Eco Crystal Ball: RNG webinar transcript

The first webinar in our “Crystal Ball” series was all about renewable natural gas! In this webinar originally held on Dec. 15, 2020, the experts at EcoEngineers looked back at 2020 and looked forward to 2021. We discussed the trends with low-carbon fuel projects, various carbon credit markets, and predictions for the future of low-carbon fuel standards. Read the transcript from the webinar below.

1:31
OK, all right, Well, hello, and welcome, everyone, to our Crystal Ball webinar series, where we will take a look ahead at 2021, a look back at 2020 and a look ahead to our crystal ball at 2021 to the RNG space. Then programming note, we’re also going to be having a similar crystal ball look at ethanol, biodiesel, and renewable diesel and to be featured in the upcoming issues. My name is Kathy MacBeth, and I’m the Director of Strategic Development at EcoEngineers. And joining me today are my colleagues, Brad Pleima, who is a Senior Engineer and the RNG Line of Business Manager and Sarah Caswell, a Senior Regulatory Consultant and Policy Expert at EcoEngineers.
1:50
Carbon is the biggest disrupter of the 21st century, and the world as we know it is changing. EcoEngineers can guide you to make the best decisions as you navigate toward your clean energy goals. Our diverse team of carbon analysts, engineers, scientists, auditors and regulatory specialists are trusted advisors of the clean energy fuels sectors worldwide. Clean energy regulations are a maze – we simplify them with an unbiased approach and fully manage your compliance. Modeling your carbon reduction is complicated – we quantify your emissions with a rigor based in science. Together we can create markets that will protect and grow your investment. We create sustainable solutions for a better tomorrow. We are EcoEngineers.
2:21
EcoEngineers is a renewable energy consultant audit and consulting firm since 2009 and we’re headquartered in Des Moines, Iowa, with a mission to build out a clean energy economy.
EcoEngineers has developed a proven process to enable clean energy projects from concept to commissioning, and across the finish line, into ongoing compliance.
2:41
Our work is focused on the biofuel and biofuels ethanol, biodiesel renewable natural gas hydrogen, and electricity, and emerging decarbonization strategies such as low carbon farming and carbon capture and sequestration.
3:06
A few housekeeping items here. The webinar is recorded. Everyone in the audience will remain muted throughout the presentation. Please send your questions through. The chat function will answer the questions at the end of the content delivery today, which will be about 60 minutes, and then we’ll allow 30 minutes for Q&A at the end. There will be a survey at the end of the webinar. We really appreciate everybody’s response and helps guide us on how to improve our webinars going forward and the content you want to look at, and all of you will receive a copy of the recording at the end of the webinar.
3:43
Next slide, please.
The agenda: a 2020, look back at 2021, look forward, emerging markets, and comments on the new administration from our policy expert, at the end, and then a Q and A session, that, I’m going to turn it over to read, or to start out on the look back.
4:02
Thanks, Brad.
4:04
Sure. Yeah, thanks Kathy. I hope everyone can see the slides and see me. I put on a jacket today, I think, for the first time in. Or maybe the second time, in about 9 or 10 months.
So, it feels good to be talking to everyone and really happy that you have carved out 90 minutes.
4:21
I know everyone’s busy and carving out 90 minutes to join us here today. We’ll spend about the first 30 minutes or so, talking about a look back of, what did we see?
Specifically with RNG in, in 2020, we’ll talk about credit pricing, we’ll talk about COVID Impacts, obviously, that had a huge impact, both on a project basis from a market basis.
4:45
And we’ll talk about some of the impacts that we’ve seen from COVID 19 specific to RNG. What are some of the other Market Challenges? What do we, what do we see? Was our, what are some hurdles or roadblocks for projects in 2020?
5:00
And then Kathy is going to talk about the implementation of the new … LCFS validation and verification requirements.
2020 was the first year for pathway validation.
So previously you would submit an application to CARB an LCFS application and they would review that and certify that pathway themselves.
5:25
2020 was the first year of a third party, like EcoEngineers, did a third party validation before that pathway would get certified and be available for credit generation, and we’re also preparing for the first year of the annual verification process.
5:42
So, with that, let’s jump right in and talk about some price history here with RNG, and we had a lot of ups and downs in 2020.
The green line here is the D3 RIN price with RNG, really two RIN categories, four available credits.
The D5 RIN, which is shown here in that orange line, towards the bottom, and the D3 RIN pricing is the green line here.
6:14
And notice, especially from about mid 2019, how much variability in what was happening to D3 RINs.
So, we saw at the end of 2019, D3 RIN pricing going down to historic lows somewhere in the 60% range bouncing back up and stabilizing for the rest of the year. And in early 2020, about a dollar per RIN.
6:42
Once that RVO, that larger RVO was approved, then RIN prices shot up, you know, to $1.50 to $1.60 for the first part of 2020 had some stability and then what happens in March, COVID starts to impact things.
7:00
Pricing immediately goes down into the dollar range.
And you can see that U shaped there rebounded pretty nicely into June or so, again, stabilized in that $1.50 to $1.60 range.
7:17
We had some ups and downs.
But recently, over the last 10 days or so, if you’ve been tracking our Daily RIN pricing, e-mail or any of the index prices, you’ll notice that D3 RINs have climbed to $2.08. So a nice increase to the end of the year, we’ll talk about in the look forward portion of the discussion today.
7:40
We’ll talk about what we see happening with D3 RINs going into 2021.
What about LCFS?
Another good stable year for LCFS credits, overall.
7:55
We did see some softening of credit pricing after COVID and we saw historic prices settle in in that $190 all the way up to $210 per … LCFS credit range.
8:09
When COVID happened that price did for a very short time dip down to $175 a credit and that did rebound and stabilized again in that $190-195 range and today credit price is trading just under $200 a credit.
8:27
And with the LCFS program there is a $200 price cap that is adjusted for inflation.
So if you use that inflation factor, you know, somewhere around $217, $218 is the hard cap for LCFS credit prices for 2020.
8:45
So credit price is trending higher and higher towards that cap for a majority of the year. And, again, in the next section in the look forward, we’ll talk about what we envision for LCFS credit prices, not just in 2020, but also in the next 3 to 4 years going forward.
9:05
So stepping back a little bit into the RFS and RINs, what happened? A lot of things happened in 2020.
What we’re seeing, the theme here, is, it looks like the market will be short for D3 RINs in 2020, I think that’s been evident by the recent price increase for D3 RINs going up, exceeding $2.
9:29
And that’s been a good sign, that pricing is, is hopefully going to remain strong in the very near term here.
9:37
So, let’s look at that.
The 2020 RVO pre COVID, that was approved at the end of 2019, 590 million, D3 RINS was the RVO.
9:51
Well, how are, how is the industry doing?
From a production standpoint, if we take out trees and COVID impacts, the market is going to be, it appears to be it, look’s going to be short.
So, right now, through October, about 376 million, D3 RINS have been generated based on EPA available data.
10:14
That’s about 40 million RINS per month.
And if you do the math, on the 590 million RVO, we need to be, the industry needs to be at about $49 million D3 RINs per month in order to hit that RVO.
10:29
So 2020, 25% short from industry production, compared to the RVO.
Now, we add COVID. That has a, has had a big impact.
Historically, we’ve seen the small refinery or small refiners exemptions that have also degraded, that RVO number.
