Policy and Progress in the Biogas Industry

Policy and Progress in the Biogas Industry
Interviews with some of the Key Speakers at Biogas USA West 2012

At Green Power Conferences, we recently caught up with a number of leaders in the biogas industry who shared some of their experiences and perspectives on the market. They will be amongst the leaders in the industry that will be convening in San Francisco this October for the 4th Annual Biogas USA West conference (10 – 11 October 2012). Amongst the issues that will be addressed at these 2 days of intense discussions are the innovations in the biogas market and policy issues, on which I spoke to a number of the speakers ahead of the conference.

New Developments

Perhaps the key competitive advantage of the biogas sector is its wide diversity of potential feedstocks and variety of end-use markets, including on and off-grid electricity generation, biomethane pipeline injection and industrial direct-use. The ability to innovate and adapt has seen the industry serve a number of niche roles for concurrently solving waste issues, renewable and localized power/fuel supply and more.

“From the solid waste perspective, the industry is poised to move further away from “waste” and more to the “resource” side of things,” says William Merry, General Manager and District Engineer at Monterey Regional Waste Management District. “Many entities have evaluated their position and set plans to increase diversion and to improve recovery of energy from waste, and by doing so, end up landfilling less.” Private and public waste managers across the nation are increasingly sharing this view, the most striking example being the state of Massachusetts’ plans to ban all organic diversion to landfills by 2014.

For the biogas industry, this is indeed is an exciting progression. The high energy content of MSW makes anaerobic digestion projects far more cost effective than with other feedstocks, however the main sticking point so far has been availability of waste in the absence of schemes facilitating the necessary separation, collection and transport of organic waste at the municipal level.

Another interesting innovation is being seriously considered at Microsoft. In a contrast with the conventional utility power purchase model, the company Sean James, a senior project manager, sees “a great opportunity to design future data centers that are optimized for biogas use, organizing a program that consumes biogas onsite and only exports data.” The synergy between a global computing giant and a small-scale industry with roots in the rural community may not seem like a match made in heaven, but as James explains There are unique applications data centers can bring to biogas projects, including the ability to consume gas at the source and the supply/demand symmetry associated with biogas sources and web user density.”

Microsoft are one of a number of power-hungry corporations that are looking very seriously at cleaning up their power supply, and biogas offers an attractive, reliable off-grid energy solution.

The Future of Transportation?

Of the possible end markets, the prospects for using biogas upgraded to Renewable Natural Gas (RNG) as a transport fuel (either as CNG/LNG) is causing the most stir. Waste Management have been one of the pioneers in developing RNG projects for their vehicle fleets. Chuck White, Director of Regulatory Affairs outlined: “Biomethane produced by Waste Management and Linde at the Altamont landfill in the San Francisco Bay area  from landfill gas is the largest commercial source of very low carbon intensity fuel – with a >90% reduction in carbon intensity below that of conventional fossil fuels.”

Clean Energy Renewable Fuels (CERF) are one of the strongest proponents of this market, and are taking big steps to improve the viability of wider spread integration of RNG into the vehicle market. CERF president Harrison Clay explained some of the company’s ambitious projects: “We are building a chain of LNG fuel stations at Pilot/Flying J TravelCenters across America to fuel a coming wave of 18-wheelers that can run on RNG. The growing infrastructure for delivery of LNG and CNG vehicle fuel to America’s fleets represents a new, robust and profitable distribution channel for RNG.”

As the awareness and market for natural gas vehicles grows, more fleets transition their engines and the fuelling infrastructure continues to expand, a whole new market is opening for biogas producers.

Policy, Policy and Policy

But for all the entrepreneurial vision and wide ranging benefits, a fiercely competitive renewable energy sector and the low cost of natural gas is putting the biogas industry at risk of being an afterthought. Policy is a constant discussion for biogas professionals, and one subject on most people’s minds is the Californian regulatory situation.

Marco Lemes of the Sacramento Municipal Utility District stated “The recent moratorium on biomethane injection into pipelines as an eligible CA RPS resource puts a hindrance in project development outside and inside state.” Biomethane is the only viable renewable alternative for the natural gas network, but as White added, “The biggest challenge facing biogas is the historic low prices of conventional fossil-derived natural gas.  It is extremely difficult to develop a biomethane project that can produce fuel at a competitive price.” For utilities such as SMUD, without a strong incentive to purchase biomethane over a far cheaper alternative, there is usually only going to be one outcome.

“I hope that, eventually, the regulatory imbroglio in Sacramento will be resolved and that biomethane produced from facilities located inside the California State lines will be able to be used as a fuel for RPS power generation, providing a good long term, fixed price market for producers,” remarked Clay. The discussions in California will undoubtedly continue, and those in the biogas field across the nation hope there will finally be a beneficial resolution that recognizes the value of this industry to meeting renewable energy and environmental objectives. Often where California leads, the rest follow, and by taking a visible lead in the biomethane regulatory arena, the example could well be replicated elsewhere.

Outside the RPS, there are other policy mechanisms, such as the federal Renewable Fuel Standard Phase II (RFS2) and California’s Low Carbon Fuel Standards (LCFS), that can help to incentivize biomethane adoption. “The RFS2 and LCFS can help bridge the gap,” says White, “But the predictability and future of these programs are uncertain.  Few financiers will allow a project developer to rely on revenues from the RFS2 and LCFS to make these projects pencil out.” And ‘uncertainty’ is certainly a critical word when it comes to biogas policy. “Stability will lead to greater depth and liquidity in the market for RIN credits (generated by RFS2) and LCFS credits”, remarked Clean Energy’s Clay. “The yearlong controversy over California’s RPS program is an unfortunate example of the kind of regulatory uncertainty that works against the ability of the private sector to build, finance and deploy renewable energy assets.”

So, What Next?

How far this industry advances may well be reliant on the confluence of a full range of political support measures that help to incentivize the full range of biogas markets and production methods. Regardless, the industry is continually finding new and more profitable ways to turn waste into a renewable fuel, led by the pro-active leaders like Clean Energy, Waste Management, and soon to be Microsoft. Innovation will get you so far, now let’s hope the policy makers will help them to do the rest.

You can read the full interviews of Clay, Merry, James, Lemes and White at www.greenpowerconferences.com/biogaswest.

Then meet them all and continue the discussions by registering your place at the Biogas USA West conference today: 10 -11 October 2012, San Francisco.


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For Green Power Conferences in London, I am working as a Research Analyst. My role focuses on the research and production of senior level business meetings for renewable energy industries across the globe.I have a particular interest in the progression of emerging renewable energy markets, and identifying the critical challenges and opportunities companies in the sector are facing.Currently I am concentrating on the biogas industries in the US and Poland, the geothermal sector in South East Asia and on optimizing wind power performance in the US.

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