New Environmental Market Revenue Opportunities for Biogas

New Environmental Market Revenue

Opportunities for Biogas Projects

Peter Weisberg

Biocycle Portland OR

April 18, 2012

Renewable Energy Certi!cates

Renewable Identi!cation Number

Nutrient Management Carbon Credits

Methane Avoidance Carbon Credits

Avoided Methane Carbon Credit Projects that digest eligible feedstocks and combust biogas can

earn carbon credits for avoided methane. Eligible feedstocks:

1) Livestock manure, 2)Post-consumer food waste, 3)Agro-Industrial waste previously managed in an anaerobic lagoon.

Avoided Methane Carbon Credit 2,500 cow digester

generates ~3.5 credits per cow per year or 8,750 credits per year

Carbon price Voluntary $4.00

Pre-Compliance$8.50

Compliance $15.00

Average Annual Net Revenue

$25,000 $64,000 $120,000

Net Present Value (10 years, 7%)

$163,000 $440,000 $840,000

% of Capital Cost (~ $2.1 million)

8% 20% 40%

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

Oct 1, 2011 Nov 1, 2011 Dec 2, 2011 Jan 2, 2012 Feb 2, 2012 Mar 4, 2012

Livestock Digester Carbon Credit Prices California Compliance Offset Climate Action Reserve Livestock Credit

Renewable Energy Certi!cates (RECs)

Renewable Energy Certi!cates

Projects that generate electricity can sell RECs.

Barrier: Washington Renewable Portfolio Standard does not allow RECs from projects that also sell

carbon credits.

$ Renewable

Identi!cation Number

$ Nutrient

Management Carbon Credits

Trends Rapid increase in natural gas supply is causing natural gas

and therefore electricity prices to fall.

Biogas = Advanced Biofuel (50% fewer GHGs, no corn)

Renewable Fuel Standard 2

Biogas to Transportation Fuel

Renewable Identi!cation

Number

Projects that clean and compress biogas into transportation fuel can earn Renewable Identi"cation

Numbers.

RIN Ownership

Renewable Identi!cation

Number

Gas Price +

Green Premium?

RINs are owned and sold by the entity that compresses the gas and fuels the vehicles.

Biogas RINs

•  77,000 BTUs = 1 Advanced Biofuel RIN •  Advanced Biofuel RIN prices: – Current: $0.74/RIN (equivalent to $9.61/MMBTU) – Projection:

•  Tillamook County mortality study: $0.50/RIN •  Oregon Waste Water Treatment Plants study: $0.20/RIN •  ~$0.25/RIN (equivalent to $3.25/MMBTU)

Biogas RINs 5,000 cow digester with signi"cant co-digestion à 158,341 MMBTU of biogas fuel/year

RIN Price Worst Case $0.02/RIN

$0.26/MMBTU

Projection $0.25/RIN

$3.25/MMBTU

Current Price $0.74/RIN

$9.61/MMBTU

2014 Net Revenue

$(10,282)

$460,000

$1.47 million

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2014 2019 2024 2029

Mill

ions

Net Cash Flow

(Revenue - Operating Cost – Debt Service)

Retail Gas Price- $0.74/RIN

Retail Gas Price ($16.23/MMBTU)- $0.25/RIN

Commodity Gas Price- $0.74/RIN

Commodity Gas Price- $0.25/RIN

Electricity

Commodity Gas Price ($3.87/MMBTU)- No RIN

Nutrient Management

•  1% of applied nitrogen is released as N2O •  N2O is a potent greenhouse gas – 298 times the global warming potential of CO2

•  Removing nitrogen can earn carbon credits

$ Nutrient

Management Carbon Credits

N to N2O Emissions Factors: Regional non-linear

Domestic linear

Nutrient Management •  Nutrient recovery that includes ammonia stripping

can capture half of the nitrogen in manure before it is applied to "elds – Before recovery: 8 lbs N/1,000 lbs of manure – With recovery: 4 lbs N/1,000 lbs of manure

•  5,000 cow dry lotà 1,280 metric tons of nitrogen not applied to nearby "elds – Simpli"ed Tier 1 Linear Emissions Factor à – 8,800 metric tons carbon dioxide equivalent reduction

Nutrient Management •  5,000 cow dry lot, •  1,280 metric tons of N reduction, •  8,800 mt CO2e carbon credits

Carbon Price Voluntary

$3/credit

Pre-Compliance $8.50/credit

Compliance

$15/credit

Net revenue in 2014

$16,500 $65,000 $120,000

Thank you!

Peter Weisberg Senior Project Analyst [email protected] (503)238-1915 x207