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Environmental Markets and Biogas:
Valuing Climate Benefits
Peter Weisberg
November 12, 2014
AgStar Webinar
Renewable
electricity
21%
Avoided
methane
emissions
79%
Climate Benefits
2,000 cow, 750 kw Diary Digester
Environmental Markets and Biogas
1. Carbon Markets
2. Low Carbon Fuel Standard Credits
3. Renewable Identification Numbers...
Environmental Markets for Biogas
Market Credit Biogas Use Geographic
Limitation
California
Cap-and-
Trade
Offset Any Anywh...
California Carbon Market Key Insights
• Buyers = Large emitters in California
• Offset Project Types:
– Livestock manure
–...
Offsets generated and owned
by the digester
$5
$6
$7
$8
$9
$10
$11
$12
$13
California Carbon Offset ($/mtCO2e)
$/mtCO2e $/cow $/DGE*
Current $8.60 $30.10 $0.21
*Assum...
Low Carbon Fuel Standard Key Insights
• Biogas must be consumed as transportation
fuel in California
– Out of state: “Phys...
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CarbonIntensity(gCO2e/MJ) California’s Low Carbon Fuel...
LCFS credits generated and
owned by entity injecting
biomethane.
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00 California LCFS Price ($/mtCO2e)
$/mtCO2e $/DGE
Current ...
Renewable Identification Numbers Key Insights
• Buyer: Transportation fuel refiners and
importers
• Sunset: 2022
Non-Renewable
Fuel
Renewable fuel
Advanced Biofuel,
17%
Cellulosic
0.04%
Renewable Fuel
Requirement
9.76%
2013 US Fuel Con...
Renewable Fuel Standard 2
RINs can be generated and
owned by anyone in the
supply chain
Cellulosic Biofuel
• Biogas Cellulosic RIN
– Separated Mixed Solid Waste Digester
– Wastewater Treatment Facility Digester...
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60$/D5RIN
2011 Vintage 2012 Vintage 2013 Vintage 2014 Vintage
$/D5+CWC $/D...
Value Comparison
Average price $/diesel gallon
equivalent
Carbon Offset $8.60/
mtCO2e of methane reduced
$0.21
Low Carbon ...
Financing
• Revenues are not bankable
– Solution: Price floor
– Solution: Green Credit Reserve
• State policy: Payment for...
Increasing Importance of Methane
• LCFS/Offsets = Carbon Dioxide Equivalent
• 1997 Methane Global Warming Potential:
– 21 ...
Thank you!
Peter Weisberg
Program Manager
The Climate Trust
pweisberg@climatetrust.org
(503)238-1915 x207
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Environmental Markets and Biogas: Valuing Climate Benefits

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Looking at environmental markets and biogas and their valuable climate benefits.

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Environmental Markets and Biogas: Valuing Climate Benefits

  1. 1. Environmental Markets and Biogas: Valuing Climate Benefits Peter Weisberg November 12, 2014 AgStar Webinar
  2. 2. Renewable electricity 21% Avoided methane emissions 79% Climate Benefits 2,000 cow, 750 kw Diary Digester
  3. 3. Environmental Markets and Biogas 1. Carbon Markets 2. Low Carbon Fuel Standard Credits 3. Renewable Identification Numbers (RINs)
  4. 4. Environmental Markets for Biogas Market Credit Biogas Use Geographic Limitation California Cap-and- Trade Offset Any Anywhere in the US California Low Carbon Fuel Standard LCFS Credit Transportation fuel Fuel consumed in California US Renewable Fuel Standard RIN (Renewable Identification Number) Transportation fuel Anywhere in the US
  5. 5. California Carbon Market Key Insights • Buyers = Large emitters in California • Offset Project Types: – Livestock manure – (Post-consumer food waste = voluntary, not yet accepted by California) • Sunset: 2020
  6. 6. Offsets generated and owned by the digester
  7. 7. $5 $6 $7 $8 $9 $10 $11 $12 $13 California Carbon Offset ($/mtCO2e) $/mtCO2e $/cow $/DGE* Current $8.60 $30.10 $0.21 *Assumes each cow produces 51,072 BTUs/day
  8. 8. Low Carbon Fuel Standard Key Insights • Biogas must be consumed as transportation fuel in California – Out of state: “Physical Pathway” • Buyer = Transportation fuel refiners and importers in California • Sunset: 2020 – (2020 target applies until legislation is modified)
  9. 9. 0 20 40 60 80 100 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CarbonIntensity(gCO2e/MJ) California’s Low Carbon Fuel Standard Carbon Intensity of Compressed Biomethane from Dairy Farms - 13.45 gCO2e/MJ Carbon Intensity of Crude Oil - 99.18 gCO2e/MJ LCFS Carbon Intensity Targets Credits Deficits
  10. 10. LCFS credits generated and owned by entity injecting biomethane.
  11. 11. $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 California LCFS Price ($/mtCO2e) $/mtCO2e $/DGE Current $25.38 $0.29 Average $45.41 $0.52 2013 LCFS Credit Value for Dairy Biogas
  12. 12. Renewable Identification Numbers Key Insights • Buyer: Transportation fuel refiners and importers • Sunset: 2022
  13. 13. Non-Renewable Fuel Renewable fuel Advanced Biofuel, 17% Cellulosic 0.04% Renewable Fuel Requirement 9.76% 2013 US Fuel Consumption (billions of gallons) 2013 US Renewable Fuel Standard 2 (billions of gallon) *Biomass-based diesel intentionally omitted because its volumes are not on an ethanol-equivalent gallon basis.
  14. 14. Renewable Fuel Standard 2
  15. 15. RINs can be generated and owned by anyone in the supply chain
  16. 16. Cellulosic Biofuel • Biogas Cellulosic RIN – Separated Mixed Solid Waste Digester – Wastewater Treatment Facility Digesters – Agricultural Digesters • Cellulosic RIN Price (“D3 RIN”) Proxy for D3 RIN Price = Advanced Biofuel RIN (D5) + Cellulosic Waiver Credit
  17. 17. $- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60$/D5RIN 2011 Vintage 2012 Vintage 2013 Vintage 2014 Vintage $/D5+CWC $/DGE Current $0.90 $1.37 Average $0.98 $1.50 Cellulosic RIN Proxy Credit Value
  18. 18. Value Comparison Average price $/diesel gallon equivalent Carbon Offset $8.60/ mtCO2e of methane reduced $0.21 Low Carbon Fuel Standard $45.41/ mtCO2e from LCFS intensity target $0.52 RIN $0.98/ D3 RIN proxy (D5 + Cellulosic Waiver) $1.50 Cannot sell both offset and LCFS credit
  19. 19. Financing • Revenues are not bankable – Solution: Price floor – Solution: Green Credit Reserve • State policy: Payment for performance > grant making – Leverage accounting – Catalyze private capital through government programs based on accounting at this early stage
  20. 20. Increasing Importance of Methane • LCFS/Offsets = Carbon Dioxide Equivalent • 1997 Methane Global Warming Potential: – 21 carbon dioxide equivalent per unit of methane • 2014 Methane Global Warming Potential: – 34 carbon dioxide equivalent per unit of methane
  21. 21. Thank you! Peter Weisberg Program Manager The Climate Trust pweisberg@climatetrust.org (503)238-1915 x207

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