10:50
We don’t know what they are, what the SREs will look like for 2020. I think there’s thought that they will be much less, but that is yet to be seen, we don’t know that number.
11:02
Also, there was an oversupply of D3 RINs last year. And so those RINs can be carried over and a portion of those can be used for this year’s compliance.
11:14
And we estimate, you know, somewhere in the 50 million, maybe 40 to 50 million in the RIN Bank that can be used. So, that also comes off of the, the true RVO number.
Then, we have COVID-19 impacts.
11:30
So, if, if you follow, you know, the actual petroleum consumption, which the RVO is not just a number, that 590 million, it’s just an estimation of how much petroleum is going to be refined. And then a percentage of that is the obligation to comply with the RFS.
11:50
It’s really a percentage of refining that is the true RVO number on an annual basis, And so with a lot of people quarantined a lot less commuting. There’s been a lot less petroleum usage this year in 2020.
12:07
Diesel usage has actually remained fairly consistent.
A lot of goods, heavy duty trucks and goods and services have continued to move, but the gasoline sector has really taken a hit in actual dispensing of fuels throughout the country.
12:25
Estimates somewhere, maybe the eight to 10% of the overall market was wiped away due to decreased fuel usage across the country.
12:33
And so, that 590 million gallon RVO is really not the true number, and it’s difficult to know exactly where that will be. What will the coat, what will covert impacts be for the rest of the year? What’s that RIN Bank really consist of?
12:48
And then what will happen with these small refiner refinery exemptions, that will all chip away at that 590 million gallon number.
So even with all of those unknowns, taking that into account, that shortage that 40 million gallon, or 40 million RIN production per month, compared to the 49 million that’s really needed to hit the total mark, it really does appear that the market may be short, maybe upwards of 30, 40 million RINs.
13:20
And I think that’s a sign that pricing in the very short term will remain strong for the rest of the year.
We also had some issues just with projects coming online and I’m gonna turn it over to Kathy to talk about what EcoEngineers has seen with RNG projects coming online and then also to get into the … EFS verification and validation work.
13:46
So, Kathy?
Great, Thanks, Brad. I embedded myself with R L C.
The best team, most of 2020 in, certainly had the opportunity to see a lot of what was going on with projects coming online.
13:59
I mean, even under normal circumstances projects going into the California LCFS program would have taken longer just due to the implementation of the three point. Oh, update, not to mention the impacts of the pandemic.
14:13
Those were the two major influences for slowing down projects that under the pandemic we saw things like, well, of course, then Q 1 of 2020, and most of us were required to mobilize to work from home.
14:26
Travel was stopped in IRFS and LC at that site, visits were delayed and then schedule the possible workplace with restrictions. Impacted the number of workers at construction sites, and across the entire supply chain. We saw technology and equipment bronchi project stranded it borders and construction on projects just stopped altogether, so, not a movie a year for the construction side of the business. And then you have the three … implementation.
14:58
This was the first year for compliance then.
Then in the first quarter of its first year, the kit, and then not only were all of us at all the cart staff also had mobilized to home, and re-establish communications and workflow processes.
15:13
That took a little bit of time, and then everyone was on the learning curve here.
With guidance coming from carbon real-time, often, some of the pain points are bottlenecks, that I think are worth mentioning here. We’re with, you know, as a result of the three update would be, you know, missing data from the tier 1 tier 2 calculators, around a 15 minute inlet flow data requirement. That we have to stop and sometimes install new meters or have missing data substitutions approved. By carb, there were wastewater treatment plants that were coming online that needed to redraw utility boundaries and instead stall new utility meters, so they can isolate the energy used to improve their score.
16:03
Donors who didn’t realize they needed to have a compliance monitoring plan available for the verifiers when they showed up for validation of their pathway.
16:14
Manure baseline lagoon played out. What does nothing, credits, intermediaries, Or these were all things that slowed down project approval, because we had to stop and go with carb approval and then move forward? And then, to some extent, maybe, lesser. Just.
16:30
The extra co-ordination required around a new provision of a joint application that allows the producer and the dispenser or credit generator to apply jointly but separately, each being responsible for their own input of the CI, the production versus the credit generation Where we’re collecting data from two separate entities, depending on their role in the transaction.
16:59
Assembling a three calculator to get a composite score taking those backup or are submitting them up to the individual respective ASP’s accounts to Carlos thieves them, does a data check.
17:15
That’s them together, composite score, it takes them back park, and then approves the pathway. So, with all that being said, I see good news in a smooth road ahead in 20 21. All are up the learning curve here. And I think some of the takeaways to share with producers are those of you were bringing projects online, know what you need to do, be preemptive.
17:39
Educate yourself around these new regulatory requirements, especially validation and verification.
Great. Next slide, Brad.
Thank you.
17:49
We go in here, we’ll just an overview of some of the key features of the New ELSI program, Of course. The Calculator has a three update, so there were updates done to the Calculator. And some of those were beneficial, especially if you’re in the ethanol industry to get in gaining lower scores, and the establishment of pathway validation and verification requirements that are mandatory for all producers, that was, effective January fourth, 2019.
18:20
Alternate pathway applications are to be validated by the accredited third party verifier verification body, which became effective January first, 2020. A few comments around that.
18:33
Once you have submitted your pathway verification, you know, there was more to do than just coming under the validation requirements that also cause to cause producers, to have to contract with the verification body, to the Verifier, have to do a conflict of interest assessment. And then notice that validation services to be approved by the Executive Officer at carb. Just needs to develop a compliance monitoring plan. and then in the AFP select verification body, the verifier conducts a site visit. Again, those site visits were stalled out because of travel restrictions.
19:14
So this required, they asked us to pivot at that point in time and develop protocols for virtual site visits, which were approved, and we were able to keep moving.
Then the validation site visit, once that is completed and the validation statement report is submitted to carve a pathway, If it’s a Tier one, is deemed complete to two, then it’s reviewed by carb, it goes up for 10 day public comment period, and then they deem it complete.
19:42
So, the validation is a one-time requirement under this new program, and then then your pathway gets enrolled or qualifies for the verification program.
19:54
All three pathways are subject to annual and quarterly verification. And it’s a similar process. Is the validation we have to contract with the verification body?
20:04
Don’t have to update the conflict of interest. And the notice about validation services will need your compliance monitoring program and then, and then the verification can be conducted. The verification is on two key pieces of the verification requirements, one being the Annual Flow Transaction Report.
20:27
This is not new. You should be doing.
You’ve been doing quarterly, full transaction reports and submitting them to the L R T. Now, there’s just an annual look back and verification of all those one of reports, referred to as the Transaction verification.
20:42
And then there’s the Annual Fuel pathway Report, this is new, New requirements. So the Annual fuel pathway Report is around your operating conditions, or really around the production processes that lead to your carbon intensity score.
20:58
So what this means is that you have a 3 0 pathway that was validated. At some point in 2020. You’re going to need to take a calculator and update from the point of deemed complete my validation to the end of this year, 12, 31, 2020.
21:16
And you’ll need to re-submit that to carb through your AFP by March 31st, 2021 in every year thereafter, because that is indeed what the verifier will be verified.
21:29
The verifier wants notified that they’ve been selected as a verification Lani.
21:37
And eco engineers has, is an accredited verification body with 17 verifiers on staff. We will download the calculator. We will make a request to you through the compliance monitoring plan, conduct.
