For several months there’s been a scramble on to consolidate the U.S. landfill gas collection systems, dairy- and hog-farm digesters, and other assets that produce renewable natural gas (RNG) — a drop-in replacement for conventional natural gas that can qualify for federal and state financial incentives. But what really caught everyone’s attention was BP’s announcement a few weeks ago that it would acquire Archaea Energy, a Houston-based company with more than a dozen RNG projects in operation and many more under development, in a deal valued at $4.1 billion. That’s big bucks in the biogas space. In today’s RBN blog, we discuss the BP/Archaea deal and other recent acquisitions of RNG assets, as well as what’s driving the surging interest in RNG.
The global push to reduce greenhouse gas (GHG) emissions — and, even more important, the financial incentives to help make that happen — have spurred interest in alternative fuels such as renewable diesel (RD), sustainable aviation fuel (SAF) and clean hydrogen. And don’t forget RNG. As we said in I Love Trash, RNG is methane, with no material difference from the natural gas produced from wells in the Marcellus/Utica or the Haynesville basins. Instead of emerging from hydrocarbon wells, however, RNG is produced either by (1) collecting the gases generated by the decomposition of organic materials in municipal solid waste landfills, or (2) using anaerobic digesters to break down animal manure, wastewater solids and food waste in the absence of oxygen. Once the resulting gas is treated to remove moisture, carbon dioxide (CO2), nitrogen and impurities, it’s good-to-go methane.
Historically — in this case meaning since the 1990s — the vast majority of the landfill gas collected and the biogases generated by anaerobic digesters has been only partially treated and consumed onsite either to generate electricity (typically for sale to the local electric utility) or to fuel boilers, dryers, kilns or greenhouses. (A lot of landfill gas is also being flared.) Only a relatively small share these gases (but a quickly growing share of late, as we’ll get to in a moment) has been fully treated and upgraded — which puts it on par with pipeline-quality natural gas — and sold as RNG.
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