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The Role of Renewable Natural Gas in State Climate Policy

Leading policy, industry, and technical experts highlight renewable natural gas as a climate strategy and current experience, trends, and opportunities in U.S. states and regions.

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The Role of Renewable Natural Gas in State Climate Policy

  1. 1. Webinar: The Role of Renewable Natural Gas in State Climate Policy
  2. 2. Tom Cyrs, Research Associate, WRI United States
  3. 3. BACKGROUND ON WRI RNG INITIATIVE • For several years, WRI has conducted independent research on RNG as a climate strategy, facilitating greater awareness and understanding of RNG and its environmental impacts as well as approaches for evaluating resource potential, market opportunities, and policy options. • We’ve done this through: • Convenings and dialogue – bringing together stakeholders across academia, government, and industry to inform our work and identify needs • Research – distilling latest data and stakeholder insights into series of working papers and blogs on RNG as a climate strategy • Outreach – engaging with key audiences including policymakers and general public
  4. 4. WHAT IS RENEWABLE NATURAL GAS? • Renewable natural gas (also known as biomethane) typically refers to waste-derived fuel that is interchangeable with fossil natural gas • Common sources include landfills, food waste, animal manure, and wastewater • RNG projects have the potential to: a) contribute to more sustainable waste management; b) reduce methane emissions from organic wastes; and c) displace fossil fuels in heavy-duty vehicles, heating appliances, and other applications Figure| Biogas and RNG fuel characteristics and common end uses
  5. 5. WHAT ARE THE CLIMATE IMPACTS OF RNG? Figure| Lifecycle carbon intensity by feedstock Example | Food waste RNG lifecycle: RNG climate impacts vary considerably from feedstock to feedstock • Sources of emissions in RNG pathway may include energy for gas cleaning and upgrading, fuel combustion, and methane leakage along the pathway • “Credits” in RNG pathway can include avoided methane emissions/flaring from landfill • Projects most likely to yield climate benefits when: a) they are derived from wastes, and b) they result in a real reduction in methane emissions
  6. 6. WHAT IS THE ROLE OF RNG IN DECARBONIZATION? Where can it be deployed? • RNG supply from organic wastes unlikely to be sufficient to fully decarbonize any one sector • Modeling of building and transportation sectors finds that RNG can nonetheless play a significant complementary role • RNG’s unique attributes likely to be best leveraged when displacing fossil fuel use in hard-to-abate sectors How much can be produced? • “Wet waste” sources could yield as much as 780-1,400 BCF (equivalent to 4-7% of current natural gas consumption) • Addition of “dry” feedstocks could bring total to upwards of 2,000 BCF (equivalent to 11% of current natural gas consumption) • These resources come with different considerations regarding feasibility and environmental impacts Figure| National resource potential by feedstock
  7. 7. WHAT ARE COMMON BARRIERS AND KEY POLICIES? Key takeaways: • Policy incentives have driven and will continue to drive RNG markets moving forward • Variety of options and frameworks still evolving, including fuel mandates, public financing, and other enabling incentives to streamline regulation or improve feedstock availability • Key is to encourage deployment that: a) yields net reduction in methane emissions; and b) provides clean fuel option in otherwise hard-to-abate sectors
  8. 8. Expert Speakers Rebecca Smith, Senior Energy Policy Analyst, Oregon Department of Energy Sam Spofforth, Chief Executive Officer, Clean Fuels Ohio Chris Voell, Head – Waste, Recycling & Biogas Advisory, Danish Trade Council, North America
  9. 9. 9 Renewable Natural Gas in Oregon Rebecca Smith Senior Policy Analyst January 26, 2021
  10. 10. 10 • Oregon Context • Recent RNG Legislation in Oregon • RNG-Related Programs and Policies • Oregon RNG Inventory • Utility RNG Program • Clean Fuels Program Agenda
  11. 11. OREGON CONTEXT 11 • Oregon has three natural gas utilities – NW Natural, Cascade, and Avista … but many rural areas of state without NG service
  12. 12. • Renewable Portfolio Standard – 50% by 2040 • GHG reduction goals – 75% below 1990 levels by 2050 • Multnomah County goal of 100% renewable electricity by 2035 and 100% renewable energy by 2050 • Clean Fuels Program – decrease carbon intensity of transportation fuels • Signatory to the Multi-state Medium- and Heavy-Duty Zero Emission Vehicle MOU Major Clean Energy Policies OREGON CONTEXT 12
