LAUNCH: RNG Project Implementation webinar transcript

An RNG project, much like launching a rocket, takes years of planning, coordination, and teamwork. You can now watch our July 28, 2021, webinar that dove into registration and compliance requirements for these projects.

Lyndsey Nielsen (00:00:00):

My name’s Lyndsey Nielsen. I’m the marketing coordinator for EcoEngineers. It’s been a minute since we held an RNG webinars. I’m happy to welcome you guys to this one, Launch: RNG Project Implementation. It’s going to focus on registration and compliance requirements for the LCFS, RFS and other programs surrounding RNG projects. We thought the launch theme was a little bit apt considering how many billionaires have been flying into space recently. A few housekeeping things before we start. The webinar is recorded. Everybody will be receiving a recording to the event once it’s done processing and everybody is needed per usual and feel free to send any comments or questions through the questions chat function.

Lyndsey Nielsen (00:00:47):

We’ll try to answer as many as we can throughout the presentation. We always get a ton of questions for RNG webinars. If you don’t get to all of your questions, we will definitely follow up with you with email after the presentation. There will also be a short survey. Let us know what you think. Let us know if you have any ideas for future webinars. Before we get started, let’s just play a short video explaining how EcoEngineers can help you in the low carbon world that is today.

Narrator (00:01:17):

Carbon is the biggest disruptor of the 21st century. 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. A diverse team of carbon analysts, engineers, scientists, auditors, and regulatory specialists are trusted advisors of the clean energy fuel 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.

Brad Pleima, P.E. (00:02:12):

All right. Well, I’m going to take it over from here. Everybody, my name is Brad Pleima. I’m a senior engineer and lead our renewable natural gas line of business. With me is Dr. Roxby Hartley. He leads our compliance team and together we’re going to talk about, as Lyndsey mentioned, what are some of the registration requirements? How do you get registered for RNG projects into the various programs? What are those ongoing compliance, record keeping, reporting obligations for the key programs? Just in practice, how are these applications, how are these credits generated? We’re going to talk about that today. For those of you who aren’t familiar with EcoEngineers, we are renewable energy consultants. We do three things primarily, consulting, compliance management, and auditing. We do that through these six service areas.

Brad Pleima, P.E. (00:03:09):

You can see here, we do a lot of training and education, regulatory engagement, a lot of life cycle analysis, carbon intensity modeling. We help support the development of RNG and other renewable energy assets. Then what we’re going to talk about quite a bit today is focusing on our compliance management team and our audit team. We do that across all different fuel types, various technologies, various clean energy regulations. Today, mostly is going to focus on RNG and the federal Renewable Fuel Standard, the RFS and the California Low Carbon Fuel Standard. Since many RNG projects are going that route, but we will [inaudible 00:03:54] on voluntary market audits as well as some of the emerging markets like the British Columbia program and the Canada Clean Fuels program.

Brad Pleima, P.E. (00:04:06):

I mentioned, we’re going to keep this pretty casual. I think hopefully, Roxby and I will have some good discussions. We’ll take questions towards the end as well. Just to kick this off, the Renewable Fuel Standard and RINs, what are some of the registration and compliance obligations? You’ve gone through the complexities of doing pre-development, developing, financing, construction. Now, you’re finally getting close to that finish line and now the real work starts on the credit generation, the compliance and the monetization of these various energy credits. We’re going to start with the Renewable Fuel Standard here, talk about the RFS and what some of the requirements are. In order to participate in the Renewable Fuel Standard in generate RINs, you need to have a registered pathway. Whoever that pathway holder is, is the entity that will generate the credits.

Brad Pleima, P.E. (00:05:09):

This does not necessarily mean it will be the renewable natural gas producer. It could be an off-take party. It could be a regulated party. That RNG producer usually has the first rights to generating the credits and they can delegate that responsibility to other entities in the value chain should they choose. What does that process look like from an RFS registration standpoint? You can see, to keep it simple, really four tasks. You need to appoint a responsible corporate officer. This is the person that’s going to be responsible for the compliance obligations under this pathway. Then probably the most work here and number two is you have to hire somebody like EcoEngineers, third-party engineer to conduct an engineering review once the facility’s substantially complete.

Brad Pleima, P.E. (00:06:01):

That’s a key term there is you can’t get these RFS pathways, you can’t submit an application to the United States EPA for an RFS pathway until the facility is actually built and substantially complete. After that, then you can do this third-party engineering review, which requires a site visit. That third-party engineer will put together this report which will include all of the contractual pathways, all of the information about the facility. It’s that showing that complete package that you’re able to generate RNG with the equipment onsite. You can inject that gas into the pipeline or use that locally as CNG vehicle fuel.

Brad Pleima, P.E. (00:06:44):

Then if you do inject into the pipeline, which most part projects do, you’ll need to have the contracts between you and the utility. You’ll need the contracts between you and the off-take party. That really will complete the overall process. All of those contracts need to go into this RFS registration package. You will have the opportunity to redact and designate some of that information as confidential business information, but EPA does need unredacted copies of all contractual arrangements as part of this RFS registration process.

Brad Pleima, P.E. (00:07:23):

We do that site visit. We put that engineering report together. You submit a new company or a facility application on the CDX system. Then EPA will wait for approval. Essentially, your company needs to be registered with the EPA. Then, each RNG generating facility will have a specific facility ID. One, you might have a company ID and you may have a lot of facility IDs under that one company but both are required in order to obtain an RFS pathway. You submit that to EPA. They will review it. Typically, it’s been as short as a week. It’s been as long as a couple of months. They will review that and approve that if all of the information meets the regulatory requirements of the RFS. You’re also required to keep EPA up to date and notify them of any changes. If you do any major process improvements, you’ll likely have to amend your application.

