Landfill gas (LFG) remains the dominant feedstock for renewable natural gas (RNG) production, according to a recent report by Wood Mackenzie.
The report highlights that while LFG-to-RNG projects have seen significant growth, with capacity nearly doubling in the last five years, the success of these projects varies widely based on location, scale, and technology.
Wood Mackenzie notes that only 10 percent of the potential LFG resource is currently being utilized in North America, leaving substantial room for growth. The report identifies four key factors that influence the success of LFG-to-RNG projects:
Economies of Scale: Larger projects tend to have lower costs, with a strong correlation observed between project scale and overall cost-effectiveness.
Location: Proximity to landfills and local environmental regulations play a crucial role in determining interconnection costs and project feasibility.
Upgrader Technology: The choice of technology for upgrading LFG to RNG affects capital expenditure, with costs varying significantly based on the type of technology employed.
Operational Efficiency: Operating costs can range from 3 percent to over 60 percent of capital costs, heavily influenced by utility costs.
Despite the cost variations, LFG-to-RNG is currently the most cost-effective option for RNG production, with pre-tax breakeven prices ranging from $4 to $35 per million British thermal units (mmbtu), and an average of $15/mmbtu. The potential for growth in this sector is considerable, with Wood Mackenzie forecasting that RNG production could reach 2.2 billion cubic feet per day (bcfd) by 2050, up from 0.3 bcfd today.
The report also emphasizes that government scrutiny on methane emissions, coupled with increasing policy incentives, will likely drive further growth in LFG-to-RNG projects. However, challenges remain, particularly for smaller or remote projects that face higher costs and potentially lower returns due to their higher carbon intensity (CI) compared to other RNG technologies.
As North America continues to focus on decarbonization, RNG, and particularly LFG-to-RNG, is expected to play an increasingly important role in reducing carbon emissions, especially in the transportation sector.