  13. 13. RECENT RNG LEGISLATION IN OREGON • 2017 SB 334 Directed ODOE to inventory RNG resources in the state • 2019 SB 98 Directed OPUC to adopt by rule large and small utility RNG programs • 2021 HB 2535 Would provide property tax exemption for facility producing hydrogen using electrolysis or renewable natural gas 13
  14. 14. 14 ODOE directed to: • Estimate the potential production quantities of biogas and RNG in OR • Estimate the energy content of biogas available at each site • Document the location of existing biogas production facilities • Assess the supply chain infrastructure associated with each type of biogas Gross annual potential from AD = 10 billion scf About 4.5% of Oregon’s annual NG use Total annual potential CH4 = 50 billion scf About 22% of Oregon’s annual NG use Emissions reductions potential of 2 MMTCO2e w/ RNG as stationary fuel Emissions reduction potential of 2.3 MMTCO2e from using RNG in place of diesel Oregon RNG Inventory
  15. 15. OREGON RNG INVENTORY 15 Source – Anaerobic Digestion Annual CH4 Production scf3 Agricultural manure 4,639,626,825 Landfill 4,351,052,420 Wastewater 1,225,228,606 Waste food 138,571,656 SUBTOTAL 10,354,479,507 Source – Thermal Gasification Annual CH4 Production scf3 Agricultural harvest residues 22,686,775,137 Forest harvest residues 16,998,108,771 SUBTOTAL 39,684,883,908
  16. 16. OREGON RNG INVENTORY Recommendations • Allow NG cos to buy/sell RNG to and for their customers. • Allow NG LDCs to recover pipeline interconnection costs through rates. • Develop voluntary gas quality stds for injection of RNG into pipeline. • Explore financial incentives. Next Steps • Practical statewide RNG potential (as opposed to theoretical potential). • Lifecycle economic analysis of RNG production pathways. • Tracking and accounting for RNG in transport and stationary fuel use. • Detailed economic analyses. 16
  17. 17. Oregon Utility RNG Program Rollout • SB 98 (2019) allows NG utilities in Oregon to buy and sell RNG to retail customers and invest ratepayer funds in infrastructure for acquisition, processing, transport, and production of biogas and RNG in Oregon. • Costs and benefits shared by all ratepayers. • NG utilities defined as large or small based on whether have greater or fewer than 200,000 customer accounts in Oregon. • Large NG utilities have annual spending cap of 5% of annual revenue. • Annual volumetric caps for RNG, beginning at 5% in 2020 and reaching max of 30% by 2050. 17
  18. 18. • Rulemaking tackled questions related to: • Defining and tracking environmental attributes associated with RNG • How utility RNG programs might interact with CA’s Low Carbon Fuel Standard and Oregon’s Clean Fuels Program • Utility cost-recovery mechanisms • Rules for small NG utilities • Reporting requirements OPUC Rulemaking (2019-2020) OREGON UTILITY RNG PROGRAM ROLLOUT 18
  19. 19. • Defining and tracking environmental attributes • Interaction with clean fuels programs OPUC Rulemaking (2019-2020) OREGON UTILITY RNG PROGRAM ROLLOUT 19 • Carbon intensity of particular source of RNG • For each dekatherm of RNG, attributes represented by renewable thermal certificate (RTC) • RTCs tracked via M-RETS • Book and claim tracking
  20. 20. Oregon Clean Fuels Program • Administered by Oregon DEQ. • Commenced in 2016 with goal of reducing average carbon intensity of OR’s transportation fuels by 10% over 10 years (2015-2025). • Governor’s EO 20-04 amended goal to 20% below 2015 levels by 2030 and 25% by 2035. • Regulated entities are importers of gasoline, diesel, ethanol, and biodiesel. • Credits are generated by entities who provide fuel with a lower CI than the standard gas or diesel it is substituted for. 20
  21. 21. OREGON CLEAN FUELS PROGRAM 21 Year Average CFP Credit Price 2016 $51.30 2017 $48.09 2018 $84.06 2019 $147.95 2020 $128.12 1 CFP is equal to one metric ton of CO2e not emitted as a result of the use of the fuel as compared to a fuel that precisely met the CFP. - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2019 2020 Diesel Gallon Equivalent (DGE) Annual Volume of Bio-CNG and Bio-LNG in the Oregon Clean Fuels Program Bio-CNG Bio-LNG
  22. 22. OREGON CLEAN FUELS PROGRAM 22 OREGON CLEAN FUELS PROGRAM CREDITS BY FUEL TYPE
  23. 23. WHAT’S NEXT FOR RNG IN OREGON NW Natural seeking RNG for its utility RNG program • Announced partnership with BioCarbN Jan 2021 to convert methane from some Tyson Foods facilities in U.S. into RNG – option to invest up to $38 million • Could produce up to 1.2 billion Btu/year of RNG Four new RNG production facilities in various stages of development • Two wastewater treatment plants – Eugene and Portland • AD dairy waste – Tillamook • AD food and ag waste, FOGs – Junction City ODOE to continue work on RNG analysis 23