Brad Pleima, P.E. (00:08:27):

If you add end users, that’s a notification that you’ll need to make to EPA. Really, that contractual pathway needs to be an up-to-date process of how you’re actually operating your RNG facility. Once you do get that approved pathway, you’ll have the ability to generate RINs under the program. A couple things to point out here, the key dates, that substantial completion date, that’s when the third-party engineer can come onsite. After that date, then you have the ability to store any RNG that’s produced in a physical storage location but that can be done through virtual contracts. After the site visit date is when you have the ability to store those environmental attributes in a qualified storage facility.

Brad Pleima, P.E. (00:09:17):

If you are planning on storing gas in the interim while you’re waiting for your registration, and most people go through that process, you do need to include that storage contract and the physical location of the storage facility that you are using. Again, that does not need to be onsite storage. It can be done virtually but it does need to be identified in the RFS registration package in order to generate those RINS once you do have an approved pathway. All in all, this process usually takes several months between coordinating the site visit, getting the document review, putting the package together, submitting to EPA, and then getting that approved pathway application. We recommend starting this RFS registration process about three months before your facility will be substantially complete. That will give us a head start to move forward with a lot of this data and documentation.

Brad Pleima, P.E. (00:10:18):

Once you do have a pathway, you can imagine there’s a lot of dollars that are available under the RFS and through RINs. There’s also a lot of compliance obligations. Here’s just a list of some of the reporting requirements that you’ll have to do as an RFS pathway holder. You can see, I won’t go through all of these there but a couple, you have to submit these quarterly reports and annual production outlook, how much RNG are you expected to produce into the future? You do have to do an annual attest engagement through a third-party CPA. There’s a new reporting starting in 2021 that you’ll have to identify and report all corporate and contractual affiliates. There’s also some additional reporting on the D6 RIN which is mostly starch-based ethanol, not usually applicable to RNG.

Brad Pleima, P.E. (00:11:14):

A lot of filings to make as part of the ongoing requirements of the RFS. Also another program that you may be familiar with or have heard about is the Quality Assurance Program, Quality Assurance Plan, QAP. People call it different things but really what it is, it’s a voluntary audit program for RIN generators. You don’t have to participate in that but in the renewable natural gas industry, a vast majority of RINs that are generated Q-RINs, which is the designation that you generated a RIN under a QAP program. Maybe a requirement of your contractual path to sell those credits to an obligated party. They may require you to supply them with Q-RINs. if you don’t, there’s likely a discount that you’re going to have to take. That discount is typically not worth the cost of participating in a QAP program. Really what it is it’s an ongoing audit program that does a monthly document review.

Brad Pleima, P.E. (00:12:18):

We look at a mass balance. We as QAP providers, and EcoEngineers is one of three approved QAP providers under the RFS, we have to submit a quarterly report to EPA with our findings to see is this facility in compliance with the requirements of the RFS. It also requires two physical site visits per year. Two site visits per year, monthly documentation review and quarterly reporting that we will do to EPA. If you’re satisfactorily participate in that, you will generate these Q-RINs. They will be identified in the EMTS system, which is where RINs are generated. You’ll be able to sell those Q-RINs to obligated parties or brokers or whoever you trade RINs with.

Roxby Hartley, Ph.D. (00:13:10):

[crosstalk 00:13:10] I want to ask a question. In this, who doesn’t usually get Q-RINs? What companies don’t get them or don’t want them or need them?

Brad Pleima, P.E. (00:13:24):

I think, the ethanol industry, there’s not a lot of participation in QAP. You do a lot of work in biodiesel. Would you say? Is it 50-50? What’s the percent in the biodiesel industry?

Roxby Hartley, Ph.D. (00:13:36):

In the biodiesel industry, it’s the smaller entities that require it. Then in terms of number of entities, it’s probably more the majority. But in terms of volume, it’s probably much less.

Brad Pleima, P.E. (00:13:52):

Really, what would prohibit you from participating is a really small volume. If you’re producing a few 100 MMBtus a month or 1,000 a month, that may not be worth the cost of participating in a QAP program, may not be worth the value of the RINs. Most of those are really small producers. Most of the the larger production facilities in RNG are participating because that’s a good segue. The obligated parties, there’s a benefit. They get a affirmative defense. If they buy a Q-RIN that’s found to be invalid, they have to go out and replace that RIN but they have that affirmative defense that, “Hey, we went through a QAP. We can’t be out of compliance or we can’t be held responsible for this.” There’s a benefit to the obligated party by participating in this program. That’s just a really quick overview of the RFS, how do you register a project and what are some of the compliance obligations. Roxby, anything else you wanted to add on just overall RFS obligations as the compliance team leader there?

Roxby Hartley, Ph.D. (00:15:04):

I think it comes out very well. The only thing I’ll mention is that there was quite a lot of short in the biodiesel industry because of lack of QAP. I think it was largely because of that fraud that the Q-RIN was developed. Before that, I had to deal with the third party engineering part every three years. I think there was no other auditing that was required. It was easy to skirt the rules.

Brad Pleima, P.E. (00:15:31):

That’s a good point. I don’t remember the exact number. Maybe you do, but it was something like 12% of all the RINs that were generated were found to be fraudulent pre-QAP, some pretty high number. That number has gone down significantly with the implementation of the QAP process. Well, let’s switch gears here and talk briefly about the LCFS, the registration, compliance, where a lot of development that’s happened in the LCFS program, and new requirements in 2020 and 2021. In a similar way, when you have an LCFS pathway application that you want to submit, you’ll have to register that, you have to create an account. This is for the regulated party in order to generate credits. All of the credits are generated in the LRT, which is the LCFS reporting tool and credit bank and transfer system.