21:52
The US will conduct verification, planning meetings, and then a site visit, and then submit the verification report card, which must be submitted by August 31st, 2021, and all the verification activities take place between April first and August 31st of every year and every year thereafter. So, that’s a very high level overview. There’s a lot to wrap your arms around with this validation and verification. So, again, start early, educate yourself.
22:23
Here’s the timeline, that’s fine, Brad.
Move that forward.
So the next slide.
Just as an overview for the timeline of how the program came together. Really, you know, just the background here before time begins on this slide, rulemaking and more workshops were started around this in 20 16, in 20 18, that the Board approval the three update in 20193, calculator and pathway requirements were, went into implementation.
22:57
During that first year, car, to do all of the validation of the pathways, while they were allowing time for verifiers to come to training and received their accreditation.
23:08
Which that has happened, and then, they are in which is the most significant piece, that I’m sure of this regulations, that they are actually outsourcing, outsourcing the validation and then establishing a verification program going forward.
23:23
That will be administered by third party providers, and eco engineers is one and you can find a full list of those providers on our website.
23:33
I think, again. next.
Aw.
No?
That?
All right. Let’s just take a walkthrough.
23:48
The process one more time, we can see the CI application, which is at 3 0 application pathway application. You need to contract with the verification body, you should, at this point B, also, working on your compliance monitoring plan.
24:06
The application gets submitted, The verification body gets notified, the validation, the activities take place, once the activities of the validation activities are completed, if it’s, again, again, that’s a tier one, then, this season, the CI is complete or the validations complete or incomplete upon submission of the validation statement.
24:34
Which needs to happen within six months of your pathway application submission.
So, you need to be monitoring your timeline, so that once you have the dean complete, you’re going to be there’s going to be the typical quarterly reporting of your fuel transactions or dispensing and credit deficit generation that’s going to be occurring credit will be issued.
24:58
And then there’ll be more reporting, reporting around your annual CI, which is actually, know, again, the annual Fuel Transaction report and the annual Fuel pathway Report, all due again by August 31st of 2021 in its first year.
25:18
OK, next slide.
25:26
This is a nice summary, again, of what this reporting schedule looks like. From the producer perspective, the quarterly fuel transaction reporting is due on the days that are listed on the frequency of the middle, and then you can see the two new key pieces here, which is the annual full pathway report. And, again, that’s just the updating of your tier one or tier two calculator, with a complete set of data, for the year 20, 23 to 12 31, 2020.
25:54
And due to car by March 31st, 2021, for its first year, and then the Annual Verification Report, that kind of wraps it up.
26:03
Again, I think there’s a lot of information that’s buried in these regulations around validation and verification, so it takes some time to, to educate yourself. And with that, I’m going to hand it back to Brett.
26:18
Yeah, thanks, Cathy. I think you’re right there is, uh, there’s a lot to go through.
There’s a lot to go through and there’s a it is a little bit of a learning curve.
I think we’ve submitted Caffey, What, somewhere in the 40 or 50 pathway validations. We’ve got 60 or 70 verification engagements.
26:41
Planning for 420 21.
Yeah, I’d say we did at least we’ve done at least that many, I think I was involved directly with 30 to 40, and then that was just and there were others, Brothers?
26:58
I think I would definitely build on Cathy’s recommendation of start that planning process early.
You know, give us, give it, give us an email, and give us a shout.
27:08
And we can start to help you understand what that process is, and all of the various components, but I think that that compliance monitoring plan is one that has stuck out to me.
27:20
That is if you haven’t looked at the regulations around that, there is some work to do, and that’s a different requirement.
The rest is a lot of interfacing with verification bodies like us, and then getting your Pathway.
OK, our Tier two pathway, there may be a lot of interfacing is, you know, what car?
27:40
Because especially if it’s a new base pathway, there’s still a lot of developing guidance there. And I think there was just some guidance on lagoon clean outs, not too long ago. So, that, that program is still pretty dynamic.
27:53
To give you some idea of most of these Pathways from submission to, know, validation deemed complete, anywhere from 6 to 9 months.
And the Compliance monitoring plan is really the heartbeat of the validation and verification, because that’s where you capture all of your operational and transactional data that tells the verifier, how you run your operation, and how you maintain your CI score. So, it needs to be a living document, and the more detail, the better documented it is Probably the smoother your validation or verification, is going to go.
28:31
Yeah, that’s a good point. I think we could probably talk about compliance monitoring plans for 90 minutes, But if anyone has any specific questions, feel free to use the Chat, question them, chat them in.
28:43
We’ll talk more about what those may look like in the last 20, 30 minutes of the Q and A session, but for now, let’s take a look. You know, that’s a look back of 2020.
28:53
What happened to recap of specific to RNG from pricing?
Let’s look a look, what’s 2021 look like?
And I think this is where it will pull out our crystal ball and see what we don’t know. What’s going on. We still have lingering coven impacts.
29:10
But there was a little bit of an election in November, that maybe shake some things up, around a complete change out of the EPA administrator, administer, and also, just a general switch towards climate change, lower carbon. And Sarah is really going to talk about that at the end of the webinar.
29:34
Of what we see from an administration change coming up here in the next 30 days.
So, let’s look at 2021 pricing, around the RFS. There’s a lot of unknowns here.
I think the big one is, normally, in a normal year, the 2021 proposed RVO, the draft RVO, when it came out in June, and would have been released for public comment.
30:01
And then usually around this time, late November, early December, the finalized RVO for 2021 would have been published.
And none of that happened. The draft didn’t come out in June. Obviously, there was no final finalization.
30:17
There were some rumors that the pump that maybe the draft coming out would have been in the $600 million’s for the D3 category.
30:26
Nobody just kind of through the grapevine.
I don’t think anyone knows that for, for sure. But that’s certainly going to have an impact on 2021 RIN pricing, if we don’t know what the full 20, 21 RVO we’ll be well into next year.
30:42
I think that’s one thing. We don’t know. When will that be released?
Will they combine the 2022 process releasing the proposed RVO with the 2021 process?
All of those are, are yet to be determined, but we have seen this before in his historical years.
31:01
And, I think production, things are going to continue.
Like, there, there will be an RV 2021 RVO.
Eventually, I think people expect that to be to grow from 2020, and we’ll see what the production looks like to match up, but I think, in the very short term, we’re bullish on the overall Britain Price over the, over the coming early in 20 21, until we see what that actual RVO may be.
31:32
Another thing that to point out here is the Cellulosic Waiver Credit.
So the compliance mechanism for a D3 RIN for an obligated party is you either buy a D3 RIN or you go buy a CW, see the Cellulosic Waiver Credit, plus a D5 RIN.
31:51
And so there is a cap on where D3 are in crisis trade, and that cap is the CW C plus the value of a D5.
D3 pricing is not going to go above that, because the obligated party can switch over and use the other option as a compliance mechanism.
32:09
So that’s TWC value is just a function of the wholesale price of gasoline.
So it’s $3 minus the wholesale price of gasoline, which is adjusted for inflation, and that that calculation for 2020 was a dollar 80.
32:26
So if you look at the value of a D3 RIN right now, somewhere in the dollar per ran mark, the price cap for a D3 RIN is a dollar, 80 plus a dollar, so about $2 and 80%.
32:40
Well, when you look at the last 12 months of wholesale gasoline prices, do two coven: Oversupply Gas Prices Being Low even before coven.
The gas pricing is down.
And if you use that Formula $3 minus the wholesale pricing average wholesale price of gasoline, the lower the gasoline price the higher the Cellulosic Waiver Credit.
