Renewable Natural Gas: a Compliance and Voluntary Solution to Lower Greenhouse Gases BLUESOURCE IS…

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Renewable Natural Gas: A Compliance and Voluntary Solution to Lower Greenhouse Gases BLUESOURCE IS…

DEVELOPER RETAILER INNOVATOR

Largest and most-established carbon Renewable Energy Credits (RECs), Bluesource pioneers new offset developer in North America. Low Carbon Fuel Standard Credits environmental attribute markets, (LFCS) as well as carbon offsets creative commercial structures and 200+ Projects, 20+ Project Types proficient capital deployment. 150+ million tons of greenhouse gas emission reductions

SIMPLE & EFFICIENT | UNMATCHED EXPERIENCE | COMPREHENSIVE & COST - EFFECTIVE | QUALIFIED

Bluesource has been voted Best Project Developer and Best Offset Originator 4 years running by Environmental Finance.

Salt Lake City San Francisco Calgary Toronto BLUESOURCE PROJECT PORTFOLIO

25+ RNG plants we pair to Voluntary Buyers, Green Tariff Utilities, Transportation End Use

3 BLUESOURCE RNG TEAM

▪ 4 hub offices: Salt Lake City, San Francisco, Calgary, and Toronto ▪ 43 employees Will Overly Lizzie Aldrich ▪ 10 employees on the RNG team Vice President Vice President of Business ▪ Will Overly- US RNG Business Unit Leader Development

▪ Sarah Johnson- US RNG director

▪ Chelle Davidson- RNG Compliance Manager

▪ Lizzie Aldrich- Ag Methane & LCFS specialist

▪ Justin Friesen- Registration & Implementation Sarah Johnson Chelle Davidson ▪ Courtney Messer- RNG Analyst Director of RNG Projects RNG Compliance Manager

▪ Jamie MacKinnon- Canadian RNG Leader

▪ Kevin Townsend- Offset, RIN & LCFS Sales

▪ Ben Massie- Offset, RIN & LCFS Sales

▪ Matt Harmer- Internal Counsel

▪ Coby Price- Internal Counsel Justin Friesen Courtney Messer Manager RNG Projects Analyst RNG Analyst Analyst WHAT IS BIOGAS/BIOMETHANE/RNG?

Biogas- product of organic material decomposing in an anaerobic (zero oxygen) condition. The raw biogas needs treatment to clean out impurities to meet pipeline Landfill | Wastewater | Anaerobic Digestion specifications Biogas Biomethane- refers to cleaned and conditioned Biogas that meets pipeline quality

Manure | Food Waste | Crop Residue Environmental Attribute- refers to a volume of gas that was produced in a designated environmentally beneficial fashion. The EAs can be separated from the biomethane and assigned to gas in a different region. (unbundled/transfer by displacement) Pipeline Conditioning Renewable Natural Gas (RNG)- pipeline quality gas with the Biomethane/RNG Environmental Attributes attached from a renewable source. produced in a designated environmental beneficial fashion. The EAs can be separated from the biomethane and assigned to gas in a different region. (bundled or unbundled) Gas Grid | End Use | Transportation 5 - CURRENT RNG MARKET DEMAND

Voluntary Compliance Pre- • Corporates • National- Compliance (ESG, Scope RFS2, LCFS • CFS/LCFS or 1) (CA, OR), RNG RPS • Utility RNG Cap & Trade Tariffs • International

6 NOT ALL RNG IS CREATED EQUAL

Compliance NRTHNatural AMERICAN Gas Voluntary OFFSETPre- PROJECTSCompliance RFS Value Corporate Compliance LCFS $1.70/D3 RIN (Physical) (EA) (EA) $195/LCFS $0.75/D5 RIN

DAIRY/SWINE $1.50-$2.00/ D3 -250 CI MANURE N/A N/A $84/mmbtu mmbtu $19.93/mmbtu $61.98/mmbtu

0 CI FOOD WASTE $1.50-$2.00/ D5- N/A $15.54/mmbtu $9-20/mmbtu $8-11/mmbtu $8-11/mmbtu Tip Fees! mmbtu $ 8.79/mmbtu -25 CI $20.18/mmbtu

$8-11/mmbtu D3 30 CI $8-11/mmbtu WASTEWATER $1.50-$2.00/ $19.93/mmbtu $9.96/CI TREATMENT $31/mmbtu mmbtu $8-11/mmbtu $8-11/mmbtu D5- N/A N/A

Only a sampling of project types Bluesource develops or can source.

