developed from livestock waste. Methane from landfills and wastewater treatment facilities will continue to be flared and wasted, or worse, continue to fugitively escape into the atmosphere as a short-lived climate pollutant many times more potent than carbon.

Fortunately, there are two bills moving forward in California that have seen a lot of support. Senate Bill 1440 would require gas corporations to procure their proportionate share of RNG by 2030 (creating market certainty for developers). If successful, we expect to introduce this legislation in other states and/or provinces.

And Assembly Bill 3187 would help to expedite the California Public Utilities Commission’s review of the state’s monetary incentive program, to increase funding and decrease costs borne by RNG developers to interconnect in-state projects to common carrier pipelines.

Waste360: What are issues tied specifically to economics and infrastructure? What must be in place to address these issues?

Johannes Escudero: These projects are expensive. Depending on feedstock, they are $10 million to $70 million to build.

Revenue predictability is critical to securing financing or investment to expand or develop RNG production facilities. And since the cost of producing RNG is greater than the indexed price for conventional natural gas, a project requires the additional value of the environmental attributes, tax credits and/or grants.

For an RNG-to-transportation fuel project to be developed, other required essentials include access to common carrier pipelines or another delivery method (virtual pipelines or mobile transportation). The RNG would then need to be distributed through fueling stations into compressed natural gas vehicles in order to generate credits that make projects viable.

Waste360: How much RNG is used for transportation, and what are the challenges for further growth?

Johannes Escudero: Nationwide, only 20 to 38 percent of natural gas vehicles are fueled by RNG, so there is significant opportunity for growth across the country.

This brings up a challenge, and an opportunity, moving forward: more clean natural gas vehicles (medium and heavy duty) are needed on our highways and at our ports, and more reliable ultra-low nitrogen oxide buses are needed to deploy RNG as an alternative to engines powered by dirty diesel fuel.

It is expensive to replace or convert diesel fleets to natural gas vehicles that can be fueled by RNG. Additional financial support is needed to incentivize fleets to transition to clean-burning engines, reduce air pollution and contribute to improved public health, especially where disadvantaged communities are disproportionately affected.

Waste360: What is the RNG Coalition doing to guide or advance policy? What are key considerations?

Johannes Escudero: The RNG Coalition and its members continue to educate the general public and elected officials about the reliability and sustainability of RNG, as well as about the global and local environmental and economic benefits associated with increased development, deployment and utilization of RNG.

We are advocating for favorable treatment of RNG as a viable investment and alternative energy resource in federal, state and provincial laws and regulations.

We are accumulating production data and projections from developers and marketers and communicating inventory to the U.S. Environmental Protection Agency (EPA) for its reference in establishing the annual Renewable Fuel Volume Obligations (RVO) for each biofuel category.

The RNG Coalition has also been working with a Northeast U.S. natural gas pipeline utility company (National Grid) in drafting its “Biomethane Interconnection Guidance” document, expected to be released by the end of August. It should serve as an educational tool for other natural gas utility companies interested in interconnecting with RNG.

We continue to work with industry and other stakeholders in California to sponsor the two pieces of legislation I referenced earlier that are under final consideration in the state senate and state assembly this month (August). Both bills (SB 1440 and AB 3187) now go to Gov. Jerry Brown for signature.

Waste360: What is future success dependent on?

Johannes Escudero: A successful future is largely dependent on two things. One is the ability of the RNG Coalition to effectively advocate and educate on behalf of the industry’s collective best interest and, as a result, create and help sustain markets that support RNG project development. The other is the ability of industry stakeholders to finance and develop projects and provide supply that meets policy-underwritten market demands.

The RNG industry also needs to increase support for candidates campaigning for office or already serving in an elected capacity at the federal, state or provincial levels who support increased development, deployment and utilization of RNG.

Waste360: Please speak on EPA's proposed 2019 renewable fuel volumes and how you expect this to impact the industry.

Johannes Escudero: The EPA’s proposed 2019 cellulosic biofuel RVO of 381 million gallons represents a 32 percent increase over the 2018 level. The proposal recognizes that the RNG industry is continuing to grow under the RFS program. A 381 million gallon RVO would be a signal of stability that should allow RNG industry producers and investors to continue developing and access the capital necessary to invest in, build and service new RNG production facilities.