RNG pricing gives companies pause; plus news from Generate, Waga and more – Waste Dive

Report on the Renewable Natural Gas (RNG) Sector’s Economic Viability and Contribution to Sustainable Development Goals

The Renewable Natural Gas (RNG) sector, a critical component in achieving global sustainability targets, is currently navigating significant economic shifts. This report analyzes the impact of fluctuating financial incentives on RNG projects derived from landfill gas, contextualizing these developments within the framework of the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).

Economic Headwinds and Implications for SDG Advancement

Recent economic pressures, primarily driven by the declining value of federal renewable fuel credits, are influencing investment decisions and project timelines within the waste-to-energy industry. These challenges pose a potential risk to the sector’s continued contribution to key SDGs.

Analysis of D3 RIN Price Fluctuation

The primary economic challenge stems from the price of D3 Renewable Identification Numbers (RINs), credits generated for cellulosic biofuels under the federal Renewable Fuel Standard. A significant price drop over the past year has altered the financial calculus for RNG projects.

• Price Decline: D3 RIN prices in October were approximately one dollar lower than the previous year, with investment bank Jefferies adjusting its long-term expectation from $2.50 to $2.20.
• Impact on Profitability: Waste Connections reported that its projected 1-to-1 ratio of investment-to-earnings, based on RINs in the $2.50-$3.00 range, is now shifting closer to a 2-to-1 ratio, impacting the economic feasibility of projects crucial for SDG 13 (Climate Action) by mitigating methane emissions.
• Regulatory Factors: The U.S. Environmental Protection Agency’s (EPA) conservative proposal for future Renewable Fuel Standard (RFS) targets has contributed to market uncertainty, affecting long-term investment in the clean energy infrastructure required for SDG 7 (Affordable and Clean Energy) and SDG 9 (Industry, Innovation, and Infrastructure).

Strategic Responses from Industry Leaders

In response to these market dynamics, major waste management companies are recalibrating their RNG strategies. These adjustments reflect a balancing of economic realities with long-term commitments to sustainable energy production.

Company-Specific Strategy Adjustments

1. Waste Connections: The company is delaying some planned capital spending on RNG projects due to “cost creep and delays.” This postponement could slow progress on capturing landfill gas, a key activity for fulfilling SDG 11‘s goal of sustainable waste management.
2. WM: Executives have indicated a strategy to defer the sale of some RINs, anticipating a future price increase. This tactical financial decision underscores the market’s volatility.
3. Republic Services: The company is exploring an increased focus on landfill gas-to-electricity projects. This strategic pivot demonstrates an alternative pathway to contributing to SDG 7, leveraging high energy demand from data centers to ensure the continued utilization of landfill gas as a renewable resource.

Despite these adjustments, analysts note that RNG revenue remains a small portion of overall earnings for these large companies. However, sustained low RIN prices could limit future investment beyond currently committed projects, potentially capping the sector’s growth and its capacity to contribute to national climate goals under SDG 13.

Recent Industry Developments and SDG Contributions

Notwithstanding the economic challenges, several new projects and financing deals in October highlight the industry’s ongoing commitment to expanding RNG capacity and advancing circular economy principles in line with the SDGs.

Generate Capital’s Food Waste-to-RNG Initiative

Generate Capital secured a $60 million (Canadian) financing deal to support its subsidiary, Generate Upcycle. This investment directly supports:

• SDG 12 (Responsible Consumption and Production): The funding will enhance anaerobic digestion facilities that process food waste, turning a waste stream into a valuable resource.
• SDG 7 (Affordable and Clean Energy): Once upgraded, the sites are expected to produce approximately 1 million gigajoules of RNG annually, contributing to the supply of clean energy.

