Renewable Natural Gas Projects Forge Ahead Amid Economic Challenges

Gus Simmons, Director of Bioenergy for Cavanaugh & AssociatesGus Simmons, Director of Bioenergy for Cavanaugh & Associates /Submitted Image

PENN VALLEY, PA — The Renewable Natural Gas (RNG) industry is adjusting to new economic realities as it continues its rapid growth. Despite inflation and questions about tax credit eligibility, the sector remains optimistic about its progress and future prospects.

“There’s a lot of work being done to get projects already started to completion,” says Simmons, Director of Bioenergy at Cavanaugh & Associates, a North Carolina-based consulting/development firm with an expanding portfolio of biogas-centered projects. “The pace of shovels going into the ground for new projects has slowed a bit compared to previous years due to inflation and tax credit issues, but there are still many projects under construction and under development.”

A typical RNG project ranges in price from $10 million to $150 million. This substantial investment underscores the industry’s commitment to advancing renewable energy and reducing carbon emissions.

Simmons is among several biogas experts slated to present at the Appalachian RNG Conference III – Spring 2024. The one-day program, scheduled for April 18 at the Hilton Garden Inn Southpointe, south of Pittsburgh, will offer industry leaders an opportunity to share insights into navigating the burgeoning RNG landscape.

While federal and state pro-RNG regulations and laws have positively impacted projects, Simmons identifies the transportation sector as the primary driver of biogas production. “The demand for low-carbon fuels continues to grow, and RNG is recognized as having the greatest impact in offsetting carbon emissions from the use of conventional fossil fuels,” Simmons said.

Indeed, Simmons has observed an increase in the number of passenger buses running on Compressed Natural Gas (CNG) instead of diesel. Commercial freight-hauling trucks are following suit. “Converting a fleet to using compressed natural gas may be an easier and better option than other low-carbon fuels,” Simmons noted.

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Despite the industry’s momentum, challenges persist. Biogas projects rely on investment tax credits to offset the rise in costs due to inflation and supply-chain constraints. However, questions remain about the applicability of these tax credits to the portions of biogas projects that upgrade biogas to RNG for offsite sales.

Simmons and other industry leaders are working to garner more support for these projects, focusing their efforts on clarifying tax credit eligibility and advocating for the benefits of RNG.

Despite these hurdles, Simmons remains optimistic about the future of the biogas industry. “I believe the biogas industry will remain strong well into the foreseeable future,” he said. “Biogas and RNG provide a faster path to decarbonization of the transportation sector, and will play an increasingly important role in our efforts to reduce carbon emissions.”

As the RNG industry continues to evolve, it appears poised to overcome its challenges and continue its growth. The sector’s commitment to reducing carbon emissions and advancing renewable energy, coupled with the growing demand for low-carbon fuels from the transportation sector, suggests a promising future for RNG projects. Industry watchers will undoubtedly keep a keen eye on developments in this space as it navigates an increasingly complex economic landscape.

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