LANDFILL GAS $1.50-$2.00/ D3 45 CI $8-11/mmbtu N/A $28/mmbtu mmbtu $19.93/mmbtu $7.18/CI

7 VOLUNTARY BUYER’S RNG APPROACH TO NET ZERO- SCOPE 1 EMISSIONS

Source: WRI, “Operational Boundaries of GHG Emissions”

8 CORPORATES’ VOLUNTARY RNG PURCHASES

Purchase RNG directly (bundled)

• Through a direct connection pipeline

• Through a book-and-claim accounting that involves a financial transaction for the gas o Examples of companies pursing these options:

Purchase Green-e Thermal/Renewable Thermal Certificates separate from actual gas purchases (unbundled). • An emerging standard that has not yet been completely developed. o Slated to be ready for use in 2020.

9 NATURAL GAS UTILITIES WITH VOLUNTARY RNG TARIFFS

Utilities Purchase RNG to offer to Residential & Commercial clients

• Similar to Renewable Portfolio Standard (RPS for Electricity)

• Pass along costs through Green Gas Tariffs

10 APPLES TO APPLES COMPARISON

OFFSETS VS RNG

Direct boiler operations use of natural gas example:

LFG RNG= 40 70,000 116.89 2,204.62 3,711.43 CI x ÷ = $370.74/ton MMBtu of lbs CO2 lbs CO2 metric tons natural gas /MMBtu /metric of CO2 ton

Biogas with a 40 CI score (lower landfill gas RNG) would have approximately 50% savings: approximately 1,855 metric ton savings.

Offsets $2-12/ton 70,000 $10 1,855 $370.74 x ÷ = MMBtu of /MMBtu metric /metric ton biogas tons

11 12 PRE-COMPLIANCE & COMPLIANCE MARKETS

▪ Pre-Compliance Market: Opportunity for early actors to take a position before regulation

– Canada in preparation for the Federal CFS

– Any State or Province that pursuing a CFS/LCFS or Cap and Trade program

• WA, CO, MN, NY, etc.

▪ Compliance Market: Regulation requires that action is taken

– CA Cap and Trade: RNG (virgin) can be used to lower obligation

– Federal Renewable Fuel Standard: National program to increase renewable fuels in the transportation market (RNG)

– CA LCFS: State program to decrease carbon intensity of transportation fuels (20% by 2030)

– OR CFP: State program to decrease carbon intensity of transportation fuels (10% by 2025)

13 RIN/LCFS RNG TO CNG PROJECT OVERVIEW

Ag Methane & AD Project Developer X Biomethane Conditioning End-User CNG / LNG for transportation Obligated Party WWTP Sale of:

RINs LCFS credits Annual Renewable Landfill Volume Obligations under RFSII

Introduction to Commercial Distribution

Direct Use – Either used on-site of conditioning plant or transported via tanker to dedicated end-user ▪ RIN value shared between ABC Landfill, Project Developer X and End-user ▪ LCFS only if project and end-user are in California Pipeline | Virtual – RNG sold to remote user through inter-connected gas network ▪ If end-user is in California, there is potential for LCFS credits LCFS RNG TO RENEWABLE ELECTRICITY OVERVIEW

Ag Methane & AD Project Developer X Biomethane to Electricity End-User Electricity transportation Obligated Party WWTP Sale of:

LCFS credits

Deficits generated Landfill EVs, Forklifts, Buses, etc. from CI vs Standard

Introduction to WREGIS Transmission

Virtual – RECs sold to remote user through WREGIS connected grid ▪ If end-user is in California, there is potential for LCFS credits RIN MARKET OVERVIEW

▪ The EPA’s Renewable Fuel Standard 2 requires blenders and refiners of fuel to blend increasing amounts of biofuels in their fleets over time.

▪ Renewable Natural Gas (RNG) qualifies for this program and generates Renewable Identification Numbers (RINs).

▪ Each RIN is equal to a gallon of ethanol equivalent.

▪ There are different flavors of RINs based on the greenhouse gas intensity of the fuel to make it.

▪ RNG qualifies for the most valuable of the RINs and is known as a D3 RIN.

