Episode 7

Opportunities and Challenges for Renewable Natural Gas

The Energy Transition series is comprised of one hour panel sessions involving executives and industry experts dedicated to improving awareness on various elements of the energy transition, as well as identifying investment opportunities for corporate and institutional investors.

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By TJ Schultz, Chris Looney and guest speakers
Published November 5, 2021 | 2 min watch
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Key Points

  • What are the opportunities and challenges for Renewable Natural Gas (RNG)?
  • How important is legislation for adoption?
  • Will consumer demand accelerate?
  • Supply and demand trend
  • Infrastructure build-out

To discuss this key topic of the energy transition, RBC Capital Markets asked Brian Hlavinka, Director, Emerging Opportunities at Williams, Mark Nelson, EVP Downstream & Chemicals at Chevron and John Dannan, Principal at Generate Capital.


Three Key Takeaways:  

RNG is gaining momentum

RNG is increasingly seen as a decarbonisation tool, notes Brian Hlavinka of Williams. “RNG is not new, we’ve been having it in our system for quite a while, but it got much more attention recently,” he stressed. “We invest in it as part of Williams’ 2050 Net Zero goal and 2030 interim target of 50-60% reduction. It’s a very natural fit with our core business.” As reducing Scope 1 emissions is very challenging, and no single technology will provide the magic answer, RNG is one that they can use today, he thinks.

Big players are looking at RNG as part of their decarbonisation strategies

Chevron intends to increase its RNG production ten-fold by 2025 and has signed a number of deals and various initiatives in this space last year. “Our company has identified RNG as an action area,” says Mark Nelson of Chevron. “It aligns with our strategy for higher returns and lower carbon. We expect to become a strong player in the RNG/CNG space in policy enabled markets like the US West Coast.” Nelson remarks that Chevron is strong in terms of its positioning in the value chains from feedstock all the way to commercial sales and knows the policies. “Relative to other things we do, it has a lower capital intensity and, perhaps, even less risk.”

Policy is key and should be watched closely in the RNG space

Amid different types of incentives, John Dannan of Generate Capital recommends paying attention to the movements of regulators and lawmakers. “In a policy-enabled space like this, watching the political call is important.” This is because policies can affect the investment model and reduce margins. Two main markets currently exist in the RNG space: ultra-low animal waste carbon intensity (“CI”) projects “with a very high value to derive”; and longer-term contracted utility or voluntary market contracts, which are more stable but offer a lower return, he stresses.

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