A new report from Wood Mackenzie highlights the growing potential of landfill gas as a feedstock for renewable natural gas (RNG) production in North America.
The study, Trashing your way to a cleaner future: landfill gas as a feedstock for RNG in North America, reveals that landfill gas-to-RNG (LFG-to-RNG) capacity has nearly doubled in the past five years, with only 10 per cent of the resource potential currently being utilised.
Dulles Wang, director of research at Wood Mackenzie, notes that the LFG-to-RNG sector has been extremely active recently, with new project ramp-ups, significant M&A deals, and new market entrants.
The top seven developers now control over 60 per cent of the market, indicating a trend towards consolidation.
Wood Mackenzie forecasts substantial growth in the sector:
- Resource potential could exceed 5 billion cubic feet per day (bcfd) by 2050, up from less than 4 bcfd today
- Production could reach 2.2 bcfd by 2050, a significant increase from the current 0.3 bcfd
The report identifies four critical factors that contribute to the success of LFG-to-RNG projects:
- Economies of scale: This has the most significant impact on project costs
- Location: Proximity to landfills affects interconnection costs
- Upgrader technology: Capital costs vary based on technology type
- Operational efficiency: Operating costs can range from 3 per cent to over 60 per cent of capital costs
Despite variations in project costs, LFG-to-RNG remains the lowest-cost option for RNG production. The subsidy value of RNG could potentially reach over US$20/mmbtu when considering different Environmental Attributes.
Currently, RNG pre-tax breakeven prices range from US$4 to US$35/mmbtu, with an average of US$15/mmbtu.
Wang points out that population growth will likely lead to more landfills, which are major sources of methane.
Increased government scrutiny on methane regulation and policy incentives targeting the RNG industry is expected to boost LFG-to-RNG conversions.
However, challenges remain.
The relatively high carbon intensity compared to other RNG technologies may deter some investors. Additionally, small-scale or remote projects may face economic hurdles, and recent inflationary pressures could affect cost breakevens.
Despite these challenges, Wood Mackenzie maintains a positive outlook for LFG-to-RNG. Wang concludes, “RNG will play an increasing role in decarbonising North American economies, and with LFG-to-RNG capacity nearly doubling in the last five years, we expect the trend to continue in the foreseeable future”.
As the renewable energy landscape continues to evolve, LFG-to-RNG projects are poised to play a significant role in North America’s transition to cleaner energy sources.