▪ RINs can be stacked with LCFS credits.

16 CALIFORNIA LOW CARBON FUEL STANDARD

▪ LCFS Target: Reduce carbon intensity of transportation fuels by 20% below 2010 levels by 2030.

▪ Mechanism: Sets annual carbon intensity values for gasoline and diesel fuels in terms of

gCO2/MJ.

▪ 2020 Standard: 91.98 gCO2/MJ for gasoline and 92.92 gCO2/MJ for diesel. Those fuels above the standard create deficits and those below create credits.

▪ Regulated parties: Most providers (importers and refiners) of petroleum and biofuels. Meet target by buying credits or blending in less carbon intensive fuels.

▪ Opt-in to create credits: Electricity, hydrogen, natural gas, and biogas.

▪ How to create credits: Full lifecycle assessment determines opt-in carbon intensity (CI). If the CI is below the current standard, then credits can be earned and sold to regulated entities. 17 THANK YOU

Will Overly, MBA Vice President [email protected] (801) 438-1533

Lizzie Aldrich, M.S., Ph.D. Vice President of Business Development [email protected] (303) 898-5558 Green-e® Certification for Renewable Fuels

Rachael Terada September 29, 2020 Bluesource Webinar Renewable Natural Gas: A Compliance and Voluntary Solution to Lower Greenhouse Gases Center for Resource Solutions

Nongovernmental Organization (NGO) creating policy and market solutions to advance sustainable energy since 1997.

• Expert assistance • Renewable energy and climate policy • Renewable Energy Markets annual conference • Green-e® certification for suppliers and users of renewable energy and carbon offsets in the voluntary market

• Global leader in clean energy certification • Consumer protection for voluntary renewable energy purchases • Over 68 million MWh in retail transactions certified in 2019, enough to power over half of U.S. households for a month.

Current representatives from:

• Natural Resources Defense Council (NRDC) • Union of Concerned Scientists (UCS) • CDP • National Renewable Energy Laboratory (NREL) • Center for Resource Solutions (CRS) • Southern Environmental Law Center • Renewable Northwest • WSP | Parsons Brinckerhoff • Sacramento Municipal Utility District (SMUD) • Keyes, Fox & Wiedman LLP • SunPower Corporation

Plus, non-voting members from 3Degrees, Puget Sound Energy, Carbon Solutions Group

Objectives

• Accelerate the adoption of renewable fuels, while ensuring that the gas is from sustainable renewable resources and meets the highest environmental standards • Ensure customers are protected in their purchase and ability to make verifiable usage claims

• Initial focus on biomethane from waste sources; may be expanded in the future • Covers U.S. and Canada • Regulatory surplus required: no RINs or LCFS credits for the same dekatherm sold in a Green-e® certified transaction • Verification and audit required • Consumer disclosures and marketing compliance review • No double counting, double selling, double claiming

A. Fuel Type: Biomethane B. Sources of Production: 1. Digester Gas 2. Landfill Gas C. Feedstocks for Anaerobic Digestion A. Municipal Wastewater B. Organic component of municipal solid waste when separated prior to landfilling C. Food waste D. Vegetative matter, such as yard waste, shrub, or chaparral E. Crop residue

• Definitions • Utility program requirements and residential customers • Feedstocks, including wastewater and energy crops • Use of animal waste and confined animal feeding operations (CAFOs) • Production requirements, including permit violations and digestate management practices • Carbon Intensity, including thresholds, leakage, and calculation methodologies • Vintage of renewable production • Production Facility Age • Raw Biogas • Certification program structure and options

Lessons Learned from the Electricity Market

• Certification is crucial in a nascent market • Stakeholder feedback helps create robust Standard and program • Standard must be adaptable but clear

© 2020 Center for Resource Solutions. All rights reserved. PAGE 9 Standard Setting Process • Advisory Group • Working Group • Terms of Reference • Draft Standards • Stakeholder comment periods • Independent Green-e® Governance Board votes on the final draft of the Standard

Timeline: plan to release the final Standard by the end of 2020

• Working Group for treatment of bioenergy and biofuels across all scopes • CRS is co-leading the development of the chapter on treatment of certificates • Final draft released next year

2nd Open Stakeholder Comment Period is open August 31-October 30, 2020 60-day comment period—please provide feedback www.green-e.org/renewable-fuels

