win with rins: overview of the rfs2 regulation and new ......value of d3 and d5 rins • 77,000 btu...

WIN WITH RINS:

Overview of the RFS2 Regulation and

New Opportunities for Biogas Producers

April 21, 2015

Luca Nencetti, Associate

First Environment, Inc.

About First Environment

• HQ in NJ with regional offices across U.S. – Third-party verification services – Climate change technical assistance – Regulatory support – Site investigation and remediation – Environmental due diligence

• Voted Environmental Finance’s Best Verifier for North American Markets 2008 through 2012

• 75+ landfill projects involving GHGs or RFS2

International Biomass Conference – Minneapolis, MN

April 2015 2

Presentation Roadmap

• Introduction to RFS2 and RINs • Economic opportunities for

biogas producers

• Achieving registration • Guide to the engineering review • Quality Assurance Program for

RINs verification


April 2015 3

INTRODUCTION TO RFS2 & RINS

EPA’s Renewable Fuel Standard

• Mandates minimum volume of biofuels in U.S. transportation fuel supply each year

– Target: 36 billion gallons by 2022 • Establishes standards for fuel

suppliers and RIN tracking system

– Suppliers have annual renewable volume obligations (RVOs)

– One RIN = one gallon of ethanol


April 2015 5

Renewable Identification Numbers

• RINs are: – Only generated from qualifying

feedstocks, fuel pathways (D code)

– Reported to EPA by producer or importer – Can be sold or transferred to be used for

RVOs (with fuel or separated)


April 2015 6

ECONOMIC OPPORTUNITIES FOR

BIOGAS PRODUCERS

Renewable Natural Gas Pathways

Pathway Fuel type Feedstock Production

Process D-Code

Q

Renewable CNG

Renewable LNG

Renewable

Electricity

Biogas from:

• landfills • municipal wastewater treatment

facility digesters

• agricultural digesters • separated MSW digesters • cellulosic components of

biomass processed in other

waste digesters

Any 3

T

Renewable CNG

Renewable LNG

Renewable

Electricity

Biogas from waste digesters Any 5

Title 40 CFR Part 80.1426 Table 1


April 2015 8

Biogas Project Characteristics

• Biogas produced from: – Landfills – Wastewater treatment plants – Anaerobic digesters

• Transportation End User: – CNG/LNG (High Btu RNG) – Electricity used for on-road transportation (Medium or

High Btu Biogas)

• Biogas production and end user can be different entities in different geographic locations


April 2015 9

Requirements for Biogas –

CNG/LNG/Electricity Pathways

• Biogas is the feedstock • CNG/LNG/electricity is the renewable fuel • Producer (RINs generator) can be any

party in project chain

– Biogas producer – Biogas treatment plant – Gas marketer – CNG/LNG/electricity processor or distributor


April 2015 10

Value of D3 and D5 RINs

• 77,000 Btu of CNG/LNG = 1 EGE – 11.73 RINs/MMBtu CNG/LNG – 5.86 RINs/Mscf LFG

• 22.6 kWh of Renewable Electricity = 1 EGE – 4.90 RINs/MMBtu LFG

• 2,000 Mscf/day LFG ~ 1,000 MMbtu/day – 4.2 Million RINs/year

International Biomass Conference – Minneapolis, MN April 2015

11

EGE = ethanol gallon equivalent

LFG ~ 500 Btu/scf

Value of D3 and D5 RINs

D5: $0.80/RIN ~$9.00/MMBtu

D3: $0.80 - $1.40/RIN ~$9.00 - $15.75/MMBtu

Natural Gas price ~ $2.50 – $3.50/MMBtu


April 2015 12

$-

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

D5 RIN Price Trend 2013 - 2015

ACHIEVING REGISTRATION

Registration Process


April 2015 14

Registration Process


April 2015 15

Stage Estimated Time Frame for

Completion

RFS2 application

• 8-12 weeks, depending on data availability and project

complexity

Engineering review

• 4-6 weeks, depending on data availability and number of

facilities/site visits

EPA review and

approval

• No less than 8 weeks from submission, dependent on EPA

load and project complexity

Requirements for Registration

• List of feedstocks, fuels produced • Description of production process • Types of co-products produced • Process heat fuel supply plan • Baseline volume calculations and supporting

records

• Records of contractual pathway: source to end user • Evidence of physical pathway: source to end user • Third party engineering review report


April 2015 16

Contractual Pathway -

CNG/LNG/Electricity

• Track biogas through end user; affidavits if contracts unavailable

• Demonstrate fuel used for transportation purpose only, no other party relied on volume for RIN generation

• Provided at time of registration, plus ongoing recordkeeping

Landfill

(Biogas

Source)

Treatment Plant

Commercial Pipeline

LNG/CNG Production

Facility

Fleet Manager

(End User)


April 2015 17

Physical Pathway –

Commercial Distribution

• Evidence gas is injected into commercial pipeline (e.g., sales invoices, nomination

records, etc.)

• Description of modalities of transportation of fuel from production to conversion

facilities (e.g., physical pipeline pathway)

– Transportation route, network, pipeline maps – Nomination records or sales invoices – Contracts


April 2015 18

GUIDE TO THE ENGINEERING REVIEW

Overview of the Engineering Review

• Verifies accuracy of registration data

• Performed by licensed Professional Engineer

• Independent from fuel producer

• Requires site visit and records review


April 2015 20

Site Visit Requirements

• Site visits required up to pipeline injection

• Document review to confirm site visit

observations, confirm

RFS2 requirements met

• Requirements evaluated through

documents review,

additional site visits

optional

Landfill

(Biogas

Source)

Treatment Plant

Commercial Pipeline

LNG/CNG Production

Facility

Fleet Manager

(End User)


April 2015 21

Common Pitfalls in Registration

Process

• Contract arrangements not complete

• Fuel use not clearly designated • Inadequate documentation of

physical pathway

• Limited production data available


April 2015 22

QUALITY ASSURANCE PROGRAM

FOR RINS VERIFICATION

Incentives for Verification

• Note: RIN verification is voluntary

• Addresses concern of invalid RINs

• Standardized audit process • Increases value of RINs • Promotes greater liquidity in

transfer/use of RINs


April 2015 24

QAP-Q Requirements

• Performed by independent, EPA-approved third party verifier

• Periodic monitoring of fuel production

• Periodic on-site audits – Audit requirements can be reduced if

continuous monitoring is implemented


April 2015 25

Summary

Despite past market volatility, value of

biogas RINs appears to be well-supported

EPA has improved and streamlined

registration process for biogas projects

QAP-Q verifications allow for increased

market transparency and RIN value


April 2015 26

For More Information

Contact us:

Luca Nencetti, Associate First Environment, Inc.

79 Madison Avenue, 2nd Floor New York, NY 10016

646.873.6781 x301

[email protected]


April 2015 27
mailto:[email protected]

win with rins: overview of the rfs2 regulation and new ......value of d3 and d5 rins • 77,000 btu...

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