The investment boom in ​‘renewable natural gas’ is sparking debate

U.S. grocery stores toss out billions of pounds of wilted lettuce, rotten apples and moldy bread every year. Most of that food ends up rotting in landfills, where it releases methane — a potent greenhouse gas — into the atmosphere. But a growing effort is underway to rescue all those stinky scraps and turn them into energy instead.

Divert, a Massachusetts-based technology company, is doing just that. The firm works with retailers to reduce food waste and donate edible goods; it then collects whatever’s left and hauls it to anaerobic digesters, where the organic matter is converted into fuel. The resulting ​“biogas” is used to heat and power buildings, or it’s turned into so-called ​“renewable natural gas.” The RNG can be injected directly into existing pipelines, where the fuel mixes with fossil gas fracked from the earth.

Divert is preparing to dramatically expand its food-to-fuel operations in coming years. It’s doing so with the help of major fossil fuel companies, which are pouring money into the sector like never before.

Investment in RNG, also called ​“biomethane,” is soaring as energy companies seek what they claim are cleaner ways of powering the economy. Reuters recently likened the trend to a ​“land grab,” with investors snapping up landfills, manure-sodden dairy farms and food-waste streams as if claiming a corner of the Bakken oil and gas shale fields.

The Inflation Reduction Act, which passed last August, has driven much of the recent interest, by offering tax credits for companies that build equipment like anaerobic digesters and produce RNG. The federal Renewable Fuel Standard and California’s Low-Carbon Fuel Standard both provide lucrative incentives for companies that turn methane-rich waste into transportation fuel.

“All of these things are coming about because of all the momentum we see coming out of Washington [D.C.] and from consumers being more aware,” Ryan Begin, CEO of Divert, told Canary Media. ​“It’s very exciting right now.”

Divert, which operates 10 anaerobic digesters, plans to build 30 additional facilities in the next eight years to turn supermarket scraps into RNG. Enbridge, the Canadian pipeline operator, committed $1 billion in March to finance the new digesters and invested $80 million in Divert itself — a step Enbridge said should help reduce its own climate pollution. The company moves about one-fifth of all the fossil gas consumed in the United States over 74,000 miles of infrastructure; it also operates a large and controversial network of crude-oil pipelines.

The Enbridge deal came on the heels of Divert’s $175 million agreement to supply BP with RNG over 10 years. Separately, the oil and gas giant spent $4.1 billion last year to acquire another RNG firm, Archaea Energy, which makes fuel from landfill gas.

The industry’s spending boom and the raft of new subsidies are raising fresh concerns among environmental groups and watchdogs. 

For one, despite all the buzz, the fuel is only expected to play a minor role in curbing the nation’s greenhouse gas emissions.

While RNG can be considered ​“low-carbon” or even ​“zero-carbon,” depending on how it’s made, the reality is that people and cows only create so much waste. At most, RNG could displace around 16 percent of current fossil gas consumption, according to industry-supported research. Other studies suggest the share is much smaller.

At the same time, methane can leak from the digesters, landfills, storage tanks and pipelines that handle both the raw materials and finished fuel products. If too much of the potent gas escapes into the atmosphere, it could offset the climate benefits associated with using RNG.

Critics say they worry that RNG is being touted as a transformative climate solution, on par with electrifying buildings and replacing gas-burning power plants with wind, solar and other renewable sources. That refrain is often repeated by the U.S. gas industry, which sees RNG as a means of justifying infrastructure expansion.

“The message you hear [from companies] that’s very persuasive for consumers is, ​‘Why do we need to get off the gas system if we can drop in a clean replacement instead?’” said Sasan Saadat, a senior research and policy analyst for the environmental organization Earthjustice. ​“We can keep all the same appliances in place, and we’ll just substitute the dirty fuel for the clean fuel.”

“What’s missing from that message,” he added, ​“is an honest assessment of how scant the supply of sustainable RNG is and how risky the potential is that RNG could actually increase climate impacts.”

Turning the nation’s waste into fuel 

Both fossil and ​“renewable” gas are composed primarily of methane, which acts as a global-warming accelerant. Over a 20-year period, methane is about 80 times more powerful than carbon dioxide when it comes to trapping heat in the atmosphere.

In the United States, nearly 30 percent of human-caused methane emissions come from the breakdown of organic wastes in landfills, sewage treatment plants, compost heaps and farms.

Proponents of RNG note that, since these sites are already generating emissions, it only makes sense to harness that gas instead of letting it escape into the atmosphere.

“RNG is an important part of the solution stack because it’s capturing what would otherwise be vented atmospheric methane and turning it into a useful energy resource,” said Blaine Collison, executive director of the Renewable Thermal Collaborative, an organization that’s working to scale up renewable heating and cooling technologies.

“That’s a pretty important double win here,” he added.

Some 230 RNG facilities were operating in the United States in 2021, according to the U.S. Department of Energy’s Argonne National Laboratory, which maintains a database of RNG projects.

