Several federal policies under development could have major impacts on the viability of renewable natural gas projects at US landfills, according to witnesses who testified before the US Senate Environmental and Public Works Committee on Jan. 31.

Final rules for a clean energy tax credit, the US Environmental Protection Agency's updates to air-quality regulations and a challenge to federal renewable fuel mandates could all affect project viability, lawmakers and witnesses said. Republicans on the Democrat-controlled committee raised concerns that the rules will be punitive and unachievable, ultimately hamstringing renewable natural gas (RNG) development.

In establishing low-carbon fuel policies, the Biden administration has often embraced strict environmental standards backed by climate activists who aim to limit the use of combustion-based energy. Industry groups have warned that the strict standards will strangle nascent markets.

"I'm concerned that the landfill sector is facing the same approach that the Biden and the Obama administrations have taken with regard to fossil fuels, where the goal is to make them uneconomic and then the EPA then works backward to achieve that with crushing regulations," said Sen. Shelley Moore Capito (R-W.Va.), the committee's ranking member.

The committee held the hearing to explore the potential to divert organic material from landfills, where it decomposes and releases methane. Lawmakers also sought pathways to better detect and capture landfill emissions.

Landfills are the third-largest manmade source of US and global methane emissions, trailing the agriculture and energy sectors, Sen. Tom Carper (D-Del.) said. That makes landfills "the next frontier of mitigating methane emissions," said Carper, the committee chair.

RNG, or fuel produced from waste methane, is one pathway to mitigating those emissions. Some investors prefer landfill gas projects because their cost profile can be more attractive than RNG projects at dairy farms.

Clean energy investment tax credit

An immediate concern for the landfill industry is the US Treasury Department's recent guidance for the Section 48 investment tax credit (ITC) for clean energy technologies, according to Anne Germain, COO and senior vice president of regulatory affairs for the National Waste & Recycling Association.

The Inflation Reduction Act expanded the ITC to cover up to 30% of the cost of qualified biogas projects.

However, Treasury's guidance said the ITC does not apply to cleaning and conditioning equipment, which landfills and farms use to upgrade biogas into pipeline-quality RNG. Without that equipment, producers cannot inject biogas into a pipeline, store it or process it into commercial fuel, Sen. Pete Ricketts (R-Neb.) said.

"In other words, the administration's strained interpretation of the new biogas provisions will in fact strand this valuable fuel because it cannot be moved off-site to homes, businesses and industry that would welcome and pay a premium for renewable natural gas," Ricketts said.

This upgrading equipment is typically the most expensive component, according to Ricketts. Questioned by Ricketts, Germain said landfills would face challenges investing in RNG equipment under Treasury's Section 48 guidance, resulting in fewer RNG projects being built and more organic material ending up in landfills.

US EPA New Source Performance Standards

The EPA's upcoming updates to New Source Performance Standards (NSPS) could also affect RNG project development, stakeholders said. The EPA regularly updates the air-quality regulations to ensure that industries are using the most effective emission-control technology available.

The agency is evaluating several NSPS rules to penalize fugitive emissions and require emissions accounting in project permitting decisions, Capito said. She was concerned that the rules could end up inhibiting investment in landfill RNG projects.

"The waste sector already experiences needless permitting delays for deploying renewable energy projects that the administration supports," she said. "These rulemakings will only exacerbate the sector's frequent permitting obstacles."

The EPA also faces a deadline to review its standards and emissions guidelines for municipal solid waste landfills, Capito said.

The NSPS does not apply to landfills below a certain size threshold, so expanding regulations to smaller landfills could subject them to emission control and capture requirements, Germain said. About half of the nation's 1,200 landfills are municipality-owned, though private landfills handle about two-thirds of US waste, she said.

The EPA should modernize landfill air emission regulations by mandating more comprehensive emissions monitoring and expanding gas collection requirements, testified Tom Frankiewicz, who specializes in waste methane at sustainability group RMI. New NSPS landfill standards that "reflect the latest, best practices in methane monitoring and control" and encourage organics diversion could cut methane emissions by 1 million metric tons per year, Frankiewicz said, citing Environmental Integrity Project analysis.

Congressional funding sought

Germain urged lawmakers to address a historic disparity in federal funding for methane emission reduction research and development. Landfill operators have not benefited from this funding as much as the oil and gas and agriculture industries, she said.

The industry recently began conducting controlled methane releases in order to assess the ability of various technologies to accurately measure methane leaks. However, landfill operators conducted the tests in Canada because of US permitting delays, she said. The Canadian government has also expressed interest in financially supporting these tests, she added.

These controlled releases are not easy to execute, but they are critical in helping technology providers improve their methodologies and validate their products, Carbon Mapper staff scientist Tia Scarpelli testified. Accurately measuring methane is difficult at landfills, which are more dynamic environments than oil and gas production sites and infrastructure networks, she said.

Carbon Mapper has used remote sensing technology to detect and quantify methane emissions from 300 US landfills. It found large-scale emissions from more than 200 of the sites, Scarpelli said.

Renewable Fuel Standard at risk

A petition by environmental groups to reconsider the EPA's decision to increase the federal Renewable Fuel Standard (RFS) for transportation fuel also presents risk for landfills seeking to capture methane, Germain said.

The EPA's decision, which required obligated parties to increase production of cellulosic biofuels known as D3 in coming years, was expected to boost demand for RNG.

"Granting the petition would disrupt the long-term stability needed for continued investment in landfill gas collection and renewable energy programs," Germain told the committee.

The RFS is a critical incentive for addressing RNG's premium to other transportation fuels.

Cellulosic D3 renewable identification numbers (RINs) were assessed at nearly $2.92/RIN on Jan. 30, equating to a $34.21/MMBtu value of RNG consumed outside of California, according to data from S&P Global Commodity Insights.

Indicative values for short-term voluntary, or non-RFS, landfill gas have been recently heard at approximately $23-$27/MMBtu. The Platts North America Renewable Natural Gas Premium (excluding California) was last assessed on Jan. 30 at $26.51/MMBtu.

Platts North America Renewable Natural Gas Premium is an offering of S&P Global Commodity Insights. S&P Global Commodity Insights is a division of S&P Global Inc.