Brad Pleima, P.E. (00:16:27):

Similar to the EMTF system where RINs are generated and transacted, that happens with LCFS credits in the LRT. Then you have to import fuel into California. Anyone that has title to fuel entering California has a reporting obligation under the LCFS. You have to comply with various record-keeping and verification requirements. Let’s come at this from the RNG producer. The LCFS program is quite a bit different than the RFS program. One is because the RNG producer oftentimes does not generate the LCFS credits. We’ll talk about why that’s the case here shortly but they’re still responsible for getting a pathway under the LCFS program. What does that look like? You have to do all your registration forms. You need to have that account with CARB in order to submit an application. Then you need to put together your pathway application.

Brad Pleima, P.E. (00:17:29):

Similarly to the RFS, you’ll need to show all those contractual pathways that you can actually generate RNG, inject it into the pipeline, get it to California and use that as vehicle fuel in California. You’ll have to show that contractual pathway. Oftentimes, that’s done by submitting your RFS registration package with your LCFS pathway application. Also the key differences here because carbon intensity and GREET modeling is a requirement in the LCFS, you actually have to collect a minimum of three months of operational data and build a GREET model, submit that GREET model along with your application package. You’ll submit all of that to California Resources Board or CARB. From there, you do that all online. For a tier one process, CARB will do a high level data review. Do you have all the required documentation? Did you submit everything?

Brad Pleima, P.E. (00:18:29):

Does it look like everything’s there? What’s happening now starting in 2020 and has been implemented here for about the last year and a half is CARB now requires a third-party verification body. EcoEngineers is an accredited verification body by CARB, to review that as an independent third party and submit a validation statement to CARB. Essentially what the verification body does is they will review all of line item number two. Do you have all the supporting data and documentation? Did you build the model correctly? Do you have all the pieces and components? A site visit is required.

Brad Pleima, P.E. (00:19:13):

A confirmation of the carbon intensity score is also part of this process. Assuming all of that goes well, the positive validation statement is submitted. The pathway’s deemed complete and certified by CARB. Then that can be used for LCFS credits that can be generated. We’ll touch on this process a little bit more shortly here. Before I hand it off to Roxby to talk a little bit more detail on the LCFS compliance obligations, I did want to point out that RNG is a little bit unique in how these applications get put together.

Brad Pleima, P.E. (00:19:49):

A good way to think of this is there’s two components. You have to show dispensing in California and you have to show RNG production, those get matched up and you can generate LCFS credits. But that dispenser, has the reporting obligation under the program. So they register under LRT and they report how much CNG or RNG they dispense as vehicle fuel. They can do that with fossil natural gas, or they can do that with RNG. Preferably RNG because there’s more credits that could be available. But those two can submit applications to CARB separately, and then join those up together through this application process.

Brad Pleima, P.E. (00:20:34):

I’d say a lot of RNG projects are going down this route, mostly because it allows each entity to keep control of that confidential data. The dispenser can keep all their contracts, their downstream contracts separate, the RNG producer can keep all their information separate. And both of them have different compliance obligations and they’re required to conform with the program. That’s what we’re going to talk about next year after we talk about just the difference in tier one and tier two pathway applications.

Roxby Hartley, Ph.D. (00:21:11):

You can generate credits in a number of ways. The simplest way is simply choose a lookup table value. Say if you’re a diesel importer, you have a diesel lookup value and you can list your imports in your reports, in the required reporting against lookup table values. You can see there’s grid energy, there’s 100% zero CI charging as well. Tier one pathways use something called a tier one calculator. The pathways both use the GREET model. For the tier one pathways, CARB has made simple calculators. The list of that is a bio-diesel, renewable diesel, LNG, CNG, North American Natural Gas. The starch, fiber and sugarcane ethanol. For biomethane, there’s North American Landfills, anaerobic digestion of wastewater, organic waste and various swine manure.

Roxby Hartley, Ph.D. (00:22:09):

The validation process is slightly different between tier one and tier two pathways. Tier two pathways, tier one fuels using innovative methods, meets sustainability requirements. Are 5% lower effective CI above 20. One CI lower if the reference is below 20. Basically CARB is looking for a decent percentage dropping in the CI score. There’s wet mill ethanol come to this, plastics to fuel, pyrolysis oil, some next generation fuels. Basically, if you’re looking for feed stocks that don’t neatly fit into tier one calculators, they come into the tier two pathways.

Roxby Hartley, Ph.D. (00:22:50):

I think, Brad, you’re having any idea of the differences in the timing on how long these take to get through CARB, for the tier one and the tier twos?

Brad Pleima, P.E. (00:23:00):

Yeah. I think what we’re seeing is delays, longer timeline in those tier two pathway applications. Because I mentioned in the other process and a couple of slides before, that CARB does a high level review and completeness review for a tier one. For a tier two, they do a much more detailed review. Those are more complex processes. That process is currently taking several months, just for CARB to review that. Then they turn that loose to a verification body. You have to spend another few months going through that process.

Brad Pleima, P.E. (00:23:36):

What we’re seeing out there, it’s taking all of three quarters to get these projects done. By the time you collect all the operational data and then go through the review process and the verification process. Then also on the back end, I know you’re going to probably touch on that, Roxby, is there’s a public comment period. You have to go through a 10 day public comment period, respond to any comments. And then CARB has to certify the process.

