In 2022, the price of natural gas increased by 17%, due in part to higher prices in Europe which increased liquefied natural gas exports from the United States. As energy companies enjoy higher revenues, they are also looking to increase supplies, diversify their portfolios and cut greenhouse gas emissions, leading many to invest in one oft-overlooked source of power: renewable natural gas.  

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Renewable natural gas (RNG) is biogas produced from a variety of sources including animal waste, landfills, and organic waste operations. In commercial applications, RNG can be used to heat homes or power vehicles such as city buses or heavy duty trucks. Importantly, RNG is a net-negative source of energy, displacing more emissions than it creates. As Tom Cyrs and John Feldmann of the World Resources Institute explain:

To calculate the greenhouse gas emissions impacts of renewable natural gas, experts typically use a lifecycle approach to quantify all sources of emissions from a given project — including energy used to convert organic waste to biomethane, and any methane leaks along the supply chain — as well as all avoided emissions resulting from the project.

In many cases, renewable natural gas avoids more emissions than it generates, leading to a net-negative carbon intensity (in terms of carbon dioxide emissions avoided per quantity of fuel consumed).

In the biggest renewable natural gas deal of the year, BP bought Texas-based RNG producer Archaea Energy for $4.1 billion. Archaea retrofits landfills with a series of pipes and compressors to capture naturally emitting methane and deliver it to power grids. The largest project is Project Assai in northeastern Pennsylvania which is able to harness and supply enough methane to power more than 65,000 homes per day. 

According to Ryan Dezember’s reporting for The Wall Street Journal, it costs Archaea $160 million to build a plant the size of Assai but the company expects to earn its investments back within 3 years of operations. Archaea, which is already operating at 50 landfills across the country, has deals to build 80 more plants in the United States. 

In November, Shell spent $2 billion to purchase Denmark-based Nature Energy Biogas A/S. While Nature Energy creates green natural gas with food waste, it primarily works with animal waste from farms. The company separates biomass (manure) into liquid gas and fertilizer using tanks called digesters. Once they separate the liquid gas, Nature Energy filters out CO2 and hydrogen sulfide and sends it to the power grid where it can cleanly power homes and businesses. The company then returns the manure to farms where it is used to fertilize fields. 

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Nature Energy predominantly operates in Denmark, but they have announced plans to open more than two dozen facilities in the United States and Europe in the coming years. 

In late February of 2022, Chevron purchased Renewable Energy Group Inc. for $3.15 billion. The Iowa-based company, which owns 11 refineries, produces RNG with waste products like tallow or cooking oil. Chevron has stated that it intends to spend $10 billion through 2028 on low-carbon fuels such as RNG, hydrogen, and carbon capture. 

Renewable natural gas offers businesses, and governments an opportunity to reduce emissions while providing reliable power to consumers. Thanks to private sector investments and innovation, carbon-free natural gas is quickly becoming an affordable reality. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.