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Renewable Natural Gas 101: Your Essential Carbon Capture Guide

Renewable Natural Gas 101: Your Essential Carbon Capture Guide

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June 24, 2024

In the quest for sustainable energy solutions, Renewable Natural Gas (RNG) has emerged as a versatile and environmentally friendly option that also serves as a critical carbon capture tool. RNG is nearly identical to fossil natural gas but is produced from organic waste. It can be used interchangeably with fossil natural gas, seamlessly integrating into heating, electricity generation and vehicle-fueling systems without any modifications or the purchase of new equipment.

By capturing the methane produced by organic waste and repurposing it as a renewable energy source, RNG helps mitigate greenhouse gas emissions while contributing to a clean energy future.

What is Renewable Natural Gas?

While RNG is virtually indistinguishable from natural gas produced from fossil fuels, it can be produced into perpetuity. RNG production utilizes one of two different processes: anaerobic digestion or gasification. 

The anaerobic digestion method uses organic waste as its feedstock — from agricultural waste (such as manure or crop residues) and food waste to sewer sludge and other municipal solid waste. After breaking down this matter into a smaller size and removing contaminants, producers introduce the feedstock to a digester tank, where anaerobic digestion takes place. In this oxygen-free environment, bacteria and enzymes break down the waste in several stages until it becomes biogas, a mix of methane and carbon dioxide.

To transform biogas into RNG, impurities like hydrogen sulfide and water vapor must be removed. Biogas typically consists of 50 percent to 70 percent methane and 30 percent to 50 percent carbon dioxide. To make it indistinguishable from fossil fuel-based natural gas, producers must then increase the methane content to more than 90 percent by removing the carbon dioxide, which can be done through a variety of different technical processes. Once upgraded to RNG, it can be compressed for storage, injected into existing natural gas infrastructure or used directly as vehicle fuel.

Gasification is another method for producing RNG. Unlike anaerobic digestion, gasification can use dry biomass, like forestry residue, as feedstock. It also has the potential to yield more energy per unit of feedstock than anaerobic digestion and produces fewer, more manageable byproducts that can be used as soil amendments. In contrast, byproducts from anaerobic digestion require disposal or further processing.

Similar to the anaerobic digestion process, producers often begin production by breaking down feedstock into smaller sizes and removing any contaminants before transferring the feedstock into a special chamber called a gasifier. Then, producers bring the dry biomass to temperatures between 300°C to 500°C in a low-oxygen environment. This process produces volatile gasses, tar and char. Then, at temperatures between 800-1000°C, a small, controlled amount of oxygen is introduced to partially oxidize the volatile gasses and char. This produces syngas and ash. The syngas, made up of primarily hydrogen and carbon monoxide, is then purified. A catalytic process converts the purified syngas to methane. The resulting mixture, mostly methane and water vapor, is cooled and the water is removed. Further purification is sometimes needed to remove any remaining impurities, and at this point, is classified as RNG, which can be compressed for storage, injected into the natural gas grid or used as vehicle fuel.

No matter the production method, however, RNG is versatile, scalable, and sustainable. Unlike fossil fuels, RNG can be continually produced as long as there are organic waste inputs.

RNG Emissions Reductions and Co-Benefits

While the exact percentage of RNG’s emissions reduction capabilities depends on the type of organic waste used in its production, its decarbonization potential is significant. Organic waste in landfills and agricultural settings naturally produces methane, a potent greenhouse gas with a global warming potential much higher than that of CO2. By capturing this methane and converting it into RNG, we prevent it from escaping into the atmosphere, where it would contribute significantly to global warming.

When RNG is combusted for energy, it releases CO2. However, this CO2 is considered biogenic, or part of the natural carbon cycle, and therefore does not add new carbon into the atmosphere. This makes RNG a carbon-neutral energy source, as opposed to fossil fuels, which release carbon that has been stored underground for millions of years.

Because RNG can be injected directly into existing natural gas infrastructure and used for the same applications, RNG allows for a direct reduction in fossil fuel consumption and associated carbon emissions. 

Beyond its primary role in carbon capture, RNG offers a host of co-benefits that enhance its appeal as a sustainable energy solution, not only aiding municipalities in organic waste management and waste disposal, but also diversifying energy supplies and contributing to energy security. RNG production can play a role in supporting the development of a circular economy by transforming waste into a valuable energy resource. Utilizing RNG as a vehicle fuel can significantly reduce air pollutants compared to conventional gasoline and diesel, contributing to better public health outcomes. 