Brad Pleima, P.E. (00:24:04):

It’s definitely going to take another quarter, I would say, in order to go through that process. We’re seeing many RNG dairy, Roxby mentioned that dairy and swine manure can fall under the tier one process. But I think our team was looking at the approved pathways, and I think there’s one tier one dairy or slime pathway. All of the other ones are tier two. Some of the things that kick you into that tier two category for RNG, are if you’re a trucking RNG, a virtual pipeline on the back end, that’s going to be a tier two. If you’re using anything other than grid energy for process energy, that’s going to be a tier two.

Brad Pleima, P.E. (00:24:49):

Then there’s one where most of these get caught up is, unaccounted for, or fugitive methane emissions. You’re allowed a 2% threshold for the tier one process. Basically, if you do a methane mass balance across the system and you can’t account for more than 2% of the methane, which happens frequently with all the metering points and the meter accuracy, and your above two, you’re going to get kicked into the tier two process. I would plan on the tier two process if you’re a dairy and swine. Then if you can fit into that tier one process, that will shave a little bit of time off of this.

Roxby Hartley, Ph.D. (00:25:27):

That’s where I like renewable diesel. Because there’s only one to one pathway from renewable diesel. Everything else is being kicked into tier two as well. That’s really interesting. There’s a slight difference in the validation process because for tier two, your pathway is deemed complete after the CARB review. Tier one, it’s after validation. That can be an advantage.

Roxby Hartley, Ph.D. (00:25:49):

Okay, let’s talk about reporting responsibilities here. Credit generators are responsible for completing the following reports, quarterly credit generation reports, and the annual credit generation reports. That is basically, what fuel has been imported and dispensed in California. That responsibility can be assigned to a third party, but they still have to file those reports.

Roxby Hartley, Ph.D. (00:26:16):

Those reporting parties have to include procedures for determining volumes generated. You have to understand where the dispensers are and how they’re registered. You’ve got the equipment tracking, you’ve got who was responsible for reporting and the record keeping that you have to make sure everything’s being tracked. And how those records end up in the reports. We’ll go through this. There are a few types of LCS reporting.

Roxby Hartley, Ph.D. (00:26:45):

There’s the LRT reporting. This is into the LCFS reporting tool. There are the quarterly annual reports. Basically they say, “This much fuel was brought into California, so here.” The LCFS verification, this can be done quarterly or annually, but the annual verification is the one that is audited. It has to be done by August 31st of each year. Then if you’re the credit generator, if you’re the person who holds a fuel pathway report, the facility, they have to file a report. That has to be for two years of data and that, again has to be audited.

Brad Pleima, P.E. (00:27:26):

Maybe just a reminder, a little bit to RNG, Roxby, is the LRT reporting is oftentimes done by the dispenser or the marketer and not the RNG producer. Not all the time, but in general, they’re responsible for all the LRT reporting. Because that’s how much CNG is being dispensed in California. Then the RNG producer is responsible for that fuel pathway report that you mentioned. And really what that is, it’s an updated pre model that you’re submitting each year.

Brad Pleima, P.E. (00:27:56):

You have a certified CI and a pathway. You have to update that year over year, with real time data. You’re going to have this ongoing varying CI score on an annual basis, based on that previous 24 months of historical production. Before this implementation of these new verification procedures, you’ve got the CI, you’ve got your pathway. And as long as nothing changed, you kind of kept that CI score on an ongoing basis. Now, you’re going to have almost a real time, year over year, rolling 24 month CI score average for these pathways.

Roxby Hartley, Ph.D. (00:28:41):

This is a summary of when the reports are due. I think we have a handout which the LCFS reporting table is this. I’m not seeing in the chat in the text. The types of reports on the quarterly reports that are filed by the last day of the quarter, following the reporting period. That is the LCFS reporting party, is responsible for those. That’s basically what the credits get generated on.

Roxby Hartley, Ph.D. (00:29:11):

Then there’s an annual report, that’s submitted by April 30th. That’s also submitted by the LCFS reporting party. The annual report actually, isn’t the thing that’s audited. It’s the quarterly fuel transaction reports that are audited.

Roxby Hartley, Ph.D. (00:29:26):

And then as Brad said, if you are the facility that’s making the RNG, you have to file a fuel pathway report, which is essentially the GREET model that’s being filled in again, with the two years of data. And that has to be filed again by March 31st. And the annual verification report, is the auditor’s response to the fuel pathway reports or the quarterly transaction reports. That has to be filed by August 31st. That’s responsibility of the LCFS verification body.

Roxby Hartley, Ph.D. (00:30:07):

Basically, between March 31st, when your reports are filed, and by August 31st, you have to have a site visit. The auditors have to come in and they set a verification of the [inaudible 00:30:19] monitoring plan. There’s a site visit, there’s a sampling plan developed and they have to put a report into CARB, before August 31st. You have anything to add to that, Brad?

Brad Pleima, P.E. (00:30:31):

No, I think this next slide here kind of pulls that whole process together of what does that look like? If you’re an RNG producer, you have a dispensing partner, you both put together an application, a joint application, but most of the producer is focused on the CI score. You get that pathway validated by a third-party verifier and then CARB certifies your CI score. Now you have a pathway and a CI score that a dispenser can use, to generate credits. That’s done through the quarterly fuel transaction reports. The credits are issued and then you do that annual reporting.

Brad Pleima, P.E. (00:31:11):

Then there’s the reporting of the annual CI data, that’s the fuel pathway report. Then both of those are annually verified by a third party verification body. This is the overall structure and this repeats year after year, the annual verification. But the LCFS pathway validation is a one-time process.

