Don't miss out
Every morning, the Energy News Network compiles the top stories about the clean energy transition and delivers them to your inbox for free. Sign up today!
Vermont’s only gas utility wants to offer more RNG to customers in response to demand for decarbonization.
In early 2018, Vermont Gas became the first local gas distribution company in the country to give customers the option to purchase renewable natural gas.
About 60 customers have since signed up for the voluntary program, including large businesses such as Seventh Generation and the Vermont Coffee Company. They pay a premium that averages about 10% for the fuel’s renewable attributes and can choose to ramp up the amount they purchase over time.
Renewable natural gas, or RNG, is produced from the anaerobic digestion of animal manure, food waste, and other organic waste. Once it’s conditioned and upgraded for injection into pipelines, RNG can actually be higher quality — nearly pure methane — than fossil-derived gas. And just like natural gas, it can be burned to produce electricity, heat homes or fuel vehicles.
Thomas Murray, the utility’s vice president for customers and communities, said customer demand for a carbon-free substitute for natural gas currently outstrips supply. Most of the RNG that Vermont Gas offers is currently sourced from landfills in Québec.
“So we’re excited to get more supply from Vermont,” Murray said. He was referring to a new project that broke ground this past summer on a dairy farm in Salisbury, spearheaded by Vanguard Renewables, a venture-backed firm that operates five anaerobic digesters on farms in Massachusetts.
When it’s completed in 2020, the facility will provide nearby Middlebury College with enough RNG to meet half of its heating and cooling demand. To reach the college, Vanguard’s RNG will travel through a feeder pipeline owned by Vermont Gas.
“They’re the most forward-thinking and aggressive of any utility I’ve met with,” said Vanguard CEO John Hanselman, who has other projects in development in upstate New York.
Late last week, Vermont Gas announced a target of eliminating all greenhouse gas emissions by 2050 through a combination of renewable gas and energy efficiency savings.
“We see the need for all gas utilities to be transitioning their system to decarbonize it,” Murray said. “We’re seeing more and more from customers that have sustainability plans, and reducing their carbon footprint is a big piece of it. Customers like Vermont Coffee or Middlebury want to get 100% renewable energy.”
He noted that it’s far easier for those businesses to purchase low-carbon electricity than it is to decarbonize their heating and other energy demands. “They look at their boilers and water heaters and say, ‘How do we green up our natural gas portfolio?’ And RNG is a natural option for them.”
Murray said Vermont Gas is focused on building awareness of the program, growing demand among residential customers, and finding more sources of RNG — both for its voluntary program and to include in its base supply of gas for all customers.
“Step one is getting more large customers on board,” Murray said. “Step two is how to decarbonize the system. I actually believe the best and highest use of RNG is in decarbonizing gas systems for thermal, like heating in Vermont. We need to get to a structure that allows for Vermont Gas and other utilities to buy even larger amounts of RNG to clean up our portfolios.”
Advocates of RNG point out that it offers a double benefit for cutting climate-warming pollution: by destroying methane that would otherwise be emitted to the atmosphere from landfills and manure lagoons, and by displacing fossil fuel use with a renewable fuel.
“We’re excited so many utilities are looking at this, because RNG either from cow manure or food waste has such an incredibly dense impact on greenhouse gas emissions,” Hanselman said.
Read more: Analysis: Why utilities aren’t doing more with renewable natural gas
Most of the existing biogas systems in the U.S. are located at landfills or wastewater treatment plants. Firms like Vanguard are trying to develop a profitable business model for turning largely untapped feedstocks — vast amounts of food waste and animal manure produced every day — into fuel.
Estimates vary of how much fossil natural gas consumption could be replaced by RNG. A 2013 analysis by the National Renewable Energy Laboratory found that methane generated from animal manure, landfills, wastewater facilities and organic waste (e.g. food scraps) could total almost 8 million tonnes of methane per year, displacing 5% of natural gas burned for electricity and 56% of natural gas used for transportation fuel. A report produced by the U.S. Environmental Protection Agency in 2014 estimated that those sources of organic material could support 13,000 biogas systems nationwide. One study by the American Gas Foundation concluded that 10% of natural gas demand could be met with RNG.