33:05
And so what we’re seeing is somewhere in the $2 in 32 dollars and 35% range for the 2021 CWU, see.
That’s a 50% or 50% increase over where things were in 2020.
33:18
So let’s, let’s say D5 RIN prices stay at a dollar in early 2021.
Now, the price cap for a D3 RIN is two, $3, and $30, $3, and 35% somewhere in that range.
33:33
So the ceiling for D3 RIN prices appears like that. It will increase in early 2021 we’ll see if market and trading prices go along with that. But that’s another reason for some optimism around RIN pricing, pricing, in 2021.
33:52
There’s also a rumor that there will be lower, small, a lower amount of the trees, the small Refiner exemptions issued for this year, and for next year, we don’t know if that will actually be implemented with the administration change.
34:08
I think there’s hope that there will be less wavers administered and issued. And that will also keep very high 2021 RVO, so all of that said, I think we’ll wait and see where things go with the RVO, but an overall positive outlook from us, certainly in the early parts of 2021, on the RFS and on the red side.
34:37
Switching over to, what’s the LCFS look like? A lot of projects, especially manure based, ultra, low CI projects, A large majority of the value, maybe upwards of 75% of a project’s value comes from the … slash LCFS program.
34:53
And so, what do we see for the next year or so?
I think in the very short term, we expect credit pricing to remain strong.
35:03
But as an exercise where we’re working with many, many fuel types, not just RNG, but we work a lot in renewable diesel, high renewable hydrogen electricity ethanol biodiesel. And so I think we have a decent visual into the LCFS as a whole.
35:21
And so we got to talking internally, and we put all of our teams and all of our heads together on with the various fuel types and took a look at that expertise, and that knowledge of projects, what’s coming online for each of these field types over the next three years, four years.
35:38
So we put all of that together and we’re in the final touches, we’re putting the finishing polish on a draft of an LCFS forward looking policy.
35:49
Basically, how is the LCFS program working?
And what does that look like for various producers that are going to rely on the value of LCFS credit’s going forward.
36:00
So we’re taking a look at that, both from the deficit side and the credit generation side. We hope to release this report in late 2020 still.
But I think the data, we have a good handle on the data, and we’ll be on the lookout were, so we’ll certainly be advertising what this policy analysis results will be.
36:25
So just a couple of highlights from that a sneak peak of the themes of this report, especially as it relates to RNG.
36:32
We took a look at and varied. We know ethanol biodiesel.
Those are our established markets, and we can project some small amounts of growth.
But there isn’t those industries are not growing exponentially like renewable diesel, like RNG, like biogas to electricity and electric vehicle projects.
36:53
So we really focused in on those three fuel types to take a look at what if all of these new projects come online.
37:01
I think, if we look at each one of these in a vacuum, there’s a lot of people that know the R D. Market, very well, a lot of people here on this webinar know the RNG markets very well looking at electricity and looking at hydrogen.
37:14
But a lot of those, a lot of people are specific to those industries.
And those industries, yeah, those industries. So, what we tried to do is, we took a look at aggregating those together, and made some projections, both from the deficit side and the credit generation side.
37:32
And we did that in three different ways.
Here’s a trend line.
Before we jump into the three ways, here’s a trend line of RNG, that we see being dispensed, both as bio’s CNG in the lighter color and total CNG LNG credits in the darker color.
37:48
So CNG dispensing whether that’s RNG or just fossil based sources has increased year over year since the law and the life of the program. We do expect that to continue to improve slightly.
38:06
So looking over here Let’s take a look at.
We looked at three scenarios a low scenario and A high scenario So really just set the goalpost of the Outlook So what we tried to do is Let’s look out to 20 24 It’s very difficult to project out to 20 29 to 20 30 Really the edges of where the program currently stands, But I think we do have some immediate visibility in to 20 21, 22 and 23.
38:36
So we use 2024 as our initial Outlook because we felt we had better access to, to data and some analysis.
So we looked at a low scenario, and what we, what we did is we assumed about 900 billion gallons of renewable diesel supply coming online think I believe there’s about 600 million currently. So that’s an increase of a 50 50 percent increase in RD supply coming into the market.
39:02
We know there’s a lot of Derry and low SCI manure based projects that are coming online.
So what we looked at is 30 to 40 path, new 40 pathways coming online over the next three years, about 125 new, ultra low CI pathways.
39:21
And we made an assumption that the average CI would be in the range so that that encompasses some lower, maybe deep pit hog farms, maybe some anaerobic digesters, that processed food waste that have -80 -90 Those could also be lumped in there.
39:41
Then we’ve all seen all of the approved pathways on the dairy side and in the swine side that have the -3 -400 CI score. So those are the assumptions that we made.
39:52
We also took a look and assumed that about three million metric tons of credits would come from electric vehicles and that would be either from wind or solar as zero CI sources or from low CI sources like dairy, Derry, bio, gas, hog manure, or bio gas.
40:12
And so when we take a look at those three major factors and we held a slight amount of growth in ethanol and renewable Aira and biodiesel, we looked at about net even of credit generation and deficit generation. So, you can see, right now, in 2020, 2018, 2019, 2020, pretty significant net deficits being generated.
40:39
So, there was more deficits than there were credits in the market. And that really explains why there was a significant increase in the credit price.
40:47
What we see is that gap shrinking and getting pretty close to the net even, maybe even slight, a slight oversupply of credits into the market in 20 24.
41:00
So what this tells us is we think in this low scenario, credit prices will likely remain very strong in this scenario.
And then we may start to see a little bit of softening in the market in 20 24.
41:14
But, again, that has, that, really, is dependent on all of these things happening.
The 900 million gallons of R D, and 125 Pathways, and a continued expansion of electricity.
So when we look at it, let’s swing it the other way.
41:28
Well, let’s just say all of these projects are funneling to California.
Two point one billion gallons of renewable diesel supply comes into the market.
We’re not necessarily convinced that will happen.
But if you go out there and look at published public data, there’s a lot of renewable diesel being planned in the country. And so what we wanted to look at is what if all of that came to California?
41:52
Again, maybe not very likely, from a likelihood scenario, but we did want to look at what that credit generation was. We kept 125 RNG pathways consistent.
42:03
And then what we said, what F additional bio gas, low CI electricity projects, what happened and credit generation doubled, what that showed is a very high supply of credits, an oversupply of credits in the marketplace, that may even switch from credit deficits.
42:25
Two credit positives in 2023, 2022, 2023.
Again, this may not be overly likely, but this is what is out there as a high scenario.
And If this happens, there’s no doubt that credit pricing would soften if, if this scenario would happen.
42:43
Now, all of that said, What’s a likely scenario? Probably, not the low side. Probably not the extreme high side either.
So we took a look at what if a billion gallons have already come online.
So that’s trends closer to the low scenario.
42:59
We’re: We’re pretty consistent on the 125 new, lower CI animal manure pathways, and then in-between on new credit’s being generated from electric vehicles.
In that case, there’s a much smaller switch over, but still potentially sometime in 20 22 or 2023, 2024, where credit’s start to outpace that deficit generation.
43:27
And that may have a slight impact on credit pricing going forward.
Now we looked at these scenarios in a vacuum right now. What this does not account for is other LCFS markets opening up which we’ll talk about.
43:41
Those are all critical components to these assumptions, but we’re going to lay all of these out into, in this report.

