ESG & Industry Updates

Boston based Vanguard Renewables, a pioneer in the food & dairy industry waste-to-energy space has been acquired by BlackRock for $700 million dollars, with a plan to invest up to an additional billion dollars in the company’s expansion, according to the Wall Street Journal this morning. The expansion plan reportedly focuses on commissioning up to 100 anaerobic digesters for renewable natural gas production across the United States by 2026.

We’ve written about Vanguard’s projects in MA before, so this expansion is particularly exciting, and obviously timely with the push toward renewable natural gas we are seeing in the marketplace.

As a refresher, agricultural and food waste has been a continual issue in terms of both disposal, generated methane emissions, and waste forever. As part of the effort to address that, in 2014 Massachusetts  banned disposal of commercial organic waste by businesses that produce more than a ton of organic waste per week. Organic waste was the second largest contribution to landfills in the State before 2014 and the ban served to divert that waste. But the problem became, well, divert it to where?

The solution that arose in the form of anerobic digesters is genius and has the potential to have a transformative effect on both natural gas production and the impact of the agricultural sector on climate. As a sector of the economy, agriculture contributes 11% of total carbon emissions, not including land use and other factors, according to the EPA. 

Anaerobic digesters take the methane and other emissions from organic waste (chiefly cow manure, but also food waste) and transform it into renewable energy. The process as a whole serves to divert food and animal waste, reduce odor, capture methane emissions, and produces organic fertilizer which lowers chemical usage. Additionally, the energy farmers produce can be sold back to the grid. It’s a pretty perfect sytem. Extrapolated outward across multiple states, its pretty clear implementing this process would have relatively immediate and tangible impacts.

For more information on how the digester process works (and a focus on the MA site), read this article from Oil & Energy: Farm to Grid 

For a more in depth look at the process and Vanguard’s currently operational projects in Massachusetts, check out their website: Vanguard Renewables

The Biden Administration has announced new methane regulations from the COP26 Climate Summit in Glasgow, Scotland this week. Estimates are that the new regulations will affect  up to 75% of the methane emissions in the United States. Regulations will apply largely to the Oil & Gas industry, specifically addressing “flaring” (purposeful venting) during production and leaks across the system infrastructure.

Methane is responsible for up to 30% of global warming, according to the UN Environment Program, and is estimated to be 25 times more potent than Carbon Dioxide. In recent years this had led to more focus on methane (versus Carbon) emissions, as because of the potency, decreases in methane are much more likely to have a faster and more meaningful impact on slowing Climate Change.

If this sounds familiar, it’s likely because in 2014 the Obama Administration announced similar Methane regulation controls (you can get a refresher here: Methane & Consumers Giving Nat Gas Headaches ) Those rules were enacted in 2016 and subsequently relaxed by the Trump Admin, before being reinstated by the Biden Admin. Hard to keep track of.

The oil & gas industry is responsible for an estimated 30% of methane emissions domestically, and the new rules are expected to reduce emissions from equipment, production sites, and covered areas by up to 75%. In tandem with the expanded EPA regulations, the DOT’s Pipeline & Hazmat Safety Administration is implementing the PIPES act which upgrades and expands existing pipeline setups to cut methane leakage. Other targets of emission reduction are landfills, and enhancing the abandoned mine & well closure program – orphaned mines have been an oft ignored thorn in the side of the federal government & EPA for decades, abandoned mines often leak methane and other gasses, or pollute their areas (For a refresher on that, check this article out: Accidents Happen: EPA Spill Highlights Difficulty of Mine Decontamination)

In an odd continuation of an ongoing trend, the new methane regulations will be “voluntary, incentive-based” changes in the Agricultural sector. This would seem to clash with the global concern over agriculture produced emissions, particularly those from concentrated feed lot (CAFO) based livestock production. The agricultural sector produces emissions comparable with the entire transportation sector (including airplanes) globally (14-18% for both), and agricultural emissions have increased approximately 12% since 1990, which is in contrast to the focus on emission reduction we have seen implemented (in a mandatory fashion) in other sectors. In terms of emissions, the US Agricultural sector produced approximately 698 million metric tons of CO2 equivalent in 2018, a staggering 36.2% of which was in the form of methane.