Brad Pleima, P.E. (00:31:38):

I think that’s just kind of what I summarized here on the next slide. That initial validation one time, it does require a site visit. Then that’s what helps your pathway certified. Then you have these ongoing verification services, of the fuel pathway report, which is the RNG producer’s responsibility. And of the quarterly fuel transaction report, which is the regulated party’s responsibility.

Brad Pleima, P.E. (00:32:07):

Then there’s a verification report that’s done by the third party. There is an annual site visit that’s required for verification. Our team is going through that process right now, and submitting the first set of annual verification reports to CARB, no later than August 31st. This is the first year a lot of people are trying to figure this out. I think in RNG, one of the bigger questions is, what happens if your annual CI, your fuel pathway report and your certified CI score are different? There is going to be a reconciliation process, so you may have to pay credits back, if your CI score was not as good as your certified score.

Brad Pleima, P.E. (00:32:53):

We’re still going through that process to understand exactly what that will be done. But there will be an annual true-up of that CI. Then that will be your new CI score going for the year forward. That’s kind of that rolling year, over year process that I talked about.

Brad Pleima, P.E. (00:33:11):

Just a little bit more on that pathway validation process. I’m just going to breeze over these since we talked about these before. But you need to get that validation done when you submit that pathway application. That’s a good time to start working with a third-party verification body, even a little bit before you submit that pathway application, to get them involved.

Brad Pleima, P.E. (00:33:35):

When CARB, after they do their completeness review and releases that to the verifier, that process is streamlined and you’re not missing out on any time by now having to go hire that verifier. Same thing, tier two also requires a third-party validation. There’s three potential results for the initial pathway validation and the annual verification. Positive, qualified positive and adverse. You want to be obviously in the first one, but even in the first two, basically there’s no material misstatements that were found.

Brad Pleima, P.E. (00:34:15):

Really want to avoid the adverse, where there are major issues and material misstatements. That will get turned over to CARB. I think it’s important to note here, CARB is ultimately the referee in this process. The verifier will do their review and their report, and try to work out as many things with the producer or the pathway holder as possible. If there are things that can’t be agreed upon, that’s when it’s turned over to CARB, to be that ultimate decision maker of how to handle those discrepancies.

Brad Pleima, P.E. (00:34:47):

That’s really getting the pathway going, what your annual verification requirements. There’s something in RNG in all fuel types, called the Compliance Monitoring Plan. I think this is one thing that is sliding through the cracks a little bit on RNG producers that we’ve been seeing. Roxby, do you want to talk a little bit. I don’t know how many of these things have you reviewed so far?

Roxby Hartley, Ph.D. (00:35:11):

Too many. Compliance Monitoring Plans, CMPs, basically if you are reporting either if you’re a fuel pathway holder, or if you’re just reporting the LRT to generate credits, you’re going to have to have one of these. Because if you’re subject to audits, the plan is what the auditors use, to figure out what they’re going to look at in your facility or in your process. So it has to have basically general overview and your facility and boundaries, all the methods that you use to get the data from whatever reporting you have, into the reports for CARB. If they’re Excel sheets or, all those sorts of things have to be kept for the required amount of time. You have to run them down with the Compliance Monitoring Plan.

Roxby Hartley, Ph.D. (00:36:12):

Basically, have a flow chart for how the data from your facility or from your office, ends up in the reporting for CARB. What I find is really easy to have, basically a flow chart for what happens to the data, and the block diagram for your facility, if you’re a pathway holder. The block diagram basically shows, where the meters are that are measuring all the inputs and outputs and labeling those meters.

Roxby Hartley, Ph.D. (00:36:46):

Identification measurement devices, is really important to the plan. There’s an awful lot of the plans that are dedicated to the metering, the accuracy, who maintains them, when they were calibrated. They even goes so far as to say, if you’re going to delay a calibration, you have to get permission from CARB, prior to the delay. You might have a good reason to delay calibration because you have to take the meter offline and it stops production or some of the circumstance, but CARB wants to know, in good time that that’s going to happen.

Roxby Hartley, Ph.D. (00:37:20):

When you’re applying for your [inaudible 00:37:22] pathway, you really should at least have an overview of that in place. What you will find is, as you develop a GREET model, that Compliance Monitoring Plan is likely to change, because you might for the model is going to come back with questions, say, “Hey, have you considered this?” All that information, all those changes, need to be part to the Compliance Monitoring Plan. It’s required for the validation and annual verification. The auditors are going to take this plan and build their audit based on this.

Roxby Hartley, Ph.D. (00:37:57):

As I said before, you have to have all the methods of data collection, all the calculation methods and equations you’re using, all the control procedures you have, and the staff who are responsible. Because when you have a site visit, your staff are going to be interviewed and say, “Hey, how would you do this?” The staff have to understand all the different procedures you have, for getting the data into the reports. The goal is to have really good, accurate reporting. It’s important to CARB that the program has integrity and the reporting is accurate.

Roxby Hartley, Ph.D. (00:38:32):

So everybody has to have one as we said. There’s really three parts of the monitoring plan. There’s the general part, there’s apart for fuel pathway holders, which is much more extensive. Then there’s a part for the LRT credit generation, which tends to be credit transfer documents, meter information. Where did the gas go? But if you are a pathway holder, you might have multiple fuel pathway codes, and you also have to have the allocation methodology by which you allocate between different pathways.

Roxby Hartley, Ph.D. (00:39:10):

Do you want to add anything to that, Brad? Is that comprehensive?

Brad Pleima, P.E. (00:39:14):

I think that’s good, Roxby. I think you’ve reviewed a lot of RNG Compliance Monitoring Plans. Do you have anything like off the top of your head of where do they lack? If people are putting together the first time… I know you’ve mentioned several times, that general first page is really important. You’ve told me several times, you should be able to know exactly what you do, how you do it, the fuel you make in that first page. Is that right?

