Fuel for a Greener Revolution Across the Atlantic

North America - especially the United States and increasingly Canada - is swiftly establishing itself as a global force in the biomethane industry (commonly referred to as Renewable Natural Gas, or RNG, in this region). Driven by a potent mix of environmental regulation, ambitious decarbonisation targets, and an abundant supply of organic waste, RNG is transforming waste management into a valuable source of low-carbon energy. In contrast to Europe’s more harmonised Guarantee of Origin (GO) system, the North American biomethane market is shaped by a complex web of federal schemes, state-level policies, and varied credit mechanisms. Successfully navigating this intricate landscape demands specialist insight and strategic acumen.

This article explores the principal biomethane credit systems in North America, chiefly the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS) with its Renewable Identification Numbers (RINs), and California’s pioneering Low Carbon Fuel Standard (LCFS). We also examine supplementary state-led incentives and emerging Canadian regulations. Understanding these various “tickets” is essential for stakeholders aiming to invest in, produce, or procure RNG as part of their decarbonisation strategy. Furthermore, we highlight the critical role played by expert trading firms such as AFS Energy in navigating this fragmented yet highly lucrative market.

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The Rise of RNG in North America: Key Drivers and Production

The surge in RNG production in North America is underpinned by several pivotal factors:

• Waste Management: A substantial portion of RNG is derived from landfills, wastewater treatment works, and agricultural operations - an effective solution for reducing methane emissions from organic waste.
• Decarbonisation Goals: Ambitious federal and state-level climate targets are prompting industries and utilities to pursue credible means of cutting greenhouse gas emissions across transport, heating, and power generation.
• Energy Security: Domestic RNG production bolsters energy independence and diversification, insulating the energy system from global fossil fuel volatility.
• Infrastructure Compatibility: RNG’s chemical equivalence to fossil natural gas allows for its seamless integration into existing pipeline infrastructure, minimising the need for costly retrofitting.

In North America, RNG is predominantly produced via anaerobic digestion of organic feedstocks, with upgrading technologies applied to remove impurities and increase methane content to pipeline standards. Production is also expanding through thermal gasification of woody biomass or municipal solid waste, followed by methanation.

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Key North American Biomethane Credit Mechanisms: The “Tickets”

1. Renewable Identification Numbers (RINs) under the EPA’s Renewable Fuel Standard (RFS)

• Purpose: A federal programme aimed at increasing the use of renewable fuels in the transportation sector by mandating a minimum volume of renewable fuel within the total fuel mix.
• Mechanism: Obligated parties (refiners and importers of petrol and diesel) must acquire and retire RINs, which are generated by producers for each gallon-equivalent of compliant renewable fuel.
• RIN Categories:
  • D3 RINs (Cellulosic Biofuel): Derived from cellulosic feedstocks such as landfill gas and agricultural digester biogas. Due to limited supply and high regulatory demand, D3 RINs command premium prices.
  • D5 RINs (Advanced Biofuel): Issued for fuels produced from non-cellulosic sources or renewable electricity, including certain types of biogas.
• Trading: RINs are tradable instruments, detached from the physical fuel, and represent a vital revenue stream for RNG producers.
• AFS Energy’s Role: AFS Energy facilitates efficient trading of D3 and D5 RINs, enabling producers to monetise RNG output and aiding obligated parties with compliance.

2. Low Carbon Fuel Standard (LCFS) Credits

• Purpose: Aimed at reducing the carbon intensity (CI) of transport fuels via market-based mechanisms.
• Mechanism: Each fuel is assigned a CI score. Those below the set CI threshold generate credits, while those above incur deficits. Obligated parties must balance their CI through credit acquisition.
• RNG Advantage: Biomethane, especially from sources like dairy manure, can have ultra-low or even negative CI scores, making it exceptionally lucrative under LCFS.
• Regional Variants:
  • Oregon’s Clean Fuels Programme (CFP) and Washington’s Clean Fuel Standard (CFS) follow similar principles.
  • Canada’s Clean Fuel Regulations (CFR) (since 2023) also permit RNG to earn compliance credits.
• Trading: LCFS credits are actively traded, creating a robust revenue opportunity.
• AFS Energy’s Role: AFS Energy supports market participation across multiple jurisdictions, optimising credit generation and ensuring regulatory compliance.

3. Other State Incentives and Voluntary Schemes

• Supplementary Programmes: Some states offer Renewable Thermal initiatives, direct subsidies, or utility procurement mandates to support RNG deployment.
• Voluntary Certificates: RNG certificates, akin to Renewable Energy Certificates (RECs) for electricity, allow corporates to claim sustainability benefits (for Scope 1–3 emissions) even without physical consumption.
• GHG Protocol Update: The Greenhouse Gas Protocol is refining its guidelines to provide clarity on the use of biomethane certificates in voluntary carbon accounting.

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Interconnected Credit Markets: Synergies and Stacking

One notable feature of the North American RNG market is the potential for “stacking” credits - where a single RNG unit can generate multiple credits (e.g., RINs and LCFS). While this amplifies project value, it also introduces complexity. Robust verification, traceability, and trading expertise are critical to avoid double-counting and ensure regulatory compliance.

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Challenges and Opportunities in the North American RNG Market

Challenges:

• Infrastructure Limitations: Dedicated injection and distribution infrastructure is still developing in many areas.
• Regulatory Patchwork: A fragmented regulatory framework across states and provinces complicates market participation.
• Feedstock Constraints: Consistent, scalable access to organic feedstock remains a logistical challenge.
• Project Finance: Capital-intensive RNG projects require solid financial modelling and risk mitigation to attract investment.

Opportunities:

• Policy Certainty: Long-term regulatory support underpins market stability and investor confidence.
• Rising Demand: Corporate decarbonisation targets are fuelling demand for low-CI energy solutions.
• Technological Innovation: Advances in digestion and gasification are improving cost-effectiveness and scalability.
• Voluntary Market Growth: ESG reporting trends are accelerating voluntary procurement of RNG and certificates.
• Energy Security Benefits: RNG enhances energy autonomy in line with national priorities.

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AFS Energy: Your Guide Through the Credit Maze

Successfully navigating the North American biomethane credit ecosystem demands in-depth knowledge and agile execution. AFS Energy, with a strong presence in the U.S. and a specialist biomethane team, provides:

• RIN Market Expertise: Tailored trading strategies for D3 and D5 RINs to maximise revenue and compliance.
• LCFS/CFR Mastery: Strategic advice on credit optimisation, CI scoring, and multi-jurisdictional trading.
• Market Intelligence: Real-time insights into price trends, supply-demand dynamics, and policy developments.
• Regulatory Compliance: Guidance on federal/state compliance, preventing double-counting and ensuring audit readiness.
• Sustainability Credentials: Certifications (ISCC, Redcert, Better Biomass) bolster the integrity of all transactions.
• Integrated Strategy: Advisory services aligning credit mechanisms with broader ESG and energy management goals.

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RNG Credits Powering North America’s Green Transition

The North American biomethane market, underpinned by robust credit mechanisms such as RINs, LCFS, and emerging provincial incentives, is poised to play a central role in the energy transition. These credits are not mere compliance tools—they are economic enablers that unlock investment, facilitate decarbonisation, and drive sustainability leadership.

For organisations aiming to tap into RNG’s full potential, navigating this credit landscape effectively is essential. With trusted partners like AFS Energy, businesses are equipped to capitalise on these opportunities and lead the charge in North America’s renewable energy future.