California will need high volumes of alternative low carbon fuels to be able to meet its climate change goals. In order to support these goals, this study investigated the technological and commercial feasibility of producing large quantities of renewable natural gas fuels for use in California. The study’s results indicate that there are substantial sources of RNG in California that are commercially competitive with existing fossil fuel-based transportation fuels because carbon externalities are taken into consideration in the California market through existing programs such as the Low Carbon Fuel Standard (LCFS) and the U.S.Renewable Fuels Standard (RFS). At current credit prices including California’s LCFS and the U.S. federal Renewable Identification Number (RIN) credits, up to 82 billion cubic feet per year (bcf/y) of RNG supply could be attractive for private investment at competitive rate of return in developing RNG sources from landfill, dairy, municipal solid waste and waste-water sites combined. We find that the LCFS credit of $120 per metric tonne of CO2, if taken alone, enables economically viable production of up to 14 bcf RNG transportation fuel over the study period, which begins in 2013 and extends into the 2020s, 6.3 bcf from landfill, 1.5 bcf from waste-water treatment, 1.75 bcf from municipal solid waste, and 4.3 bcf from dairy. If current carbon credit prices persist into the future for programs like the LCFS, a substantial portion of natural gas consumption in the transportation sector can be satisfied by RNG. The analysis also shows that increasing tipping fees for municipal solid waste can influence private investment in RNG. Finally, the study investigates the impact of California’s quality standards for RNG and distance to central distribution systems on the level of investment in certain kinds of RNG. These results support the implementation of the Low Carbon Fuel Standard, Short-lived Climate Pollutant Strategy, and incentive programs by providing insight into feasible methods to maximize the production of RNG via the most cost-effective pathways, thereby providing practical means to meet the State’s long term climate goals.
For more information, including the webcast link and presentations, visit the announcement webpage at https://www.arb.ca.gov/research/seminars/jaffe/jaffe.htm
