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 © 2020 Center for Resource Solutions. All rights reserved. PAGE 2 Green-e® Certification • 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. © 2020 Center for Resource Solutions. All rights reserved. PAGE 3 Green-e® Governance Board 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,