Project Specifics

An investment firm performed due diligence on an opportunity to invest in a developer of renewable natural gas (RNG) facilities. The developer designs and installs facilities that digest animal waste and upgrade the resulting biogas to RNG. Significant value in operating such RNG facilities can be derived from low-carbon and renewable fuel standards, which provide financial incentives for producing RNG. As part of a comprehensive environmental, social, and governance (ESG) due diligence, the investment firm wanted to understand the risks and opportunities associated with various fuel standards and programs, including the California Low Carbon Fuel Standard (LCFS), the US renewable fuel standard (RFS) program (implemented by USEPA), the Oregon Clean Fuels Program, the Washington Clean Fuel Standard, and the Canadian Clean Fuel Standard.

To date, many existing low-carbon and renewable fuel standards have awarded credits for avoided methane emissions associated with animal-waste-derived biogas projects. However, avoided methane emissions accounting is now being phased out in many of these frameworks. This change will affect the carbon intensity and associated credits achievable for animal-waste-derived biofuels projects; the change also has implications for biofuels producers and investors.

Geosyntec Scope of Services

Geosyntec examined the calculation frameworks for each of the low-carbon and renewable fuel standards and calculated associated well-to-wheel carbon intensities for compressed natural gas derived from animal waste. Data from one of the developer’s existing facilities were used as inputs to the carbon intensity calculations. Geosyntec also benchmarked the carbon intensity results against a carbon intensity calculated using a modified version of Argonne National Laboratory’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model. A sensitivity analysis was conducted to quantify the effects of hypothetical changes to how certain fuel standards account for avoided methane emissions.

Notable Accomplishments

The analysis examined how particular changes to low-carbon and renewable fuel standards could affect the carbon intensity and associated credits achievable for animal waste-derived biofuels projects which, in turn, helped the investment firm to evaluate future regulatory risk.

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