BP involved in two other RNG projects
Credits boost carbon negative RNG value
New York — BP is joining Aria Energy in a project to turn methane from California dairy farm waste into renewable natural gas, deepening its involvement in the RNG transportation fuel sector as it seeks to become a net-zero company by 2050 at the latest, according to a March 18 statement.
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Register NowBP will deliver "the RNG to the transportation sector through a 20-year offtake agreement executed by its low carbon trading business," the statement said.
RNG-fueled vehicles create up to 95% lower emissions than those fueled by gasoline or diesel on a lifecycle basis, according to a US Department of Energy study. Its lower carbon intensity makes RNG an attractive fuel for companies with large fleets of vehicles seeking to cut their carbon footprint.
Besides BP and Aria Energy, the project, which was named RNG Moovers, also includes Aligned Digesters, which has knowledge in anaerobic digestion, a process which uses closed-system digesters to break down biodegradable material from dairy farm waste into biogas.
This biogas consists primarily of methane, which can be processed into RNG and used as a transportation fuel.
Under this project, digesters operated by Aligned Digesters will be installed at three dairy farms in California's Central Valley, producing biogas.
Aria Energy will provide expertise on refining and removing contaminants from the biogas created by digesters, and increase its heat content, creating RNG, according to the statement.
RNG, particularly in California, can be profitable through the use of both state and federal credits for producers and sellers of the fuel to offset production costs.
The cost to produce RNG from anaerobic digestion of livestock manure ranges from less than 30 cents/diesel gal equivalent to nearly $4/dge, according to Energy Information Administration data.
No timeline was given for when the RNG Moovers project would come online and no information was provided as to how much RNG would be produced.
Earlier RNG involvement
BP is already involved in RNG, initially partnering in 2018 with Clean Energy Fuels for a project to develop more RNG, and added a second project in December 2020.
Clean Energy Fuels is the largest producer of RNG in the US and has the largest fueling infrastructure in the country for RNG and compressed natural gas (CNG) vehicles.
It sells 50% of all RNG sold in the US and supplies some of the largest heavy-duty fleets in the world including UPS, Republic Services, New York Metropolitan Transportation Authority and LA Metro.
On its March 9 results call, Clean Energy Fuels CEO Andrew Littlefair said, "The BP joint venture already has two projects that are in the process, up and running, not running, but underway."
"The projects themselves don't take long. But by the time you get the pathway charted and certified, I think it's safe to say that it's between a year and 18 months before you could have those contributing," he said.
Clean Energy Fuels, which sold 13 million gallons of RNG in 2013, reported 2020 RNG sales of 153 million gallons, and expects volumes to increase by 10% in 2021 as demand for low carbon intensity fuels grows.
The low-to-negative carbon intensity of RNG makes it attractive to both producers and end-users, and lucrative for producers as credits are layered on top of the sales price.
"Depending upon the source of RNG, carbon intensity of fuel can drop from 95 to 40-45 (landfill) but can also go negative for RNG sourced from dairy farms," said Credit Suisse analyst Manav Gupta.
Gupta noted that another company with California RNG production, Aemetis, talked on a recent call about credits it received associated with producing negative carbon RNG.
Aemetis said out of the $137/MMBtu received for RNG sold, just $2/MMBtu was from the sale of gas, with $30/MMBtu from the federal D3 Renewable Identification Number credit for cellulosic biofuel, and $105/MMBtu from California's Low Carbon Fuel Standard credit.
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BP partners in project to make RNG transportation fuel in California - S&P Global
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