New Jersey Public Landfill RNG Facility

A partnership between Opal Fuels, South Jersey Industries (SJI), and the Atlantic County Utilities Authority (ACUA) resulted in the commercial operation of an RNG facility at a public landfill. This project exemplifies progress toward:

• SDG 11 (Sustainable Cities and Communities): It is the first project of its kind at a public solid waste facility in New Jersey, showcasing innovative municipal waste management.
• SDG 7 (Affordable and Clean Energy): The facility will produce 650,000 mmBtus of RNG annually, injecting renewable energy directly into the local gas pipeline.

Waga Energy’s Iowa Facility Commissioning

Waga Energy launched a new RNG facility at the Scott Area Landfill in Iowa, capable of generating over 205,000 mmBtus of RNG annually. This development advances:

• SDG 13 (Climate Action): The facility captures potent methane emissions from 185,000 tons of waste accepted annually, preventing its release into the atmosphere.
• SDG 8 (Decent Work and Economic Growth): The 20-year operational agreement includes a revenue-sharing model with the public waste commission, creating a sustainable economic framework.

Clean Energy Fuels’ Infrastructure Expansion

Clean Energy Fuels announced new agreements to expand RNG fueling infrastructure, directly supporting the decarbonization of the transportation sector.

• SDG 9 (Industry, Innovation, and Infrastructure): The company is building new fueling stations for Republic Services and USA Hauling & Recycling, expanding the critical infrastructure needed for clean fleets.
• SDG 11 (Sustainable Cities and Communities): By supplying RNG to fuel a combined total of over 200 new and existing trucks for multiple waste haulers, these agreements contribute to reducing urban air pollution and creating more sustainable transportation systems.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on Renewable Natural Gas (RNG) from landfill and food waste connects to several Sustainable Development Goals (SDGs) by addressing issues of renewable energy, sustainable infrastructure, waste management, and climate action.

• SDG 7: Affordable and Clean Energy

  The core topic of the article is the generation of RNG, a form of clean and renewable energy, from waste sources like landfill gas and food waste. It discusses the economic viability and expansion of projects that contribute to the clean energy supply.

• SDG 9: Industry, Innovation, and Infrastructure

  The article highlights significant investments and technological applications in building and upgrading infrastructure for sustainability. It details the construction of new RNG facilities and the retrofitting of existing waste management sites to produce clean energy, showcasing innovation in the waste and energy sectors.

• SDG 11: Sustainable Cities and Communities

  By focusing on converting municipal waste (landfill gas and food waste) into a valuable resource, the article addresses a key aspect of sustainable urban management. These projects help reduce the adverse environmental impact of cities by improving waste management practices.

• SDG 12: Responsible Consumption and Production

  The conversion of waste into energy is a prime example of moving towards a circular economy, aligning with the goal of substantially reducing waste generation. The article describes how byproducts of consumption (food and other municipal waste) are being reused to produce energy, thereby reducing their environmental footprint.

• SDG 13: Climate Action

  The article implicitly addresses climate action by discussing RNG as a biofuel alternative to fossil fuels. The entire economic framework discussed, including the Renewable Fuel Standard (RFS) and carbon credits, is a policy mechanism designed to mitigate climate change by promoting cleaner energy sources and reducing greenhouse gas emissions from waste decomposition.

• SDG 17: Partnerships for the Goals

  The article provides numerous examples of collaborations between different entities to achieve these goals. It describes joint ventures between private companies, financing deals, and public-private partnerships involving municipal authorities, all working together to develop and operate RNG facilities.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, the following specific SDG targets can be identified:

1. Target 7.2: Increase substantially the share of renewable energy in the global energy mix.

   The article is centered on projects that directly increase the production of renewable energy. It details new facilities coming online, such as those by Opal Fuels in New Jersey and Waga Energy in Iowa, and expansion plans by companies like Generate Upcycle, all of which contribute to increasing the share of RNG in the energy supply.

2. Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable.

   The article describes multiple instances of this target in action. For example, Generate Upcycle is “upgrading several sites to produce RNG,” and Republic Services is collaborating with Clean Energy Fuels to “build two new stations” and “upgrade a Republic fueling station.” These actions represent a direct investment in making waste management and energy infrastructure more sustainable.