Together, those facilities produced over 59 million MMBtu, or the equivalent of nearly 460 million gallons of diesel — enough to fuel 50,000 refuse trucks, Argonne’s data shows. Those numbers are likely higher by now, given that nearly 200 more projects were under construction or in planning mode when Argonne last updated its database in January 2022.

But that’s still less than 0.2 percent of total U.S. fossil gas production last year.

Most RNG projects have traditionally involved landfills, which tend to yield the most amount of fuel for the lowest cost. At these sites, a labyrinth of equipment collects the gases from decomposing organic materials and pipes them to a central point for processing.

In recent years, however, companies have begun investing heavily in agricultural projects. Dairy farms in particular are a major source of methane, owing to their open-air manure lagoons (not to mention all the gases released from cows when they burp). Now, more farms are collecting and harnessing methane by adding flexible covers and pipes to their lagoons, or by storing the manure in enclosed anaerobic-digester tanks.

In California, RNG from dairy methane can be considered ​“carbon-negative” under the state’s Low-Carbon Fuel Standard, which provides incentives for alternative fuel producers. Because the state doesn’t regulate the dairy industry’s methane emissions like it does landfills, any facility that keeps dairy methane out of the atmosphere is considered to be removing emissions. While environmentalists have criticized this approach as wishful accounting, the scheme has unleashed a ​“brown gold rush” from energy giants including Shell, BP and Chevron.

A separate California policy is spurring RNG production from food scraps. The law, which took effect last year, requires municipalities to separate organic waste from garbage so that the state’s banana peels and chicken bones can be turned into compost or RNG, not trash. Nationwide, only about 1.5 percent of surplus food is sent to anaerobic digesters, in part because of the cost and complexity involved with collecting scraps from homes and businesses.

Does RNG fit into a cleaner future?

Despite its limitations, some experts think RNG could still play a narrow role in the country’s clean energy future.

About three-fourths of the current RNG supply is currently used in transportation, including heavy-duty trucks. In coming decades, however, transportation’s share is set to shrink as utilities inject more of the fuel into pipelines for heating buildings and powering gas appliances. Saadat of Earthjustice said a more ideal use for the fuel might include high-heat industrial applications, which are harder to electrify than homes or trucks, and for which few clean-energy solutions are available today.

“It would certainly be better, though not perfect, if you focused this scant RNG resource to displace the fossil methane we use in cement production or glassmaking, rather than road transportation,” he said.

The commercial and industrial sector represents less than 1 percent of the country’s existing RNG customer base, though it’s projected to make up nearly 10 percent of the demand growth in 2040, according to a report from the Renewable Thermal Collaborative. Yet even if all the RNG supply went only to making steel, chemicals or other applications, it still wouldn’t be enough to power all of today’s most energy-intensive processes.

“If we decided we wanted to RNG our way to complete decarbonization, we really can’t, because there just isn’t enough feedstock,” Collison said. ​“And that’s fine. RNG is going to be part of the basket of solutions.”

Other organizations are eyeing RNG as an interim solution as they work to electrify the most complicated parts of their building operations.

For the University of California (UC) system, which maintains some 6,000 buildings across 10 campuses, that primarily means dealing with its combined heat and power plants. In the last decade, UC has worked to reduce its emissions through energy-efficiency improvements and adopting renewable energy. As a result, nearly 80 percent of its remaining emissions come from burning fossil gas at on-site energy generators.

The gas plants provide power, hot water and steam at hospitals, research facilities and other buildings and are ​“an important resilience tool to protect patient lives and billions of dollars of research in the face of increasingly frequent power outages caused by wildfires and grid stress,” said Sam Schabacker, UC’s renewable energy manager.

Replacing the combined heat and power plants and their associated pipes, loops and ducts is a ​“multibillion-dollar challenge that the UC system will be tackling in the next phase of its decarbonization journey,” he added in an email.

In the meantime, UC aims to displace 40 percent of its annual gas consumption with RNG by 2030. The university system has invested $21 million to build a facility in Shreveport, Louisiana that makes fuel from a city-owned landfill. UC also secured long-term agreements to purchase RNG from an anaerobic digester that converts agricultural waste in Wisconsin. Although neither project will directly supply California campuses, the university can count the RNG production as its own, in the same way entities can claim ​“renewable energy credits” for wind and solar produced elsewhere.

Notably, Schabacker said, UC is only procuring RNG that was previously vented or flared, putting otherwise ​“fugitive methane” to beneficial use.

His statement reflects another tension that underlies the larger debate around so-called renewable gases. One major concern is that, generally speaking, companies might choose not to reduce methane pollution using other means — such as further curbing food waste, reducing household garbage or improving dairy operations — because it would cut into their revenue stream.

“There’s a lot of risk involved in creating markets to drive that kind of methane capture,” Saadat said. ​“Because when you commoditize pollution, you could actually end up perversely incentivizing it.”