WIN WITH RINS:
Overview of the RFS2 Regulation and
New Opportunities for Biogas Producers
April 21, 2015
Luca Nencetti, Associate
First Environment, Inc.
About First Environment
• HQ in NJ with regional offices across U.S.
– Third-party verification services
– Climate change technical assistance
– Regulatory support
– Site investigation and remediation
– Environmental due diligence
• Voted Environmental Finance’s Best Verifier for
North American Markets 2008 through 2012
• 75+ landfill projects involving GHGs or RFS2
International Biomass Conference – Minneapolis, MN
April 2015
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Presentation Roadmap
• Introduction to RFS2 and RINs
• Economic opportunities for
biogas producers
• Achieving registration
• Guide to the engineering review
• Quality Assurance Program for
RINs verification
International Biomass Conference – Minneapolis, MN
April 2015
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INTRODUCTION TO RFS2 & RINS
EPA’s Renewable Fuel Standard
• Mandates minimum volume of biofuels
in U.S. transportation fuel supply each
year
– Target: 36 billion gallons by 2022
• Establishes standards for fuel
suppliers and RIN tracking system
– Suppliers have annual renewable
volume obligations (RVOs)
– One RIN = one gallon of ethanol
International Biomass Conference – Minneapolis, MN
April 2015
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Renewable Identification Numbers
• RINs are:
– Only generated from qualifying
feedstocks, fuel pathways (D code)
– Reported to EPA by producer or importer
– Can be sold or transferred to be used for
RVOs (with fuel or separated)
International Biomass Conference – Minneapolis, MN
April 2015
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ECONOMIC OPPORTUNITIES FOR
BIOGAS PRODUCERS
Renewable Natural Gas Pathways
Production
Process
D-Code
Q
Biogas from:
• landfills
• municipal wastewater treatment
Renewable CNG
facility digesters
Renewable LNG
• agricultural digesters
Renewable
• separated MSW digesters
Electricity
• cellulosic components of
biomass processed in other
waste digesters
Any
3
T
Renewable CNG
Renewable LNG
Biogas from waste digesters
Renewable
Electricity
Any
5
Pathway Fuel type
Feedstock
Title 40 CFR Part 80.1426 Table 1
International Biomass Conference – Minneapolis, MN
April 2015
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Biogas Project Characteristics
• Biogas produced from:
–
–
–
Landfills
Wastewater treatment plants
Anaerobic digesters
• Transportation End User:
– CNG/LNG (High Btu RNG)
– Electricity used for on-road transportation (Medium or
High Btu Biogas)
• Biogas production and end user can be different
entities in different geographic locations
International Biomass Conference – Minneapolis, MN
April 2015
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Requirements for Biogas –
CNG/LNG/Electricity Pathways
• Biogas is the feedstock
• CNG/LNG/electricity is the renewable fuel
• Producer (RINs generator) can be any
party in project chain
–
–
–
–
Biogas producer
Biogas treatment plant
Gas marketer
CNG/LNG/electricity processor or distributor
International Biomass Conference – Minneapolis, MN
April 2015
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Value of D3 and D5 RINs
• 77,000 Btu of CNG/LNG = 1 EGE
– 11.73 RINs/MMBtu CNG/LNG
– 5.86 RINs/Mscf LFG
• 22.6 kWh of Renewable Electricity = 1 EGE
– 4.90 RINs/MMBtu LFG
• 2,000 Mscf/day LFG ~ 1,000 MMbtu/day
– 4.2 Million RINs/year
EGE = ethanol gallon equivalent
LFG ~ 500 Btu/scf
International Biomass Conference – Minneapolis, MN
April 2015
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Value of D3 and D5 RINs
D5: $0.80/RIN
D3: $0.80 - $1.40/RIN
Natural Gas price
~$9.00/MMBtu
~$9.00 - $15.75/MMBtu
~ $2.50 – $3.50/MMBtu
D5 RIN Price Trend 2013 - 2015
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$-
International Biomass Conference – Minneapolis, MN
April 2015
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ACHIEVING REGISTRATION
Registration Process
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Registration Process
Estimated Time Frame for
Completion
Stage
RFS2 application
Engineering review
EPA review and
approval
• 8-12 weeks, depending on
data availability and project
complexity
• 4-6 weeks, depending on data
availability and number of
facilities/site visits
• No less than 8 weeks from
submission, dependent on EPA
load and project complexity
International Biomass Conference – Minneapolis, MN
April 2015
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Requirements for Registration
•
•
•
•
•
List of feedstocks, fuels produced
Description of production process
Types of co-products produced
Process heat fuel supply plan
Baseline volume calculations and supporting
records
• Records of contractual pathway: source to end user
• Evidence of physical pathway: source to end user
• Third party engineering review report
International Biomass Conference – Minneapolis, MN
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Contractual Pathway CNG/LNG/Electricity
Landfill
(Biogas
Source)
Fleet
Manager
(End User)
Commercial
Pipeline
Treatment
Plant
LNG/CNG
Production
Facility
• Track biogas through end user; affidavits if contracts
unavailable
• Demonstrate fuel used for transportation purpose only, no
other party relied on volume for RIN generation
• Provided at time of registration, plus ongoing recordkeeping
International Biomass Conference – Minneapolis, MN
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Physical Pathway –
Commercial Distribution
• Evidence gas is injected into commercial
pipeline (e.g., sales invoices, nomination
records, etc.)
• Description of modalities of transportation
of fuel from production to conversion
facilities (e.g., physical pipeline pathway)
– Transportation route, network, pipeline maps
– Nomination records or sales invoices
– Contracts
International Biomass Conference – Minneapolis, MN
April 2015
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GUIDE TO THE ENGINEERING REVIEW
Overview of the Engineering Review
• Verifies accuracy of
registration data
• Performed by licensed
Professional Engineer
• Independent from fuel
producer
• Requires site visit and
records review
International Biomass Conference – Minneapolis, MN
April 2015
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Site Visit Requirements
Landfill
(Biogas
Source)
Fleet
Manager
(End User)
Commercial
Pipeline
Treatment
Plant
LNG/CNG
Production
Facility
• Site visits required up to
pipeline injection
• Document review to
confirm site visit
observations, confirm
RFS2 requirements met
• Requirements
evaluated through
documents review,
additional site visits
optional
International Biomass Conference – Minneapolis, MN
April 2015
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Common Pitfalls in Registration
Process
• Contract arrangements not
complete
• Fuel use not clearly designated
• Inadequate documentation of
physical pathway
• Limited production data available
International Biomass Conference – Minneapolis, MN
April 2015
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QUALITY ASSURANCE PROGRAM
FOR RINS VERIFICATION
Incentives for Verification
• Note: RIN verification is
voluntary
• Addresses concern of invalid
RINs
• Standardized audit process
• Increases value of RINs
• Promotes greater liquidity in
transfer/use of RINs
International Biomass Conference – Minneapolis, MN
April 2015
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QAP-Q Requirements
• Performed by independent, EPAapproved third party verifier
• Periodic monitoring of fuel
production
• Periodic on-site audits
– Audit requirements can be reduced if
continuous monitoring is implemented
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Summary
Despite past market volatility, value of
biogas RINs appears to be well-supported
EPA has improved and streamlined
registration process for biogas projects
QAP-Q verifications allow for increased
market transparency and RIN value
International Biomass Conference – Minneapolis, MN
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For More Information
Contact us:
Luca Nencetti, Associate
First Environment, Inc.
79 Madison Avenue, 2nd Floor
New York, NY 10016
646.873.6781 x301
[email protected]
International Biomass Conference – Minneapolis, MN
April 2015
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