This document summarizes environmental markets and credits for biogas from dairy digesters. It discusses three potential markets: (1) carbon offsets under California's cap-and-trade program, (2) low carbon fuel credits under California's Low Carbon Fuel Standard, and (3) Renewable Identification Numbers under the federal Renewable Fuel Standard. For each market, it provides details on eligible biogas uses, buyers, prices, generation and ownership of credits. Overall, it finds the average price per gallon of diesel equivalent is highest for LCFS credits ($0.52) and lowest for carbon offsets ($0.21), with RIN prices in between ($1.50). Financing challenges and the increasing importance
3. Environmental Markets and Biogas
1. Carbon Markets
2. Low Carbon Fuel Standard Credits
3. Renewable Identification Numbers (RINs)
4. Environmental Markets for Biogas
Market Credit Biogas Use Geographic
Limitation
California
Cap-and-
Trade
Offset Any Anywhere in the
US
California
Low Carbon
Fuel Standard
LCFS Credit Transportation
fuel
Fuel consumed
in California
US
Renewable
Fuel Standard
RIN (Renewable
Identification
Number)
Transportation
fuel
Anywhere in the
US
5. 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
8. 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)
18. 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
19. 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
20. 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
July 2014 Rulemaking
Others must establish that at least 75% of the organic material in their feedstock is composed of cellulose, hemicellulose or lignin.