So I know Kathy covered this, I’m going to skip over the LCFS verification requirements.
43:54
I think she did a good job of saying what’s new, but no, in 20 21, all of your RFP slash LCFS pathways projects are going to have to comply with that third party validation and then do the ongoing verification process.
44:12
So, with that, I’m going to pause and turn it over to Sarah Caswell, who is really leading up our policy team.
She’s been following along heavily into this … LCFS rulemaking process.
And so, Sarah, do you want to take it away?
Sure, I’ll just briefly talk about opportunities for Orangeade producers and stakeholders to get involved in, in California prospectively.
44:42
So California just started a major rulemaking in October. It was supposed to start in April, but because of the pandemic, it got pushed back.
44:54
And there has been little formally written on what the process has been looked like, but, um, from, from my sources and talking to folks in the industry, it looks like, um, there’s two parts to this.
45:11
There’s the informal rulemaking process and then this formal rulemaking process. And, you know, it’s, it’s my recommendation that folks plan to be a part of both and to advocate for their positions during both processes because it’s equally as important.
45:29
So, during this informal process, starting in October and curb, staff held its first likely many workshops on specific topic areas, under consideration for, you know, regulatory updates under their current rulemaking process.
45:48
That first topic was on potential credits for farm practices and soil carbon sequestration.
After a workshop, stakeholders have two weeks, generally, to submit written comments to carves staff for their consideration as they work through all of the issues before they come up with a formal proposed rulemaking, um, likely sometime at the end of next year.
46:22
And, um, again, there’ll be like a second chance fork affecting that rulemaking by submitting formal comments to the formula proposed rule. Rulemaking, then.
46:37
But hopefully, if you advocate well enough, and there’s enough support, the provisions that you’d like to see in formal rulemaking process will be in there to comment on. So, that’s it for now.
But I highly recommend that anyone who is a stakeholder in the orange juice is get onto carbs website.
47:00
And they has email updates that they send out on the L LCFS and any developments. And that’s how you’ll hear about any workshops related to RNG.
Or other areas are of interest to you.
47:20
Great. Yeah, thanks, Sarah.
I think one thing there is, to point out, is from an orangey perspective, the lagoon, clean out process may get simplified through this rulemaking process.
47:32
And I know many people, the RNG Coalition, there’s been some other people, a State, a group of stakeholders talking about that. I think carb did release some guidance on that recently.
47:44
Hopefully there’s a more streamlined and simplified process for lagoon cleanups that could be part of that.
But that may not be fully implemented, like Sarah said, until, you know, January of 2023 or so.
47:59
So that’s a look back or look forward to 20 21? Let’s talk a little bit, what’s next for RNG, just in general, What are some of the emerging trends that we’ve seen, really picking up steam.
It’s been an interesting year, at least from my perspective, for RNG, where the evolution of voluntary markets, you know, a couple of years ago, getting an RNG project put together.
48:21
It was almost always, excuse me, we’re focused on RINs and LCFS credits now with the competition in California and rent prices be Invariable.
48:33
We’ve seen a lot of projects going to these fixed price or voluntary markets, a lot of municipalities, utilities, industries’, getting involved in those RNG purchases, which has been great to talk about, and which has been great to see as well.
48:51
The other thing we’ve really seen is electricity and hydrogen.
So taking orangey biogas to electricity or RNG to hydrogen has really come on with the new rulemaking that Kathy mentioned that was adopted in beginning of 2019.
49:08
So let’s take a look at, you know, both of those, and how does it apply to RNG and Biogas.
The benefit of both of these is being able to use Book and Claim Accounting for those.
We’ll talk about on the electricity side, the location matters.
49:23
So you really need to be in the wet region in order to take advantage of book and claim, bio, gas to electricity, and that wack region is, those are those salmon colored states on the West Coast.
So you can see there in the map, if you have a project in any of those areas, and maybe you have a pipeline issues that are far away, they’re expensive, The Interconnects are expensive, completing, or looking at analyzing a biogas to electricity pathway, maybe an option for you, and then still taking advantage of those LCFS credits through charging of electric vehicles.
50:01
There is no brand, you know, there’s no Iran right now, but that’s also something I know the American Biogas Council has been working on pretty significantly over the last couple of years. And I think who knows where that will go.
50:14
I think an administration change, we’ll maybe refresh and bring to the top the … possibility.
But if that would happen, that would be a big advantage for biogas to electricity projects as well.
50:30
But for now when those are focused on the LCFS you do need to be in that work region.
But all hydrogen is another option, so doing a RNG to hydrogen production, whether that’s hydrogen is being used as a raw file at a refinery to lower the carbon intensity of diesel or petroleum based fuels, Or if you’re using hydrogen fueling in California, the process is so similar that it’s open to anyone that’s connected to the pipeline, the natural gas grid.
51:01
And you can use book and claim for hydrogen production.
Again, the Rand is not available for hydrogen used as transportation fuel, but with the value of the slash LCFS credit and the stability, the 10 years stability, at a minimum that we see and to end the LCFS RNG to hydrogen projects are something that really are starting to take off there, and both of those would be Tier two pathway applications.
51:31
With that, we see a lot of other emerging markets. I’m going to have Kathy come back on and talk about what our experiences and, and with some of these emerging markets and new LCFS states and other, other markets for RNG So, Kathy?
51:48

No, thanks, Brad.
Um, you know, I really think that the more interesting story here in 20 21 around emerging markets, quite frankly, not at the State level. The States were distracted with the pandemic and just not a lot got done around low carbon or climate change. Now that’s not to say that nothing got not done because there’s plenty of activity. And if you know, to get a full download of the activity, the RG Coalition, on their website, post 2020 Legislative Action Listing, which is the state by state guide or download of all, all of what did happen. But nothing was promulgated. And really what I think when I look at 2020, what I found very interesting, that is maybe the bigger peek into the future around how low carbon decarbonization zero carbon is going to move forward has to do more with Corporate America at this point, quite frankly.
52:46
At the top of the year, we have …, Chevron, all announced carbon reduction goals, and BP and Shell, zero carbon goals by 2050 across Scope 1, 2 and 3 missions. And there’s someone that into joining the energy transition.
53:03
We saw a similar activity occurring in the gas utility industry. Again, at the start of the year, Berkshire Hathaway acquired the Dominion gas pipe assets for $10 billion and Dominion. Together with Smithfield Foods, committed 900 million, respectively to R&D projects.
53:25
We saw UGI out of Pennsylvania acquired …, gas Market, RG assets, north-west, natural lot of Portland tariff approved that allowed them to offer RNG to customers, and to be able to invest in projects.
53:42
Constellation Energy, a subsidiary of epsilon, no established an R&D team. So they can acquire Offtake, do trade transactions, and they are onboarding new staff and gas utility companies all across the US are joining the energy transition as part of the decarbonization strategies, so that we will see a lot more of that in the years ahead.
54:10
There was a recent announcement on Vanguard Renewables, partnering with iconic brands like Unilever and Starbucks and the Dairy Farmers of America to form the Farm Powered Strategic Alliance, where they will be working to repurpose food waste, and daring ways to contribute to carbon reduction goals of those iconic brands.
