Biogas and Environment

Markets

Peter Weisberg

Biocycle West 2013San Diego, CAApril 10th, 2013

Environmental Markets and Biogas

1. Carbon Markets2. Renewable Identification Numbers

(RINs)3. Low Carbon Fuel Standard Credits

1 2 3 4 5 6 7 8 9 10 $1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000 A

nn

ual N

et

Reven

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Environmental Markets - High Price (IRR = 34.36%)

Environmental Markets - Low Price (IRR = 15.30%)

Baseline - No Environmental Markets (IRR = 7.83%)

Low Carbon Fuel Standard Credits

Renewable Identification Numbers

Carbon Credits

California Carbon Market Key Insights• Buyers = large greenhouse gas

emitters in California• Project Types:

– Livestock manure– (Post-consumer food waste = voluntary,

not yet accepted by California)• Sunset: 2020

Offsets generated and owned by the digester

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

California Carbon Offset Livestock CRT Prices

1 2 3 4 5 6 7 8 9 10 $1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

$2,200,000

$2,400,000

$2,600,000 A

nn

ual N

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Reven

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Carbon - Point Carbon Modeling (IRR = 12.48%)

Baseline - No Environmental Markets (IRR = 7.83%)

Carbon - Price Floor (IRR = 9.50%)

Carbon - ARB Modeling (IRR = 11.23%)

California Carbon Market Uncertainty

• February auction results– 2013 – 100% allowances sold, $13.62

clearing– 2016 – 46% allowances sold, $10.71

floor

Renewable Identification Numbers Key Insights• Buyer: Transportation fuel refiners

and importers• Project types: Biogas from

– Dairies– Waste water treatment plants– Landfills– (EPA currently considering food waste

pathway)• Sunset: 2022

RINs generated and owned by the fueling

station

RIN Prices• 77,000 BTUs = 1 Advanced Biofuel

RIN• Prices (May 2012 – March 2013):$/RIN $/MMBTU

Low $0.29 $3.77Average

$0.52 $6.75

High $1.07 $13.90

Current $0.955 $12.40

1 2 3 4 5 6 7 8 9 10 $1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

$2,200,000

$2,400,000

$2,600,000

Baseline - No Environmental Markets (IRR = 7.83%)

RIN Low (IRR = 10.58%)

RIN Medium (IRR = 14.54%)

RIN High (IRR = 17.54%)

RIN Market Uncertainty

• Fraud – 5-10% of issued RINs found to be

fraudulent• Volatility• Annual adjustment of required RIN

retirement

No long term buyers

Low Carbon Fuel Standard Key Insights

• Buyer = Transportation fuel refiners and importers

• Project types:– Dairy biogas to CNG – High solids digestion food yard waste – Landfill gas to CNG

• Sunset: 2020 – (2020 target applies until legislation is

modified)

Low Carbon Fuel Standard Credits

LCFS credits generated and owned by the

digester.

*Must report data from fueling station

LCFS Credit Prices - 2012

Graph taken from Argus Media. “California’s LCFS: Economics and trade prospects.” Webinar given on Jan. 10th, 2013. Available online at http://info.argusmedia.com/uslib/ArgusWebinar_CaliforniasLCFS_Economicsandtradeprospects.pdf

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Baseline - No Environmental Markets (IRR = 7.83%)

LCFS - Current Price (IRR = 11.30%)

LCFS - Cieling (IRR = 23.66%)

LCFS - CEC Projection (IRR = 17.11%)

Low Carbon Fuel Standard Uncertainty

• Commerce clause violation– US District Court – Unconstitutional– Ninth Circuit – Stay of preliminary

injunction

• Cost of commercializing advanced biofuel unknown price of LCFS credits unknown

1 2 3 4 5 6 7 8 9 10 $1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000 A

nn

ual N

et

Reven

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Environmental Markets - High Price (IRR = 34.36%)

Environmental Markets - Low Price (IRR = 15.30%)

Baseline - No Environmental Markets (IRR = 7.83%)

Low Carbon Fuel Standard Credits

Renewable Identification Numbers

Carbon Credits

Climate Trust

• Carbon market buyer– Existing funds to purchase

• California carbon credits from dairy digesters

• Voluntary carbon credits from food waste digesters

– Project manager • Data and verification management• Commercialization

• Environmental market advisory services

www.americanbiogascouncil.org

Promoting the Use of Biogas

O 167 Members from the U.S., Germany, Italy, Canada and the UK

O All Industry Sectors Represented

Key Industry Goals:

O Promote biogas markets, technologies and infrastructure

O Achieve policy parity

O Promote as a best practice for environmental stewardship and greenhouse gas reduction

Changing the Biogas Industry through:o Legislative and Regulatory Affairs:

o Federal: Biogas Tax Credit; Clean Energy Standard; NAT GAS Act; Farm Bill

o Introduction of Biogas Investment Tax Credit(Rep. Kind and Rep Lewis)

o States: California, Massachusetts, Wisconsin, more

o Sharing Expertise:

o 4 Specialized Working Groups

o Marketing and Education:

o Briefings, presentations, and webinars for customers, policy makers, and the general public

o Member Exposure

o Speaking opportunities in ABC workshops, webinars

o Large Industry Network – 6,000+ member company contacts

o Entire supply chain of production, processing and use

Join Today!

Contact Josh Lieberman at jlieberman@ttcorp.com or 202-640-6595 x 322

Thank you!

Peter WeisbergProgram ManagerThe Climate Trust

pweisberg@climatetrust.org(503)238-1915 x207