Energy Evolution, Episode 2

On this episode of Energy Evolution, our hosts discuss the biogas industry and tax credits that can be obtained.

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Detailed Description of Weaver’s Energy Evolution, Episode 2

00:00:00

Leanne: Hi everyone. Welcome to the second installment of our Energy Evolution podcast series. Today we’re going to be talking a little bit about the biogas industry. We received a lot of questions from industry participants looking to produce biogas from cow and pig manure.

With me today are my colleagues, Dawn Rhea and Tony Miller, to talk a little bit more about how we can use, or possibly not use, manure to produce biogas and get some credits out of that. Dawn, I think, at the outset, we’ve got to be thinking about these investment credits at the 48 C site before we can even think about what we might get to produce the actual fuel.

00:00:39

Dawn: Certainly. It’s a great question. We have to really think about the investment tax credit, as Leanne said, because these particular producers would have to be in construction on or before December 31, 2024, for that investment tax credit. So it’s not the same window that we see with other credits that have a longer time span and possibly a longer build time. This one is pretty distinct from the law as it’s written. So, for all of our manure management folks out there in the biogas world, they really have to be thinking about when are they putting this facility on line to be able to avail themselves of a traditional ITC. They also have to think about, ‘geez, where are they located, are they using the right type of wages and apprentices?’ Because what we’ve been hearing, and I think this is fairly the same as Leanne and Tony, is everybody assumed this 30%. But it’s not true. You have to do and get past certain milestones to get that 5X multiplier. From the manure management perspective, for these folks that are producing biogas, that is at least the 52% methane, so RNG world. From manure, you really have to start thinking about when am I placing my facility to begin construction? Where is it? How am I going to actually construct to get them that little credit? I think that’s our first issue.

00:02:07

Leanne: Yeah, I agree, Dawn, I think you’re absolutely right. People just sort of making a lot of assumptions on that prevailing wage and apprenticeship. And like you said, it simply may not be the case.

Once we get past that first hurdle and we get something built and we get it placed into service on or before that 2024 date, Tony, what are you seeing in your world? I hear a lot about people trying to get the carbon sequestration for sequestering CO2 from manure, and some of these other production type credits. What are you hearing? How is that all going to work?

00:02:40

Tony: Well, I think the one that you see the most when parties start to collect the biogas, say, from manure from the digester, and they’ll clean it up, they’ll make it into renewable natural gas, pipeline quality specifications and inject it into commercial pipelines. Within a couple different programs, they can gather credits. The EPA’s Renewable Fuel Standard program, they can inject that renewable natural gas into a pipeline and then contract out through the party and through the chain all the way down to the end compressors, or liquefiers, to then produce a CNG or LNG product that’s used for transportation fuel and then be able to obtain credits, the renewable identification numbers, or RINS, in the RFS program. So that’s pretty common we see that a lot and that’s a program that a lot of these facilities will use and utilize.

There’s also the low carbon fuel standard out of California. So if that same fuel would then be transported over to California for the same purpose of transportation, through compression or liquefaction, then they can get those as well. But that’s also after construction and actual injection is incurring, aswell as being able to contract that out all the way through the chain, down to those and compressors liquefiers to produce that transportation fuel.

So that’s the start and then, Leanne, any other thoughts you have, or Dawn, on the other types of things I’d be really curious about, specifically with clean hydrogen or the clean fuels type of tax credits that are going to be coming in under the IRA, specifically with clean hydrogen. As I mentioned, these RNGs that are being injected that goes into commercial pipeline. It’s not going directly to someone that’s compressing or liquefying mostly. And for like a 45D, think about clean hydrogen, yes, methane is a source for steam methane reformation, an SMR unit, but they’re not going to be co-located most likely. So any thoughts on that?

Click play above to hear the rest of the conversation on biogas credits!