54:34
Amazon came up pretty publicly and committed to carbon reduction. And then you’ve got the … 100 group, which are the top 100, 500 Fortune companies, globally, who have more than 250 of them, at this point, that any formal commitments to carbon reduction, significant carbon reduction goals. And be part of that group. You can go on their website. You can see who they are, what their carbon reduction commitments are. What the timeline is there on it. It’s pretty amazing. So eventually, one would hope that the policy and the politics will catch up with what the corporate America is doing. And this is No, and it’s hard to say what might happen around the emerging regulations at the state or Federal levels with the new administration coming on board. And I think this is probably a good time to turn this over to Sarah.
55:28
And let her give us her policy perspective on what the admin knew by the administration, it’s got to be ready to too low carbon.
55:37
Sarah?
Yes, Thank you.
Next slide.
55:56
Um, so, we just had this election, Brad talked about that earlier, And at the executive level, and at the Congressional level, climate was very much on the ballot, and there’s going to be likely a strong focus on climate next year.
56:20
And over the next four years, um, President Biden committed to issuing an executive order on his first day in office to rejoin the Paris Climate Accord.
56:33
Um, with the goal of the US being carbon neutral by 2050, And it’s going to take a lot of work at the executive level, among all the agencies, and, um, with Congress to achieve that, through public policy.
56:53
Um.
Bidens also talked about wanting Congress to pass a $2000 billion investment in clean energy sources.
And Time coven economic Relief two Clean Energy initiatives.
57:10
So we’ll have to see how that pans out in the early days of the Biden Administration coming up.
He also created a new cabinet level position, um, Naming Secretary of State. John Kerry is his new climate Envoy.
57:28
That’s a position that has never been a part of the administration before, um, and not just re-iterate divided administration, focus on climate change reduction strategies and the level of priority that that will take in this Administration.
57:47
Um, talk about USDA and US EPA.
You will have to see how all the agency nominations here now, and, um, what the Senate makeup looks like and whether or not they all make it through Senate confirmation.
58:07
But right now, President Elect Biden has nominated a former USDA Secretary they’ll sack to take his own position back as the head of that agency.
58:22
We saw Secretary Vilsack and his commitment to renewables in that position before, So I think that we can safely assume that that will be a focus again particularly with President-elect Biden’s. Focus on renewables and climate.
58:43
And, of course, Orangey will be a part of any climate solution and US EPA President Biden has still yet to nominate the new administrator for the EPA.
59:00
There are news reports this week, indicating that Mary Nicholls, um, is no longer one of the top candidates.
And then there are about four, or five folks in the running right now, so we’ll have to see, I think, we can expect that rumination here in the coming days. Next slide.
59:26
Of course, what President Biden is able to achieve on climate reduction strategies will largely depend on, um, approval and, um, initiatives enacted by the US. Congress.
59:42
Um, there’s a couple of things.
And the House of Representatives, as we know, will, will routine democratic control with likely with speaker Pelosi: Keeping that role in determining what legislation comes to the floor for a vote.
59:59
Um, so, in terms of climate and orange policies, in particular, that’s generally good news because.
1:00:13
Representative Lucy has a track record of being very supportive on biofuels policy issues inherent, um, and led the effort to pass the RFS back in 2007 and in 2005.
1:00:28
Um, but on the, on the Senate side, we’ll have to see how the Georgia, Georgia Elections pan out and how the balance and power pans out in the Senate.
1:00:42
If the Republicans retain control, Mitch McConnell will likely still be in power as the leader of the Senate and will determine the legislation that comes up to on the floor for consideration.
1:00:56
That might make it a little bit more difficult.
Just if you look at historical support or his historical record on the climate.
1:01:07
Um, might make it a little bit more difficult for Biden to achieve his goals as quickly and as easily as if a Democratic senate is achieved through the Georgia results.
1:01:24
However, I think, as we all know, um, even if Democrats control all three houses, it’s not going to be a key to get climate legislation passed in through, because even among Democrats, there’s a split in terms of what kind is.
1:01:46
Policies should be enacted to achieve climate redactions.
So there will be a focus on climate orange. You will be a part of it.
But the pace with which it moves forward will be determined largely on the Congressional ….
1:02:11
And how will they work with Biden next year?
Back to you, Brad.
Sure, no, thanks, Sarah, and I think that’s, that’s really all we have formally.
1:02:29
But happy, you know, I think I know we have some questions that are building up in the chat, But if you have anything, any topics that you want you want us to, to discuss, or have a specific question, please type those in into the chat box, and we’ll, we’ll get those answered.
1:02:48
We will make a recording, a copy of the recording available, but usually we don’t release the specific slides.
But if you had a specific piece of information, you wanted to feel free to reach out to one of us, and we will, we will see what you can provide.
1:03:03
And I also did want to make a final plug.
There was a lot of questions about the data of the … slash LCFS and what we’re projecting for certain volumes of RNG.
1:03:15
I think we’re still putting the very final touches on what all of those are. So, I don’t want to give out specific numbers until that report is published just because they may change slightly.
1:03:27
But, if you’re interested in seeing a copy, you know, getting a copy of that report, and you’re not on our distribution list, feel free to reach out to me. You can reach out to Cathy or Sarah as well, we’ll be happy to let you know when that becomes available.
1:03:45
So, with that, maybe we’ll jump into a few questions here.
I think we have about 20, 20 minute, 25 minutes or so left here.
You know, here, maybe one, Sarah, that I noticed a couple of versions of about the LCFS rulemaking process and do you think that it will? It’s a little bit longer of a process, you know, with, with COVID.
1:04:14
I think maybe we were hearing earlier in April maybe that would be a 2022 implementation.
Maybe do you have any other thoughts on that sliding too?
1:04:26
You know, maybe that once they get through the rulemaking process, that implementation not happening till January of 2023, a couple of questions around, what’s the likelihood that that could accelerate or take a little bit longer?
1:04:43
Um, great question, and again, there’s not too much, formerly written that I’ve seen on what the process is going to look like from my experience, and from what I’ve seen so far, tends to announce workshops, sort of when they’re going to happen, and not sort of announce a comprehensive schedule of workshops and timelines. Please, not that I’ve seen.
1:05:14
one contract in the industry that is very close to carb, spends a lot of time there.
And I spoke recently and, um, no one thing, you know?
1:05:29
So one scenario that could happen is that the rulemaking process would be bifurcated with sort of technical changes and updates to the program first, then a second rulemaking, dealing with any kind of more detailed analysis or program or program extensions.
1:05:56
So in that scenario, what might likely happen is that with the first rulemaking on the technical changes, um, we continue to have these informal workshops to inform CARB staff and to sort of know what stakeholders opinions are on how the LCFS should be updated.
1:06:21
Going through, no mid to late summer next year, with a Zen carb staff turning around and proposed a proposed rule. By the end of next year, maybe. Take or early 2022. Of course, follow a formal comment process.
1:06:47
Um, with the implementation happening around, on January first, 2023, then with a second rulemaking, um, the informal process, the workshops, and whatnot, followed by the informal comments.
1:07:05
happening from you late summer, 2022, through spring ish 20 23.
Um, list, the formal proposed rule, sometime mid to late 2023, and formal comments being taken in 2020, for some time, with that implementation, Not happening until January first trade, between five, and that. Second rulemaking, again, would be on any …
1:07:39
program extension, or anything requiring sort of a detailed analysis under administrative law.
That’s, that’s the best answer I can give in terms of a crystal ball, but I’m not carb.
No, I think that’s good color commentary around that. I didn’t want to pivot over.
1:08:02
We had a couple of questions about LCFS pathways and one that we get asked quite often is around dairy and swine manure, and is that the only manure based feedstocks that can get these ultra low negative CI numbers?