Roxby Hartley, Ph.D. (00:39:42):

That’s right. I get some plans and you get through three pages and you don’t actually know what the facility does. This [inaudible 00:39:50]. One of the jobs of the auditor is to assess risk. If you don’t present this data well, then everybody’s going to think, “This is shoddy.” You have to make this a good document, nicely polished. It doesn’t have to be exactly right, because when you go to validation, any hiccups… There might be changes to your model during validation.

Roxby Hartley, Ph.D. (00:40:22):

The validator might say, “Hey, what about this?” Then that has to be put in the Compliance Monitoring Plan. It is a living document. Keep it up to date. If processes change, you have to update your Compliance Monitoring Plan. On the renewable diesel, biodiesel sidE, I typically [inaudible 00:40:40] that if you’ve got a management change process, it’s worth putting this into it as well. Consider this if you’re going to change your [inaudible 00:40:47].

Brad Pleima, P.E. (00:40:49):

Yeah. I think another thing we’ve seen in RNG is, have this ready when you submit your pathway application, because once the verification body gets turned loose to do the pathway validation, the first thing they’re going to ask is for the Compliance Monitoring Plan, in addition to the pathway application. You don’t want to be caught flat footed there and say, “Well, I don’t even have one.” It’s going to take you a little bit to put this together.

Brad Pleima, P.E. (00:41:11):

It’s, it looks a little bit onerous when you look at the requirements, but one, that’s something that we do here at EcoEngineers every day. Let us know, we can certainly help with more detailed information questions about the monitoring plan. I know we just have a few minutes to touch on it here. But we could probably have a whole nother webinar just on Compliance Monitoring Plans and their importance. But I think for RNG, just get started on them early. Talk to people that have done them before. Once you’ve done one, you’ll kind of get the hang of it and the next couple for other sites, will be a little bit more streamlined there.

Roxby Hartley, Ph.D. (00:41:52):

Particularly if you’re a fuel producer, you have to work with the person who’s doing the modeling, and make sure all the modeling [inaudible 00:42:01] caveats are recorded. It makes it a lot easier for the auditor. They’ll be a lot happier with their job.

Brad Pleima, P.E. (00:42:09):

I know an RNG too. There’s a lot of data monitoring, especially in dairy manure, swine manure pathways. You’ve got to do monitoring of inlet gas and outlet gas, and thermal oxidizer gas. If you’re trucking it, there’s even more meters that you’re going to do. Think about the monitoring plan is, you built your GREET model on your three months of operating data. How did you collect that data? Where did you collect that data? What meters did you use for that data? How frequently are you going to calibrate those meters or check those meters?

Brad Pleima, P.E. (00:42:42):

It’s really just a best practices of, how are you going to manage and monitor and collect and report that data, on a regular basis? A little bit more detailed than that, but in general, that’s the sense of it. It is really data focused, in addition to your overall general information about your pathway.

Roxby Hartley, Ph.D. (00:43:05):

Monitoring plan requirements. I think we covered this. First of all, general overview of your facility, make sure this is good. Actually, often your third-party engineering report for your facility, will contain a lot of that general information, which would be really useful to the auditor. If you’re in the QAP, I say, “Yes, we do the QAP.” Which will give the auditor more confidence that your data is good. Record the key operational parameters for the CI calculation. Say what methodologies are in place. You’ve got all this metadata. How do you end up with understanding the quality and quantity of gas that you’re producing? Where is that data collection, and where do you store that data? Say, “Hey, this person records it in this spreadsheet. Write those things down in the Compliance Monitoring Plan.

Roxby Hartley, Ph.D. (00:43:58):

This quarterly reporting specific transactions. If you’re important to California, I don’t think it’s gallons for each FPC. I think that might be… It’s not gallons, is it, Brad? [inaudible 00:44:11].

Brad Pleima, P.E. (00:44:13):

Yeah [crosstalk 00:44:15]. Sorry. I think that’s more for liquid fuels. Same concept. You have to report the gallons that you dispense as CNG for RNG or LNG. Gallons in LNG too.

Roxby Hartley, Ph.D. (00:44:29):

Right.

Brad Pleima, P.E. (00:44:30):

Just to kind of round things out on other RNG markets. I know we focus a lot on RFS and LCFS. We are starting to see a verification program coming into play in Oregon, in the Oregon Clean Fuels Program. I believe Roxby, that’s going to start next year. Is that right?

Roxby Hartley, Ph.D. (00:44:47):

Right. The validation. We just have the auditor training a couple of months ago. If you actually get your pathway submitted to Oregon this year, you won’t be subject to validation. The validation is going to be done in-house by the DEQ. If you submit it next year, you will be validated, you have to go through audits. If you’ve already been audited in California, I’d recommend getting a pathway into Oregon this year.

Brad Pleima, P.E. (00:45:18):

Yep. Starting next year, you’ll have to go through that same validation and then annual verification process for Oregon. I think the nice thing with the Oregon Clean Fuels Program, is they’ll accept the LCFS pathway registrations. You will have to have the ability to dispense this fuel into Oregon as well. If you’re foregoing California LCFS credits, you can transfer a lot of that information over to the Oregon program, assuming you can dispense vehicle fuel in Oregon as well. That’s a nice feature of the Oregon Clean Fuels Program.

Brad Pleima, P.E. (00:45:58):

Couple more things. Canada, the British Columbia LCFS program, that’s ongoing and moving forward. We do see some US-based RNG going to the British Columbia program. Canada just passed the Clean Fuel Standard that looks to be implemented. The rule making is going on now. Be implemented in late in December of 2022. We don’t know exactly if there are audit and verification requirements of that. I think we’re still going through that implementation.

