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Money flows into U.S. biogas projects

Investment in U.S. biogas systems
Reproduced from American Biogas Council

Companies are on track to funnel $1.5 billion into new biogas systems in the U.S. this year.

Why it matters: Renewable natural gas, procured from biogas, is set to play a significant role in helping companies hit net-zero targets and state mandates.

Details: The number of new biogas systems is rising and could jump even further next year, according to the American Biogas Council, a trade group.

  • The proliferation of these systems, which are mostly at wastewater treatment plants, farms or landfills, is being boosted by incentives in the Inflation Reduction Act.
  • The council's executive director, Patrick Serfass, says the effect of the IRA on biogas has just started.
  • "Only now are a lot of developers deeply understanding the provisions enough to be able to integrate the IRA benefits into their development strategy," Serfass tells Axios.

Zoom in: Investment in U.S. biogas systems started to soar in 2021, amid a land grab and consolidation push.

  • Last year, oil giant BP acquired Archaea Energy, one of the largest U.S. RNG operators, for $4.1 billion.
  • Earlier this month, the infrastructure investing business of Goldman Sachs Asset Management funded Synthica Energy, which develops biogas projects from food waste.
  • Canadian pipeline operator Enbridge committed $1 billion to fund the deployment of digesters from Massachusetts startup Divert, and also invested $80 million into Divert.

Big picture: Renewable natural gas can be used to power industrial processes, buildings and vehicles. But the prospect of RNG use in semi trucks has seized the most attention lately.

  • Jigar Shah, head of the Department of Energy's loan programs office, said on platform X last week: "2023 should be the Year of Renewable Natural Gas," because it's currently the only way to decarbonize semi trucks at scale.
  • Companies that are using RNG-powered trucks include Walmart, Amazon, UPS and Waste Management.

Yes, but: The size of the biogas market in the U.S. is a small fraction of the overall natural gas market and is limited by the number of locations where anaerobic digesters can be used to convert organic waste.

  • The council says the U.S. has the potential to build another 15,000 biogas systems over the years, a 7x bump from the current footprint.
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