Informational webinar on the 2nd comment period: October 8, 11 am-12 pm Pacific www.resource-solutions.org/events

Rachael Terada DIRECTOR, TECHNICAL PROJECTS [email protected] +1.415.561.2135

www.resource-solutions.org © 2020 Center for Resource Solutions. All rights reserved. Renewable Natural Gas: A compliance and voluntary solution to lower greenhouse gases Benjamin L. Gerber CEO, M-RETS September 29, 2020 For Public Distribution Agenda

• Background • Definitions • Why a thermal certificate market/tracking system? • System screenshots • State of the Voluntary & Compliance Markets • Issues • Why M-RETS? Background

• Mission: M-RETS validates the environmental attributes of energy to serve as a trusted centralized gateway to environmental markets.

• Independent non-profit 501(c)(4) with a stakeholder board.

• M-RETS tracks in all states and provinces. What Does Renewable Thermal Mean?

• Biogas - means a mixture of CO2 and hydrocarbons, primarily methane gas, from the biological decomposition of organics. • Renewable Natural Gas - Biogas upgraded to meet pipeline quality standards so it may blend with, or substitute for, geologic natural gas. • Blue Hydrogen - H produced from natural gas—usually via steam reforming with CCS. • Green Hydrogen - H produced using renewable electricity— often curtailed—to produce hydrogen via electrolysis. • Other – heat pumps, waste heat recovery, solar thermal, renewable liquid fuels, etc. Why use a certificate tracking system?

The goal is to simplify process for all parties What does an RTC look like?

RTC Information

Dekatherm (Dth) Renewable Thermal = Serial Number 1 Renewable Thermal Certificate T1234-IA-05-2020-HTR5F9-1-500

Certificate Details include:

M-RETS ID Vintage RTC Range ● Serial Number (See Example) ● Account ● Project Location Unique Identifier ● Thermal Resource ● Feedstock ● Vintage ● Location ● Quantity

Carbon Pathways (If Applicable) IRE Verification (If Applicable) Supported Thermal Resources Thermal Resources

● Air Source ● Biogas ● Compost Heat Exchange System ● Ground And Water Source Heat Pump ● Hydrogen ● Non-Renewable Additives ● Renewable Natural Gas ● Solar Thermal ● Woody Biomass System

● M-RETS is not a policy decision-making body and will support relevant regulators in determining what qualifies as renewable thermal for their specific programs. M-RETS can easily add new supported thermal resources or feedstocks.

● M-RETS can insert software code to prevent improper claims occurring within certain programs and/or regulators can utilize reporting functionality to verify compliance.

State/Utility/Voluntary Work

• Oregon - SB 98 • Nevada – SB 154 • Minnesota – Regulatory • Colorado – VW Settlement Funds • Northeast – Summit, Vermont • Hawaii — Hawaii Gas • Canada – Enbridge, Fortis, Canada Federal Carbon Plan, Clean BC 15% target • Green-e Renewable Thermal Certification • Renewable Thermal Collaborative – Buyers Statement

*Underlined text are links, graphic from RNG Coalition Polar Vortex & Gas Demand – Gas Plays a Critical Role in Many Parts of the United States

https://www.eia.gov/electricity/state/Minnesota/ Unknowns/Market Holdups

Claims:

• Reduction of carbon vs. traditional thermal resource or gross volume? • Scope Emissions Issue – How companies can count RNG use in scope emissions is currently holding up the industry!

• How will states and/or the FTC regulate?

• Will regulators allow voluntary claims stacking like RFS/LCFS

• Will voluntary markets work off CI or volumes? RFS/LCFS pricing will dictate how important/how much corporates are willing to pay to reduce emissions

Data:

• As these markets grow there will be a greater need for data standardization. M-RETS is working on this for both REC & RTC markets. Why M-RETS?

Well-Established Relationships. M-RETS maintains strong relationships with many North American regulators

Industry Credibility. A long track record in commodity tracking among clean energy stakeholders

Proven Platform. Using the M-RETS platform saves high initial startup costs and ensures a stable rollout

Responsiveness. In-house development staff

Business Model. 501(C)(4) status allows M-RETS to focus resources on maintenance and improvements

Accepted Practice. Similar market structures and complimentary processes between RECs and RNG justify using a system already trusted by regulators and market participants THANK YOU Contact: [email protected]