environmental markets and biogas: valuing climate benefits
TRANSCRIPT
Environmental Markets and Biogas: Valuing Climate Benefits
Peter Weisberg
November 12, 2014
AgStar Webinar
Renewable
electricity
21%
Avoided methane
emissions79%
Climate Benefits 2,000 cow, 750 kw Diary Digester
Environmental Markets and Biogas
1. Carbon Markets
2. Low Carbon Fuel Standard Credits
3. Renewable Identification Numbers (RINs)
Environmental Markets for Biogas
Market Credit Biogas Use GeographicLimitation
California Cap-and-Trade
Offset Any Anywhere in the US
CaliforniaLow Carbon Fuel Standard
LCFS Credit Transportation fuel
Fuel consumed in California
US RenewableFuel Standard
RIN (Renewable Identification Number)
Transportation fuel
Anywhere in the US
California Carbon Market Key Insights
• Buyers = Large emitters in California
• Offset 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
$13
California Carbon Offset ($/mtCO2e)
$/mtCO2e $/cow $/DGE*
Current $8.60 $30.10 $0.21
*Assumes each cow produces 51,072 BTUs/day
Low Carbon Fuel Standard Key Insights
• Biogas must be consumed as transportation fuel in California
– Out of state: “Physical Pathway”
• Buyer = Transportation fuel refiners and importers in California
• Sunset: 2020
– (2020 target applies until legislation is modified)
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Carb
on
In
ten
sit
y (
gC
O2e/M
J)
California’s Low Carbon Fuel Standard
Carbon Intensity of Compressed Biomethane from Dairy Farms - 13.45 gCO2e/MJ
Carbon Intensity of Crude Oil - 99.18 gCO2e/MJ
LCFS Carbon Intensity Targets
Credits
Deficits
LCFS credits generated and owned by entity injecting
biomethane.
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00 California LCFS Price ($/mtCO2e)
$/mtCO2e $/DGE
Current $25.38 $0.29
Average $45.41 $0.52
2013 LCFS Credit Value for Dairy Biogas
Renewable Identification Numbers Key Insights
• Buyer: Transportation fuel refiners and
importers
• Sunset: 2022
Non-Renewable Fuel
Renewable fuel
Advanced Biofuel, 17%
Cellulosic0.04%
Renewable Fuel Requirement
9.76%
2013 US Fuel Consumption(billions of gallons)
2013 US Renewable Fuel Standard 2(billions of gallon)
*Biomass-based diesel intentionally omitted because its volumes are not on an ethanol-equivalent gallon basis.
Renewable Fuel Standard 2
RINs can be generated and
owned by anyone in the
supply chain
Cellulosic Biofuel
• Biogas Cellulosic RIN
– Separated Mixed Solid Waste Digester
– Wastewater Treatment Facility Digesters
– Agricultural Digesters
• Cellulosic RIN Price (“D3 RIN”)
Proxy for D3 RIN Price =
Advanced Biofuel RIN (D5) + Cellulosic Waiver Credit
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60$
/D5
RIN
2011 Vintage 2012 Vintage 2013 Vintage 2014 Vintage
$/D5+CWC $/DGE
Current $0.90 $1.37
Average $0.98 $1.50
Cellulosic RIN Proxy Credit Value
Value Comparison
Average price $/diesel gallon equivalent
Carbon Offset $8.60/mtCO2e of methane reduced
$0.21
Low Carbon Fuel Standard
$45.41/mtCO2e from LCFS intensity target
$0.52
RIN $0.98/D3 RIN proxy (D5 + Cellulosic Waiver)
$1.50
Cannot sell both offset and LCFS credit
Financing
• Revenues are not bankable
– Solution: Price floor
– Solution: Green Credit Reserve
• State policy: Payment for performance > grant making
– Leverage accounting
– Catalyze private capital through government programs based on accounting at this early stage
Increasing Importance of Methane
• LCFS/Offsets = Carbon Dioxide Equivalent
• 1997 Methane Global Warming Potential:
– 21 carbon dioxide equivalent per unit of methane
• 2014 Methane Global Warming Potential:
– 34 carbon dioxide equivalent per unit of methane
Thank you!
Peter Weisberg
Program Manager
The Climate Trust
(503)238-1915 x207