RNG also has agricultural benefits. RNG byproducts can be used as a fertilizer, reducing reliance on synthetic fertilizers. Additionally, RNG provides farmers with an additional income stream through the sale of organic waste to RNG producers.  

Financing RNG Projects

The development of the RNG industry depends on overcoming several key financial barriers. First, RNG production is expensive, from establishing production facilities to covering ongoing operational costs. Consequently, RNG is currently more expensive than fossil fuel-based natural gas. However, regulatory support can help bridge this gap.

Private debt can play a crucial role in financing RNG projects. These projects typically require substantial upfront capital investment for infrastructure, including anaerobic digesters, gas upgrading facilities and pipelines. Private debt provides the necessary capital to develop these projects, especially when public incentives or grants are insufficient. By providing immediate funds, private debt can accelerate the deployment of RNG projects, enabling developers to proceed with construction and operation without waiting for long-term equity financing or government subsidies.

Private debt can also allow the financial risk of RNG projects to be distributed among various lenders. This risk distribution can make it easier to secure the necessary capital, as no single entity bears the entire risk. Additionally, private debt can offer flexible financing structures tailored to the specific needs of RNG projects, such as longer repayment terms or interest-only periods during the initial phases when revenues might be lower. In cases where RNG projects face a funding gap between the initial capital required and eventual revenue generation, private debt can help bridge this gap, ensuring that projects proceed without delays.

For larger RNG projects that require significant investment, private debt can provide the necessary capital to scale up production facilities, expand feedstock collection networks and enhance distribution infrastructure. Moreover, private debt can complement public funding and grants, facilitating public-private partnerships that combine the strengths of both sectors to develop RNG projects.

Generating RNG Carbon Credits

In addition to private debt, one of the ways that RNG project developers can finance production is through the sale of carbon credits through the voluntary carbon markets (VCM). RNG projects generate carbon credits by capturing and repurposing methane that would otherwise contribute to global warming. Revenue from carbon credits can make RNG projects more financially viable, encouraging further investment and development in this sector.

High-quality RNG projects that demonstrate clear, verifiable emission reductions can command higher prices for their carbon credits. This additional income — especially when contracted — can improve the financial viability of RNG projects, making them more attractive to investors. RNG facilities can use the revenue from carbon credits to finance upgrades, increase production capacity, or invest in new technology to enhance efficiency and reduce costs.

Participation in the VCM requires rigorous monitoring, reporting and verification (MRV) of emission reductions, incentivizing RNG projects to adopt best practices and technologies that maximize emission reductions and ensure high-quality credits.

As companies, institutions and individuals strive to offset their carbon emissions, the demand for high-quality carbon credits from RNG projects is expected to rise, which in turn can provide producers with a financial incentive for further development.

Scaling RNG for the Future

As concerns about climate change intensify, the demand for low-carbon and renewable energy sources is increasing, positioning RNG as a crucial player in the energy mix. RNG production supports global decarbonization efforts and the transition towards a sustainable energy economy. 

Technological advancements are accelerating, as innovations in anaerobic digestion and gasification technologies enhance the efficiency and cost-effectiveness of RNG production. As these technologies continue to improve, the scalability of RNG projects is expected to grow.

In the meantime, policy developments are also helping to grow the market for RNG too as governments and regulatory bodies worldwide implement policies and incentives designed to promote the use of RNG, including carbon pricing mechanisms and tax credits. Such supportive policies can continue to drive the growth of the RNG industry by making it more economically viable and competitive with fossil fuels.

RNG has the potential to decarbonize various sectors beyond energy, rippling out to include transportation, heating, and industrial and manufacturing processes. The ability to inject RNG into existing natural gas pipelines and infrastructure makes it an immediately-implementable, versatile solution for reducing greenhouse gas emissions across multiple applications.

With supportive policies, technological advancements, financial incentives from carbon markets, and the growing need for sustainable energy solutions, RNG is set to play a vital role in achieving a low-carbon future.

Interested in learning more about carbon removal? Check out our Essential Carbon Capture Guides, including Biochar 101, Enhanced Rock Weathering and Direct Air Capture 101.

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