3. Target 11.6: Reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management.

   The projects discussed, such as the facility at the Atlantic County Utilities Authority’s landfill and the Scott Area Landfill, are direct efforts to improve municipal waste management. By capturing landfill gas and processing food waste that would otherwise decompose and release methane, these projects reduce the negative environmental impact of waste generated by urban populations.

4. Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.

   The article focuses on the “reuse” aspect of this target. It describes how waste streams (landfill gas, food waste) are being repurposed into a high-value product (RNG). This process treats waste not as something to be disposed of, but as a resource, thereby contributing to the reduction of its final volume and negative impact.

5. Target 13.2: Integrate climate change measures into national policies, strategies and planning.

   The article’s discussion of the economics of RNG is framed by climate-related policies. The federal Renewable Fuel Standard (RFS) and its D3 RIN credits are central to the investment decisions of waste companies. The article also mentions state-level policies like “Oregon’s Clean Fuels Program” and “California’s Low Carbon Fuel Standard,” which are clear examples of climate change measures integrated into policy and planning.

6. Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.

   The article showcases several partnerships. A key example is the project involving “Opal Fuels, South Jersey Industries and the Atlantic County Utilities Authority,” which is a public-private partnership. Another is Waga Energy’s agreement with the “Waste Commission of Scott County,” a public commission. These collaborations are essential for financing, building, and operating the described RNG projects.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article contains several quantitative and qualitative indicators that can be used to measure progress.

• Indicators for Target 7.2 (Renewable Energy Share):

  The article provides specific production capacities for new RNG facilities, which are direct measures of new renewable energy generation.

  • Annual RNG production from Generate Upcycle’s sites: “about 1 million gigajoules.”
  • Annual RNG production from the New Jersey facility: “650,000 mmBtus.”
  • Annual RNG generation from the Iowa facility: “more than 205,000 mmBtus.”
  • Volume of RNG contracted by haulers: “2.5 million gallons” (USA Hauling & Recycling) and “300,000 gallons” (Ecotech Waste Logistics).

• Indicators for Target 9.4 (Sustainable Infrastructure):

  Progress can be measured by the number of new and upgraded facilities mentioned.

  • Number of upgraded facilities: Generate Upcycle is upgrading “several sites” from its portfolio of “five food waste processing facilities.”
  • Number of new facilities: The article announces the completion of a facility in New Jersey and another in Iowa. Waga Energy has “18 projects under construction worldwide.” Clean Energy Fuels is building “two new stations.”

• Indicators for Target 11.6 (Waste Management):

  The amount of municipal waste being managed in these advanced facilities serves as an indicator.

  • The Scott Area Landfill, which now hosts an RNG facility, “accepts about 185,000 tons of waste annually.” This quantifies the scale of municipal waste being diverted to a more sustainable management process.

• Indicators for Target 13.2 (Climate Policies):

  The article provides financial data that directly reflects the market impact of climate policies.

  • Price of D3 RINs: “$2.399.”
  • Price per metric ton of CO2 equivalent in Oregon: “$150.”
  • Price per metric ton of CO2 equivalent in California: “$55.”

  These prices serve as indicators of the financial incentives driving investment in renewable fuels under these policy frameworks.

• Indicators for Target 17.17 (Partnerships):

  While not quantitative, the article provides qualitative evidence by naming the specific partnerships formed to advance RNG projects.

  • A joint venture between “Opal Fuels and SJI.”
  • A public-private partnership between “Opal Fuels, South Jersey Industries, and the Atlantic County Utilities Authority.”
  • A financing deal between “Generate Capital” and “Fiera Infrastructure Private Debt.”
  • Contracts between “Republic Services” and “Clean Energy Fuels.”

4. Table of SDGs, Targets, and Indicators

Source: wastedive.com