Biogas Production Gets a Boost in 2012 and 2013, Too

Along with extended and modified incentives for energy efficiency and other renewable energy technologies, biogas producers also stand to benefit from legislation recently passed by Congress. This follows a year of continued expansion and improving prospects for biogas production in the United States.

The American Taxpayer Relief Act of 2012 (H.R. 8), enacted earlier this month, included the following incentives for biogas production:
• Section 45d of the tax code, which provides renewable energy production tax credits (PTC) of $0.011 per KWH for ten years for open loop biomass (which includes production of biogas from animal waste and cellulosic biomass) and landfill gas, was amended to cover new plants based upon their construction start dates rather than the dates they start producing power. Construction must start before the end of 2013 for the plant to receive the credit.
• The bill would also allow facilities that are eligible for the PTC to opt to take a 30 percent investment tax credit instead of the PTC.
• The 30 percent investment tax credits for alternative fuel vehicle refueling property, which includes biogas as an alternative transportation fuel, were extended through 2013.
• The $0.50 per gallon alternative fuel production tax credit (which includes biogas transportation fuel) was also extended through 2013.

The amendment to allow eligibility for the PTC based upon the construction start date is especially significant. Previously, eligibility was based upon the date a facility was placed in service, making a relatively short, 12-month extension of the credit useless for many renewable energy projects which require much longer time periods to develop. With this change, many more projects are likely to begin construction in 2013 and many more facilities are likely to be placed in service in the years ahead.

This recent legislative boost follows a year of significant developments and continued expansion in the biogas industry. Reflecting the broad range of sources and applications of renewable biogas, recent news items include:
• Biomass Magazine (12/28/12) reported on a new biofuel plant in Oakley, KS, that will use renewable biogas from an anaerobic digester at a nearby feedlot to provide most of its process heat. By reducing methane emissions from the feedlot and avoiding the use of fossil fuel for process heat, the greenhouse gas (GHG) emissions impact from the plant will be significantly reduced. Western Plains Energy hopes that the EPA will certify its biofuel, which will be made from sorghum, as an advanced biofuel – achieving a greater than 50 percent reduction in life cycle GHG emissions compared to conventional fossil fuel gasoline. Earlier in December, the EPA certified a biofuel production pathway using sorghum with a biogas-fueled combined heat and power system as meeting the GHG reduction standard for advanced biofuels.
• Biomass Magazine also reported (12/14/12) on the completion of two new biogas plants in Washington and California. The Agri Beef Co. in Toppenish, WA, will use methane produced from wastes from its beef processing facility to help run its steam boilers, displacing nearly 20 percent of the fossil natural gas that it currently uses. In Sacramento, CA, CleanWorld opened one of the nation’s largest commercial-scale, high-solids anaerobic digestion systems. It will "convert 10,000 tons of food waste and organic materials per year, or 25 tons per day, from area food processing companies, restaurants and supermarkets into renewable natural gas, electricity and soil-amendment products. A 30,000-ton-per-year scale-up of the facility is planned for January." Much of the biogas will be processed into transportation fuel, providing one million gallons of renewable biofuel per year to fuel vehicles at a waste and recycling company, Atlas Disposal Industries.
• December 1, the Daily News of Jacksonville , NC, reported that Onslow County signed a contract with Enerdyne to begin producing electric power from its landfill gas, creating a new revenue stream for the county. The EPA reports that there are 594 landfill gas to energy projects operating in the U.S. today with more than 1.8 gigawatts (GW) of installed capacity, and there are about 540 candidate landfills with at least one million tons of solid waste, representing about 1.2 GW of potential power capacity, waiting to be developed into waste-to-energy facilities.

The production of renewable biogas is expected to continue to grow rapidly worldwide in the coming decade. In a November report from Pike Research , analysts predicted that "biogas will play a key role in the emerging renewable energy market. Worldwide power generation capacity from commercial biogas facilities will more than double over the next decade, growing from 14.5 gigawatts (GW) in 2012 to 29.5 GW in 2022."

Wastewater treatment is one sector ready for growth. In a recent report, the EPA found "As of June 2011 CHP [combined heat and power] systems using biogas were in place at 104 WWTFs [wastewater treatment facilities], representing 190 megawatts (MW) of capacity. CHP is technically feasible at 1,351 additional sites and economically attractive (i.e., payback of seven years or less) at between 257 and 662 of those sites." This fall, a new web site was launched that provides data on the status of renewable biogas production and use at wastewater treatment plants across the country. More than 1,238 wastewater treatment plants across the country produce biogas. Of those, more than 837 use biogas for energy.
For more information on the potential of renewable biogas in the U.S., see EESI’s April 26, 2012, briefing. Kathryn Clay of the American Gas Foundation gave a presentation entitled Renewable Natural Gas: Part of Our Sustainable Energy Future which was based upon a recent study by her organization, The Potential for Renewable Gas: Biogas Derived from Biomass Feedstocks and Upgraded to Pipeline Quality . Also see a previous SBFF post Methane Pollution from Human Activities: Capture It, Convert It, Count It .