This document summarizes environmental markets and credits for biogas from dairy digesters. It discusses three potential markets: (1) carbon offsets under California's cap-and-trade program, (2) low carbon fuel credits under California's Low Carbon Fuel Standard, and (3) Renewable Identification Numbers under the federal Renewable Fuel Standard. For each market, it provides details on eligible biogas uses, buyers, prices, generation and ownership of credits. Overall, it finds the average price per gallon of diesel equivalent is highest for LCFS credits ($0.52) and lowest for carbon offsets ($0.21), with RIN prices in between ($1.50). Financing challenges and the increasing importance

1. Environmental Markets and Biogas:
Valuing Climate Benefits
Peter Weisberg
November 12, 2014
AgStar Webinar

2. Renewable
electricity
21%
Avoided
methane
emissions
79%
Climate Benefits
2,000 cow, 750 kw Diary Digester

3. Environmental Markets and Biogas
1. Carbon Markets
2. Low Carbon Fuel Standard Credits
3. Renewable Identification Numbers (RINs)

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. 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. Offsets generated and owned
by the digester

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. 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. 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. LCFS credits generated and
owned by entity injecting
biomethane.

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. Renewable Identification Numbers Key Insights
• Buyer: Transportation fuel refiners and
importers
• Sunset: 2022

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. Renewable Fuel Standard 2

15. RINs can be generated and
owned by anyone in the
supply chain

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. $-
$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. 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. 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. 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. Thank you!
Peter Weisberg
Program Manager
The Climate Trust
pweisberg@climatetrust.org
(503)238-1915 x207