In regions where untapped feedstocks are more abundant — such as North Carolina, with its thousands of hog growing operations, and California, with its huge dairy farms — RNG could supply an even larger share.
New England lacks those industrial-scale sources of RNG feedstocks, but it still has plenty of dairy farms. And increasingly — thanks to a spate of recent laws in Vermont, Massachusetts and Connecticut that ban food scraps from landfills — it has organic waste generators looking for new disposal options.
Vermont Gas hopes to see more projects come online that can take that food waste, mix it with other feedstocks such as cow manure, and produce a steady flow of biogas.
“There’s plenty of opportunity with farms in our current footprint, and we have a model now with the Vanguard project,” Murray said. “The question is, how do we replicate it?”
For RNG to scale up as a viable, renewable alternative fuel for heating and transportation in New England, the primary hurdle to overcome is project financing.
There was hope that Vermont’s Act 148 (the “universal recycling law”) would help kickstart more methane digester projects in the state. The law has tripled the amount of material coming to his district’s composting facility, said Bob Spencer, executive director of the Windham County Solid Waste Management District, Vermont’s second largest food waste processing facility.
Similar food waste landfill bans have been enacted in Massachusetts and Connecticut, but there was little enforcement in the first year or two as regulators waited for more processing capacity to be developed, he said. Tighter enforcement of these regulations could help change the economics and improve incentives for waste generators to send their material to methane digesters.
Absent state or federal subsidies, the key to financing digesters is long-term contracts with waste generators. With those signed contracts in hand, he said, “you can walk into a bank and finance that. You don’t need venture capital money.”
Spencer sees California as the most promising biogas frontier in the country. “They can scale to 100,000 tons per year,” he said, thanks to the enormous dairy operations in the central part of the state. “That’s where I see projects as economically more viable. New England is going to be tough. Once the industrial low-hanging fruit is snapped up, the challenge is commercial and residential. I have tried for the last 10 years to get projects going.”
Spencer led a feasibility study, with funding from Vermont’s Clean Energy Development Fund, of building an anaerobic digester to process food waste in his district, which is home to large industrial generators of organic waste, including yogurt and cheese manufacturers, and one of the country’s largest supermarket wholesale distributors of grocery material, with huge warehouses near Brattleboro just off Interstate 91.
“We had the infrastructure, the grid connection, the Act 148 mandate — it looks like we had all the pieces,” he said. He even secured a grant for a high-tech food waste depackaging system. But the waste generators he talked to were reluctant to get locked into long-term contracts. “That’s the No. 1 impediment in North America,” he said, to building more food waste-powered biogas facilities. “The perception is that this material will have more value down the road.” For now it’s still cheaper for them to send waste to composting facilities.
If those incentives can be aligned properly, Hanselman said the potential for RNG production in New England is still significant. Meanwhile, his and other anaerobic digestion facilities in Massachusetts have plenty of capacity to take more organic waste.
“New England landfills are full,” he said. “The waste management industry is going crazy. They can’t find a place to put all the waste. Forty percent of all weight in landfills is organic waste. You can probably recover two-thirds of that. That’s about 25% to 30% of the municipal marketplace solid waste that could go to anaerobic digestion. It’s between 2.5% to 5% right now.”
Despite these obstacles, Hanselman remains optimistic. “We intend to have other digesters in Vermont,” he said. “We’re very hopeful that this is the first project.
“And absolutely, there are going to be more folks doing this in Vermont. The creation of the Vermont Gas eco-gas tariff is a milestone that proves to the investor community that there’s a marketplace up there. Once you prove you can work with utility, there’s a lot of interest.”
Murray said that two other local RNG projects are in the early stages of development. But he also sees a bigger-picture solution to the RNG supply constraints that have kept Vermont Gas from more aggressively marketing its voluntary tariff to customers: a nationwide marketplace for RNG akin to what electric utilities have for purchasing renewable energy certificates.
He has been leading a series of conversations with other gas utilities around the country, including Eversource in Massachusetts and National Grid, about setting up a national procurement system that would include third-party certification of RNG.
“My vision is that by the end of next year, if Liberty Utilities in New Hampshire wants to buy RNG, they can go to a website and procure amount commensurate with their needs,” Murray said. “And that hopefully motivates more projects to enter these markets, and provides a backdrop to justify more policy measures to support them.”