1:08:21
And I think we’ve, we’ve, we’ve been a part of a lot of these discussions and, and carb has several times told us.
You know, right now under the current regulation, dairy manure and swine manure are the only ones that we’ll call the only manures that will qualify for this methane avoidance credit and which lead to these highly negative CI numbers.
1:08:42
So beef cattle manure, turkey litter, chicken litter, all of those would not be eligible to get the methane avoidance credit. Although that is ongoing discussions as part of this, rulemaking and public workshop period.
1:09:00
But for now though the regulation’s pretty clearly spell out this carve out for Derry and swine manure.
And so it’s not so much that the other manures do not qualify.

You could do A beef cattle manure, a pathway but it’s likely going to have a slightly positive CI score.
It’s instead of being -200 or , it may be positive 20 or positive 30.
1:09:26
And with the competitive nature into the California slash LCFS program, positive CI RNG is getting more and more difficult to place into the market, especially from a longer term perspective.
1:09:39
Because many of the CMG stations, many of the Offtake parties, see the same thing that I mentioned before, is a lot of low negative CI projects coming online.
1:09:53
And if you have a set, a finite amount of CNG dispensing and you’re getting a percentage of the credits, you want to generate as many credits at a highest value as possible.
1:10:05
And these ultra low CI projects will do that at a much, much bigger rate.
So, if you look at a Dairy RNG, a highly negative Dairy RNG project, and compare it to a landfill gas project, you may generate 7 or 8 times as many LCFS credits for the same unit for the same MM BTU of RNG that’s produced.
1:10:29
And so there’s a lot more revenue on a per MM BTU per deka third basis for these ultra low projects. And there’s a really, really high appetite and demand for those in California.
1:10:41
Somebody else asked is the is the California’s LCFS market saturated.
And I think from an R&D perspective, it’s getting pretty close if it’s not already there, but there are still maybe a little bit of CNG fossil CNG That’s being dispensed.
1:11:00
But that’s quickly becoming nearly 100% RNG.
But there’s more Orangey supply coming online then there is CNG dispensing capacity in California.
So what’s happening is this, ultra low CI and this negative CI gas, whether that’s food waste or whether that’s Darien, swine manure, or RNG, are coming in.
1:11:23
And they’re displacing landfill gas and wastewater treatment plant gas.
So, if you have a new project that is positive, 30 positive, 40 positive, 50 CI, if you think about it from a market dynamic standpoint, there’s really no home for that because the RNG that’s in the RNG that’s being dispensed already has a similar CI score to that.
1:11:47
And those 100, you know, plus, ultra low CI projects are on the horizon.
And so it’s a matter of time before the overall aggregate score of RNG being placed in California is negative, And we’re starting to see that play out in market dynamics.
1:12:09
And so, a lot of this positive CI gas has to stand alone, either on RINs only. Maybe you do get into California for a short-term, but it’s probably not a long term play.
1:12:20
But you have to rely on RINs, or what’s really becoming more and more popular is, …, voluntary markets or other non-transportation regulated markets, like California.
Maybe state specific RPS is like what Colorado is looking at.
1:12:40
Or all of the corporate and utilities that Kathy mentioned are starting to add Orangey as a significant part of their goals to achieve carbon neutrality, Specifically on the utility side.
1:12:55
So we’re seeing, maybe, some good news and some bad news there, More markets for RNG, but less market, less, uh, less RNG project types, being able to go to California, which is really why the market needs some of these other states and some of these other markets to develop and start to mature.
1:13:16
If a New York LCFS came online with a significant volume Canada with a National LCFS, if you start adding those together, then you’re starting to take away that bottleneck of every RNG project wanting to go to California.
1:13:32
And now you can diversify across markets.
So if New-York opened up, for example, you know, if you’re a North, If you’re a dairy in the north-east, developing a project there, right now, you’re, you know, you’re getting penalized from your CI score by transporting that across the pipeline by 3000 miles.
1:13:50
If you have a market next door, or in your own state, that is more competitive from a CI perspective.
That is, that has a lot more of that capacity than California open capacity than California does. That’s going to do great things for all different project types.
1:14:06
So the more of these projects that continue to develop, in my opinion, the better for the overall market here.
Let’s see. What else do we have? We also have, I talked a little bit about the CNG saturation.
1:14:23
And as it relates to LCFS, we are assuming that will be, that is saturated here going forward.
Can you review the formula for calculating a D3 RIN relative to the CW C? Yeah. Sure.
1:14:40
So the cellulose cellulosic Waiver the D3 cap is the value of the CWC plus D5 RIN.
That compliance mechanism needs to be the two choices. You D3 RIN, or you buy the waiver credit plus a D5.
1:14:58
And so it’s simply the addition of the CW C plus the value of D5. And conversely, the value of D3 RIN will not go below 85 because of the nesting feature of a D3 RIN.
1:15:11
So you really have that potential band between the D5 RIN and the and the cap of the CWD C plus, plus D5 RIN.
Maybe, Sarah, here’s one. You could maybe touch on two based on some of your discussions and policy analysis.
Any potential for an RFS pathway for renewable hydrogen anytime soon.
1:15:38
You think that’s on the radar at all?
Good question.
The answer is, I don’t know.
1:15:50
Um, but I think that with, of, I didn’t Administration coming in, um, there’s, um, it’s more likely to happen next year, or the year after, then, no.
1:16:07
So, it could happen, I wish that I could give.
no more flavor to my answer.
As of right now, that’s about it. That’s about all I know.
1:16:20
I think, do you think it’s fair to say, Sarah, that the new administration will probably be much more receptive to newer technologies and newer, new, new pathways for renewable fuels compared to the previous? I think that’s probably not going too far out on a limb, right?
1:16:40
I don’t think so, yeah, Um, my, my experience, um, you know, with one technology, since 2017.
And I know that this is true across other technologies, as well, as that.
1:16:55
It’s the current administration has not, has not encouraged growth of new renewable fuels, through the administration of the RFS sort of in general. Some have gone through worse, but it’s been very difficult.
1:17:17
More difficult than many an industry would’ve, like to experience.
And so I think that the new administration, we’ll come in and have perspective, of wanting to encourage and see the growth of RFS qualifying fuels, new fuels going forward.
1:17:41
Because, of course, the minimum greenhouse gas reductions that would have to be achieved to be qualified fuels under the RFS would be 20 for 20%.
1:17:53
Greenhouse gas reductions in 15, 60, were cellulosic fuels.
And so, no.
Any new renewable fuel projects that are, um, that are produced and that are allowed to come online, will necessarily then, um, be contributing to climate change reduction goals.
1:18:20
Yeah, that’s I think that’s good.
You know, Sarah, one couple other questions we had, around RFS, you know, post 2022, I know you touched on that and yours, and another question on, you know, RFS reform, you know, so maybe, I’d ask you, again, I know we’re all just kind of guessing, and assuming, and playing the What if game?
1:18:43
But, you know, do you see the appetite for more of an overall reform?
Or will the same, you know, the same RVO setting process, continue, you know, past 20 22, like, like, like everyone, like, what would happen right now.
1:18:59
Do you see any major shifts there, you know, based on, on, on what you’ve, what you’ve heard, and what you’ve, who you’ve talked to.
1:19:10
I think, I mean, I think there’s two parts of that question, right?