Brad Pleima, P.E. (00:46:30):

Same goes with any new emerging markets, Washington, New Mexico, and other areas that are looking at similar LCFS type programs. I think if we follow the history of the RFS, the LCFS and of the Oregon Clean Fuels Program, that there will be a verification, there will be an audit requirement at some point in the future with those programs as well. Just like anything, when there’s these kinds of dollars that are available, it’s important to… The integrity of the programs are solid.

Brad Pleima, P.E. (00:47:02):

These audit requirements are new. Some of them are stringent. You’re going to have to do a lot of data review. But it really protects the program, it protects the producers that are generating credits under the program. When everything works well and everyone’s in compliance, these programs are just in a much better light.

Brad Pleima, P.E. (00:47:29):

Maybe lastly here before Q&A, we’ve seen some voluntary markets looking at custom audits as well. There may be no audit requirements, it’s really deal specific. But we’re seeing more interest in an annual verification by a third party in that transaction. Again, not are not a regulated requirement or a mandated requirement. What that looks like is very, very dependent on who is buying the RNG. But more and more people are looking at putting in place an RNG protocol, to make sure that the RNG that they’re buying is valid there.

Brad Pleima, P.E. (00:48:07):

With that maybe Lyndsey, I don’t know if we have any questions there. Roxby, anything else you wanted to add?

Roxby Hartley, Ph.D. (00:48:13):

On the other programs, I think from the points of it being passed by the legislature, it takes about five years before the credits really start ramping up to worth something.

Brad Pleima, P.E. (00:48:27):

Yeah, that’s a good point in those emerging markets. It takes a little bit of time to get built up in the industry.

Lyndsey Nielsen (00:48:36):

We do have a couple of questions here. Do you want me to start with the RFS and go to LCFS or just bounce all the way around?

Brad Pleima, P.E. (00:48:44):

You just lob them out there and we’ll handle it.

Lyndsey Nielsen (00:48:49):

Here we go. Does a pipeline tap in a state outside of California, have to be an interstate pipeline to take advantage of CARB’s LCFS? Or can it be an interstate pipeline that ties into another interstate pipeline?

Brad Pleima, P.E. (00:49:04):

Good question. It can be the latter. As long as you have a physical pathway to California, it does not necessarily need to be an interstate pipeline. Many, many, many of the existing pathways in RNG are local distribution companies or distribution pipelines and not interstate pipelines. Interestingly enough, even projects in Mexico, Canada, that are connected to the grid, may be able to participate in these programs, they have that physical pathway into the various programs.

Lyndsey Nielsen (00:49:43):

Maybe this one’s for you too, Brad. What does a typical CI score or score range for food waste digester, producing direct injection pipeline grade gas?

Brad Pleima, P.E. (00:49:53):

Oh man, we’re going to CI. I’m putting a CI but I haven’t done [crosstalk 00:49:59]. I can plug our CI workshops that we did about 18 months ago, maybe.

Lyndsey Nielsen (00:50:07):

That would be great.

Brad Pleima, P.E. (00:50:08):

If you want to refresher and primer on those, you can go to our website. We have some specific sessions targeted towards organic food waste and CI. That’s a difficult question because the answer it really matters, is the material landfill diverted? Can you classify it as landfill diverted material? If so, you can get some landfill diversion credits and that RNG may have a negative CI score. We’ve seen anywhere from minus 20 to maybe minus 75 in that range.

Brad Pleima, P.E. (00:50:40):

If 100% of your material is diverted from landfills, and you can demonstrate that to CARB. If it’s not, if that material was going to animal feed or composting, it’s probably going to have a positive CI score. It really depends. But maybe in the 10 to 30 CI score range. So those are just some general rules of thumb. But always the caveat that you got to model every… There’s so many different inputs to the model that you do have to model each site specifically, to narrow into that. But those are generalized ranges.

Roxby Hartley, Ph.D. (00:51:15):

I saw the question there, that do we do validations and verifications? The answer is yes. Our audit team does. Last time we checked, we’re doing almost half of all the verifications for California. That might’ve changed, but the audit team has been too busy working [inaudible 00:51:33]. I don’t want them to do that. I have to go back and look at the numbers again. But yes, we do an awful lot of that work.

Brad Pleima, P.E. (00:51:41):

That’s a good point. There are some conflicts of interest that we have to abide by as the verification body. We didn’t get into those today, just in interest of time. But we’re allowed to provide consulting services and auditing services at EcoEngineers, which we do both of. We’ve submitted almost 300 LCFS pathway applications, well, over 200 in the life of the program. We’re doing a lot of the validation and annual verification engagements.

Brad Pleima, P.E. (00:52:10):

The key to that is, in this phasing period through 2023, we can do both, but we have to have completely separated staffing. We have to be approved by CARB in any kind of mitigation plan or to be a verifier. We have to be fully transparent on what we’ve done on the consulting side and what we’re proposing to do on the audit side. That has to be approved by CARB.

Brad Pleima, P.E. (00:52:36):

But after 2023, we’ll have to pick. Are we going to do consulting work or audit work, at a company level? We’ll still be able to offer both services here, but we won’t be able to do both consulting and audit services. Even with the deep separation between the two groups we have here at the company, is we’re going to have to pick one or the other on a project by project or company by company basis. Because we won’t be allowed to do both. We’ll deal with that when it gets to 2023. I think our audit team’s just trying to get through 2021 here. And August 31st of getting all these verification engagements done.