  24. 24. Questions + Comments Rebecca Smith Senior Policy Analyst Oregon Department of Energy rebecca.smith@oregon.gov (503) 373-7955
  25. 25. Sam Spofforth, Chief Executive Officer, Clean Fuels Ohio Sam@CleanFuelsOhio.org
  26. 26. Experiences from Denmark Chris Voell, Head - Waste, Recycling and Biogas Ministry of Foreign Affairs of Denmark, Trade Council of North America +1 202-797-5324 / +1 240-877-4745 / chrvoe@um.dk RNG Implementation
  27. 27. 27 Denmark ‘lay of the land’  National Climate Goal: - 70% reduction of GHG emissions 2030 - Agriculture, transportation and energy are primary target sectors • Ag/Food Sector: • 2/3 of Denmark under ag land • 25% of all export is ag and food related / 6.5% of the workforce. - Goal - climate-neutral by 2050 - 21% of Danish GHG from agriculture: 55% is methane
  28. 28. From Farm-Based to Industrial Scale Biogas Plants  Pre-2012: ~50 individual on-farm and ~56 wastewater  Post 2012: ~40 centralized co- digestion-to-RNG plants (processing 300K – 1M tons each/year) Feedstock  13% food/organic waste  yields 53% share of biogas (co- digestion)  15% of total manure is used for biogas production 28 On-farm cluster projects Individual farm based projects Industrial plants Landfill Gas Wastewater plants The size of the circles indicate the amount of biogas produced per plant
  29. 29. Biogas/RNG Growth in Denmark Why a priority since mid 1980s?  Transformation of the energy system  Reduces imported fuels, increase national energy supply, flexible applications  Agricultural Waste Management  Large livestock population, manure must be land applied, nutrient economics  Climate impact  Job creation  Export of know-how How did we get there?  Environmental Regulations  Professionalization of the Industry  Energy Infrastructure  Value of Biogas – Govt Subsidy  Cross-Sector Collaboration  Controlling In- and Off-Take  Farmer Buy-In (Cooperatives) 29
  30. 30. A Patchwork of Policy Drivers and Incentives 30 Green Growth Policy (2009) Energy Agreement - Feed in Tariffs (2012) Resource strategy (2013) National Gas Distri- bution (2019) Energy Agree- ment (2019) 70 % reduction in 2030 (2019) “One company - One vision” Continued investment in the grid Bio-methane in the grid 18.1$/GJ Taxes on consumption of fossil fuels New subsidy scheme pending (~40 mil. $ yearly for 20 years) 50% of household waste for reuse in 2023 Specific targets at the municipal and city levels Climate Goal From 2020, new buses must be CO2 neutral - 8% blending requirement with bio-fuel Goal: 50% manure used for biogas 30% investment grant (max. 7.5 mil Euro)
  31. 31. The Danish RNG Model Biogas integrated part of a circular economy Co-digestion of manure and food waste Economy of scale: Large scale plants Cooperative: 20-50 farmers supply and co-own Newest plants are putting gas to the grid ‘Biogas plants’ much more than just energy
  32. 32. European Frontrunner in RNG  In 2020 renewable natural gas constituted 15% of the Danish gas consumption.  Four-fold increase since 2012 due to 40 plants connected to the natural gas grid.  RNG mainly produced from manure and waste products biogas.  In 2023 RNG is expected to constitute 25-30% of the Danish gas consumption based on under construction plants 33 Denmark is the country in Europe (and most likely the world) with the highest share of RNG in the gas grid.
  33. 33. Side 34 Electrification is a Key Solution … But Cannot Stand Alone Gas consumption, 2030 (PJ) Natural gas; 11.000.000 MMBtu Biogas; 21.000.000 MMBtu Transport, 2030 (PJ) Industrial, 2030 (PJ) Projected fossil consumption 2030: ~ 290.500.000 MMBtu Estimated fossil consumption after maximum ‘theoretical’ electrification: ~ 74.000.000 MMBtu 25% remaining DK energy outlook (Frozen policy) Fossil; 196.000.000 MMBtu RES; 16.000.000 Fossil;83.500.000 MMBtu RES; 136.500.000 MMBtu Natural gas; 11.000.000 MMBtu Biogas; 21.000.000 MMBtu Fossil; 13.000.000 MMBtu RES; 205.500.00 MMBtu Fossil; 50.000.000 MMBtu RES; 105.000.000 MMBtu After max. electrification * Danish Energy Agency
  34. 34. Questions? 35 Waste, Recycling & Biogas Advisory Chris Voell, Head, chrvoe@um.dk, 202-797-5324 LinkedIn Twitter
  35. 35. Expert Panel Rebecca Smith, Senior Energy Policy Analyst, Oregon Department of Energy Sam Spofforth, Chief Executive Officer, Clean Fuels Ohio Chris Voell, Head – Waste, Recycling & Biogas Advisory, Danish Trade Council, North America Tom Cyrs, Research Associate, WRI United States Dan Lashof, Director, WRI United States (Moderator)
  36. 36. A special thanks to UPS Foundation and WRI RNG Working Group Members Read the Renewable Natural Gas as a Climate Strategy: Guidance for State Policymakers at https://www.wri.org/publication/renewable-natural-gas- guidance

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