I mean, as everybody on this call knows that after, after 20 22, the EPA administrator as the authority to indiscretion to set …
1:19:26
going forward without the statutory targets, no, included in the RFS statute.
And so, I think that if, if nothing else changed, if there were no other laws passed to either replace that or enhance it.
1:19:49
I think we can see sort of the more of the same, right?
Sort of along the same lines, again, under a new lighting administration, encouraging new renewable fuel volumes, that, of course, meet the requirements of the IRFS, but, um, to encourage that those new renewable fuel volumes coming online that will displace no dirtier fuels.
1:20:27
But, there’s a lot of talk, and, again, I alluded earlier, you know, climate was very much on the ballot this year.
And, I think it’s top of mind of a lot of, um, newly elected officials that are going to Washington.
I’m in the administration, and on the Hill, there’s talk in the industry, and sort of, There’s a lot of talk about, you know, what does that mean for next year, going forward.
1:20:57
We could see in some circles, we’d like to see a comprehensive energy bill, that includes climate reduction, climate change, reduction strategies.
1:21:12
And of course, Orangey projects would presumably be a part of that and know that there’s already talk about the Farm Bill sunsets in 20 23 and there’s a reauthorization process every 4 or 5 years.
1:21:34
So there’s already talk that those start to be action on the Farm Bill Reauthorization process next year in 2021, 2 years ahead of schedule.
And that there’s a contingent industry and some stakeholders that we’d like to see a climate title included in the New Farm Bill with a carbon trading system, including included in that.
1:22:02
The Farm Bill also will include no programs in funding for renewable energy renewable fuel projects.
On an orange you would be a part of that, presumably.
Um, so I guess the answer is, no, I think that EPA, they’ve already did that.
1:22:25
The staff, the non-political staff, who will remain after the end of the Trump administration, have already started, works on what 2022 … would look like.
It’s referred to as a, as a set, to set the 20 22 our views.
1:22:45
And so, I know that that administrative work will be going forward, um, but, in terms of legislation No, I wonder, and I don’t know the answer, but I wonder if Congress will recognize that the RFS statute sunsets for then the statutory targets, and would want to either extend or replace the program this legislation, and not leave it up to the discretion of EPA. I don’t know the answer to that.
1:23:22
Um hmm.
Then if they did that, right, We’re in a different place than we were in 2007.
And, um, there’s a lot of support for climate change legislation and regulating not only transportation fuels but stationary sources as well.
1:23:42
So, would such legislation just deal with transportation fuels, or would it be more comprehensive to deal with emissions from other sources other than transportation fuels?
Again, I don’t know the answer to this, but they’re all things to look out for.
1:24:00
And next year.
And, well, the last thing I’ll say is that, you know, is my prediction, just having worked on the Hill, and in Washington, and in it, and biofuels policy for over 10 years. I know.
1:24:17
I think there’s more of a chance that Comprehensive energy legislation will pass, or climate legislation will pass under … Ministration again.
1:24:28
Um, and we’ll just have to see and particularly what the Senate looks like and who the leader will be in terms of which legislation gets brought up and how comprehensive that legislation would be.
Um.
1:24:48
Yeah. I think that, no, I think that’s good to will have to see. And you never really know until you know who the administrator is, and, and see what Congress makeup and all the things that you talked about.
1:25:03
I know we have time just for a couple more questions.
I wanted to touch base, and several people asked non RNG questions about ethanol and biodiesel and maybe carbon capture sequestration.
1:25:15
We’ll follow up with you on those.
We have a list, and we’ll capture a list of questions, and we’ll get back to you, but I didn’t want to thank you. We’re ignoring it, but we did want to focus more on RNG.
1:25:25
We will have more of these sessions, and are in January about renewable diesel, biodiesel, and ethanol.
But I thought we had a good question hear about, you know, what drives voluntary markets to want low SCI.
1:25:42
And I think that’s good, because it relates a lot to what Kathy was saying earlier, that utilities corporations, not only do they just have a volume metric, they want to be 100% renewable, you know, buying 100% renewable fuels, or using 100% renewables, further process energy.
1:26:00
They also want to be carbon neutral.
And if you look at it, you know, a lot of these RNG outside of manure and some others have a positive CI.
You get a nice greenhouse gas emissions reduction from landfill gas, maybe 50%, But if your utility has a carbon neutral goal, you can’t get there, you know, with even 100% orangey in their pipelines.
1:26:25
So there is more and more focus on CI.
Some people are willing to pay more for lower CI. Some people just want to know what the CIS so they can start. You know an overall county carbon accounting system for that.
1:26:38
But I think they need to understand your project CI, even if it goes to the voluntary market is becoming more and more important.
1:26:46
Then maybe that wasn’t the case a couple of years ago.
The other one I thought was, was good is, in California, where is there, is there more demand for?
You know, RNG isn’t CNG or hydrogen vehicles.
1:27:00
The hydrogen via, you know, hydrogen fueling using RNG is certainly increasing, but it’s still a pretty small volume. I think there’s a lot more growth there. That could happen.
Then, there will be from a percentage basis from a CNG perspective, but CNG, you know, that the overall volumes are still heavily weighted towards CNG and LNG.
1:27:23
So, most of the RNG is still targeted towards CNG LNG, dispensing as fuel.
But, we are starting to see more and more analysis of and thinking about and pathways if you go to … website.
1:27:37
Uh, RNG to hydrogen, biogas to electricity.
And one thing I didn’t mention on the slide about electricity is, that also really needs to be negative CI electricity.
1:27:50
In order for there to be a significant apatite into California, what we’ve seen is there’s a lookup table value for wind and solar usage, and you can use book and claim wind and solar for electric vehicle charging, and credit generation.
1:28:08
So if you think about a CI score from your landfill that has a positive CI, it’s facing the same issue that is, is happening.
1:28:17
And in RNG or two to CNG vehicle Fueling is that if you’re electric, if you have electric charging for electric vehicles and you can easily use book unclaimed solar or election, or a wind for zero CI, you’re probably not going to partner up with us, CI of positive 40 positive 50 positive 60, Or am even more than that for landfill conversion.
1:28:44
So, there’s still that demand for negative CI.
We’re seeing a lot more food waste. You know, slightly negative.
Maybe if you’re a mixed waste digester, that you’re mixing dairy manure and some other feedstocks.
1:29:00
And your aggregate CI score is -30, -40, -50.
There’s a pretty high demand for that on the electricity and the hydrogen side right now, but there’s still, it’s still in an overall smaller volume.
1:29:16
So, with that, I know we had a lot of questions that we didn’t get to, but we will reach out, and we’ll answer, and we’ll follow up with everyone.
1:29:26
Lindsay will also send out a, the copy of a YouTube link to download into, to go back over some of this.
So we really do appreciate everyone’s time, and I highly encourage you to reach out to any one of the three of us.
1:29:43
If you have more specific questions, or if there’s anything that eco engineers can do to help move your RNG projects along, we’d love to open up that dialog and talk to you.
1:29:53
But, with that, Kathy or Sarah, do you have anything, any, any final thoughts to add here to the group?
1:30:01
Now, I just want to thank everybody for joining us today, for our presentation, for Crystal Ball, look into the webinar series, and, and just to say, you know, Happy Holidays, everybody 2020 is just about behind us. I think we can all be helpful for 2021. And I just appreciate all of you and the business and the support that you’ve given eco engineers over the years. Thank you.
1:30:26
Thanks, everyone.