One of the items regarding agricultural emission control in the White House Proposal is investment in methane reducing practices like “alternative manure management systems”. Presumably (hopefully) this would be an investment in technology like the anaerobic digester technology we have seen make an appearance in MA, where dairy farmers have been diverting manure & food waste to be upcycled into energy. (More on that here: Mass Dairy Farmers Use Food Waste & Manure to Generate Renewable Energy)

So while we will have to wait to see how the new proposals take shape in actual regulation and enforcement, it’s worth noting that according to reports, the American Petroleum Institute (API) appears to support the proposal, with a response indicating they were “committed” to “continued progress” on methane emission reduction. 2020 methane emissions by oil & gas were down 10 percent versus 2019, but that was as a result of a collapse in production, not because of corrective action. The IEA estimates that 10% of methane could be reduced “at no perceptible cost” and where the US (along with Russia) is one of the world’s largest emitters, the new Biden regulations are an attempt to remedy that and push forward progress on a broader Climate agenda.

Stay Tuned!

Local farms in Massachusetts are producing their own renewable energy, and they're doing it while diverting food waste and dropping their carbon footprint at the same time. How? By utliizing anaerobic digesters, produced by Vanguard Renewables.

The simplified version is that the process takes the potential energy in both food waste and organic waste (like cow manure) and converts it into biogas that is used to reduce energy costs, reduce methane emissions,eliminate food waste, generate heat, and offset carbon emissions. 

Massachusetts implemented a ban in 2014 on disposal of commercial organic wastes by businesses that dispose of more than a ton of organic waste per week. Prior to the ban, this type of waste was the second highest contributor to landfills, so the State mandated that instead of being disposed of, they had to be recycled.

The solution that arose in the form of waste to power anaerobic digesters is pretty ideal - it allows not just farms to upcycle their waste, but also helps food processors, supermarkets, and even fast food restaurants by opening up an avenue for food related industries to dispose of waste economically and in a way that is hugely beneficial from an environmental standpoint. 

I wrote an article for Oil & Energy online that goes more in depth into how the process works and the benefits - you can read that article in its entirety here: Farm to Grid 

For more in depth info on how waste-to-power works, and to view some of the currently operating facilites, check out Vanguard Renewables site. 

A Harvard University study has concluded that 15 billion cubic feet of natural gas escapes the aging pipelines in Boston - an amount that means we're losing $90 MILLION dollars worth of natural gas through leakage annually. 

The problem with leakage, outside of the obvious environmental and health concerns, as well as the fact that consumers bear the cost of the leakage, is that this leakage is responsible for almost all of the methane emissions given off by the city. As we've discussed previously, methane has a 25 times larger impact on the environment than carbon, and for that reason it's been the focus of new proposed regulations from the Administration and the EPA.

The suggested regulations however, are aimed at fracking companies, which over the past year have shown large declines in the amount of methane leaks, and leaks in general in four out of six of the major shale plays. The reason for that is at the production site, leakage costs the producer money in lost product.

The second sector that the regulations aim at (although they are "voluntary" in this case) is agriculture, which is responsible for the bulk of methane emissions. 

When you break down the numbers however, most emissions come from so called "super users", namely power plants etc., versus fracking sites or even intense agricultural production sites. And as studies like this point out, there is a lot of environmental impact happening passively through leaking in outdated pipeline systems, like those in Boston.

What this study points out on leakage, is that there may be a more efficient way to curb urban emissions of gas, and therefore methane, than imposing sweeping regulations on fracking sites, who already are self-motivated by profit to control product loss. That motivation is less present in urban areas, because the cost of pipe replacement and remediation is high, and the work is complicated to perform without disruptions in densely populated areas. Additionally, remediation of leaks in urban pipelines is a direct cost to the utility as well as the consumer, versus the cost-savings measure it is for upstream producers.