Brad Pleima, P.E. (00:53:17):

I will say too, I think we’re going to have a lot better feel for how this process goes. This is the first year that everyone’s going through the annual verification. So I think everyone’s on a little bit of a learning curve here. I do just want to reiterate on the CI scores, that differential of CI between your certified CA score with your pathway and your annual fuel pathway, if there’s a difference there in credits, you’re likely going to have to pay those credits back.

Brad Pleima, P.E. (00:53:46):

We’ve worked with some entities to help. What does that look like, and how should you best accomplish that? We’ve got some ideas and we’ve talked to some people around that. If that’s a concern, feel free to shoot me or Roxby an email or a phone call. We can certainly talk that through with you more.

Lyndsey Nielsen (00:54:06):

We have some questions here about validation for joint applications. How is that different than not joint?

Brad Pleima, P.E. (00:54:15):

The pathway validation?

Lyndsey Nielsen (00:54:17):

Mm-hmm (affirmative).

Brad Pleima, P.E. (00:54:20):

The fuel pathway or the RNG producer and the CI, that all has to be validated. That joint application, it will be validated kind of together. Once you get the CI score, then you’ll tie that into the dispensing side of things. I don’t believe, Roxby, there’s no validation requirement on the dispenser side. They’re just required to register and report fuel in the LRT. I think that’s how that works. Is that your understanding too?

Roxby Hartley, Ph.D. (00:54:51):

Yeah, right. There is an advantage on the verification side as well. Say you have multiple parties who you’re working with, then certainly there’s an opportunity to have multiple audits, rather than one audit, depending on what the risks are. Say your site has multiple dispensers, then each dispenser has to be audited. They might require audits of the pathway or the reporting for the pathway. You have to expect it to have a joint application in the situations where there are multiple parties involved.

Brad Pleima, P.E. (00:55:30):

Then also, all of the quarterly fuel transaction reporting done by that dispenser, is required to be annually verified by a third party as well. The credit generation side and the RNG production side, are both subject to that annual verification. Starting this as the first year, going back to the 2020 production numbers.

Lyndsey Nielsen (00:55:53):

Are there any calendar risks as SB 1383 qualifies my CI score expiration of current GREET model, grandfather plant design, concurrent with certification? Does that make sense to you guys? It didn’t make sense to me.

Brad Pleima, P.E. (00:56:08):

Yeah, I think I get the general sense. We can have a whole webinar. We probably will coming up about SB 1383. Maybe we’ll park a little bit of that for the future here. But I think CARB recently put out an analysis of how close are they to meeting dairy emissions reductions as part of SB 1383. The report was, they’re not that close. They maybe can get halfway there. So they need more and more dairy emissions reductions project. How that’s gonna relate to CI scores and pathways, I think we’ll have to wait and see how a CARB is going to treat that. But I think there is that grandfathering period into the program. If you do get a pathway and the baseline changes in the GREET model, it’s not like you’re going to have to change with it. You’ll get that grandfathered pathway for at least that reporting, that 10 year period.

Lyndsey Nielsen (00:57:13):

One more question on timing, and then we’ll won’t take up any more of your time here. It says what’s the estimated total time for a dairy, swine review and approval, for the LCFS RNG tier two pathway?

Brad Pleima, P.E. (00:57:27):

I’m really glad somebody asked that because I don’t think we touched on the timeline for the LCFS. So you have to collect your three months of operational data. And then usually, once you submit the application, you have a six month window to get that validated. In some pathways CARB may ask you to resubmit and restart that clock. But in general, they’re really trying to hit that six month window. More than likely, it’s going to take you three quarters to get a pathway certified, to be able to use and generate credits. In some tier two pathway applications, that’s been streamlined to six months. It will be no shorter than two quarters. Because you’ve got to collect the 90 days in one quarter and then go through all the activities in the second quarter.

Brad Pleima, P.E. (00:58:16):

Then remember you generate credits or you report credits, at the end of each quarter. As long as you have that process done within that six month timeframe, you could use that pathway at the end of the second quarter. Or if that takes into the third quarter, you’ll be able to use that in the end of the third quarter. Most likely, in most cases, six to nine months. I would plan on the latter and plan for nine months without that. Again, you can store gas and people are doing that. You’re not generating no revenue, or you’re not losing that revenue while you’re waiting for this. But you may be delaying it till the end of the quarter.

Brad Pleima, P.E. (00:58:56):

Something we didn’t touch on. There is a temporary pathway that you can use, especially for dairy and swine at minus 150. You can generate credits on that, while you’re waiting for your pathway to be certified. That may be one technique that you can use to generate revenue earlier. But note that it will be at minus 150. And if your CI score is better than that, you’re going to lose that differential for those couple of quarters. Then you’ll use your full CI score once that’s certified.

Roxby Hartley, Ph.D. (00:59:26):

Say two quarters. You can have it extended for third quarter, but CARB’s very sticky on [inaudible 00:59:33]. They prefer just to get the certification done in the two quarters.

Brad Pleima, P.E. (00:59:37):

Yeah, good questions. Appreciate everyone’s time and attention today. Lindsay, do you have anything to close it out?

Lyndsey Nielsen (00:59:46):

Nothing right now. But feel free to check out our website and our blog. That’s where all of our old webinars are stored. You can watch all of our old webinars on demand. Feel free to check that out and follow us on social media. We will let you know when our next webinar is coming up.

Brad Pleima, P.E. (01:00:03):

Great. Thanks everyone.

Roxby Hartley, Ph.D. (01:00:03):

Thank you.

Lyndsey Nielsen (01:00:03):

Thanks, everybody.