To their credit, both Massachusetts and National Grid have already been working on an accelerated pipeline replacement project. This program categorizes how risky leaks are and addresses them in an urgent to non-urgent priority order. This allows them to address the most critical leaks first, and move forward on remediation without undue and immediate cost burdens on the utility or the consumer.

 Essentially, studies like this point out there are emission control options downstream in addition to the ones happening upstream that can complete the picture and move the entire process forward in a more timely and efficient manner.

If you want to read a little more on the background of methane regulations proposed, or the prior study on leaks in Boston, you can do so here: "Methane and Consumers giving Nat Gas Headaches"

If you want more background on fracking and environmental impact, you can do so here: "US Carbon Emissions Still on the Decline - Guess Why?" 

 We talked before about the White House's proposed new regulations on Methane emissions, which came on the heels of the Administration supporting increased natural gas exports in response to the Russia/Ukraine debacle. Well the EPA whitepapers have come out now outlining proposed changes on each of the industries involved - you can check those out here: EPA Methane Whitepapers 

The Admin proposed changes cite the Agricultural sector as the largest methane producer, followed by Nat Gas. The difference however, is changes proposed for Agriculture are "voluntary" versus regulatory changes for the Nat Gas sector. As usual, environmental groups cheered and said too little too late, while the industry said given it's in their financial best interest to control leakage (their main source of environmental methane), new regulations are an uneccessary burden. 

As we said before, it's hard not to infer from the timing that increasing regulations on methane is at least in part due to environmental and consumer backlash on exports over environmental and supply/pricing concerns. However, given that exporting should increase revenue greatly for the industry it's a pretty savvy time to introduce regulations that may be costly. 

On the consumer side, news has been breaking recently on the number of gas leaks in communities. In the wake of several explosions,  there has been some digging into just how big a problem neighborhood leaks may be, and the news is not good. Some estimates (including a Boston University Study) peg the number of neighborhood leaks in the City of Boston alone at over 3400, and over 20,000 statewide. (You can read the Boston Globe article on the BU Study here: "Boston Riddled with Mostly Small Natural Gas Leaks" )

The issue with these leaks goes beyond the obvious safety and environmental concerns as well. Gas that escapes en route to the consumer is paid for by the consumer. Its estimated that Massachusetts ratepayers are paying an average of $39 million dollars a year for leaked gas ($640 million-1.5 Billion from 2000-2011 according to a study by Senator Ed Markey's Office)

A study published by researchers and scientists with MIT, Stanford, and the National Renewable Energy Library was recently published that is essentially the first in depth look at US Methane emissions. 

Why methane? The environmental issues with Natural Gas mainly come from the presence of methane - which is another green house gas, but 30 times more potent than the carbon dioxide we usually hear about. Approximately 1.5% of natural gas leaks during extraction, processing, transport, etc on its way to the consumer, so methane levels give us a bigger picture of the environmental impact of Nat Gas beyond carbon emissions. 

Surprisingly- Hydraulic Fracturing or "Fracking" is not the problem. You read that correctly - the often hotly debated "fracking" process is not what's causing methane emissions to rise. So what is?

The study found that so called "super users" were responsible for the vast majority of the leaks (some processing plants, factories, etc). The good news is that in theory these repairs arent cost prohibitive, and are generally profitable for the site - at least in the long term -  as they stand to lose less product in transmission. 

The question then becomes - is this an issue that should be legislated on or not? Industry folks say they are already voluntarily correcting issues, and since they have a financial incentive in at least certain cases to do so, they don't need regulatory pressure to move the process forward.  Environmental groups predictably say given the level of leaks still existant, volunteerism is not keeping pace with the level of repairs and upgrades required to address emission levels. 

I wrote an article for Oil & Energy magazine's April issue on this topic, and the related discussion of whether its environmentally "friendly" to switch your fleet to Nat Gas in the long term. You can read that article here: Oil & Energy Online