Renewable Natural Gas and RINS (Text Version)
This is a text version of the video for Renewable Natural Gas and RINS presented on June 29, 2015.
Sandra Loi: Good morning and good afternoon everyone and welcome to today's Clean Cities webinar. I'm Sandra Loi from the National Renewable Energy Laboratory. Today's webinar will feature discussion on renewable natural gas and renewable identification numbers. We are glad you could join us for today's presentation. Today we will have two speakers, Marianne Mintz from Argonne National Laboratory and Shashi Menon from EcoEngineers. Ms. Mintz will provide a general overview of biogas and renewable natural gas and she will also introduce the subject of RINS or renewable identification numbers and how they are providing an important incentive to producing renewable natural gas. Mr. Menon will then focus on how individual projects qualify for RINS, the mechanics of how RINS are obtained, documentation requirements and other details.
Before we get started I'd like to go over a few items so you know how to participate in today's webinar. When you logged into today's webinar by default you will be set to listen in using your computer speaker system. If you would prefer to join over the telephone just select telephone in the audio pane and the dial in information will be displayed. We will be hosting a question and answer session at the conclusion of both presentations. We do encourage you to submit questions as the presentations are taking place.
You may do so by typing your questions into the questions pane of the control panel. You may send in your questions at any time during the presentation. We will collect these and address them during the Q&A session at the end of the presentation. We are recording today's webinar and you will receive a link to review or to view the webinar within a few days and all of our attendees are on mute or listen only mode throughout the duration of today's webinar.
I would now like to introduce today's speakers. Our first speaker is Marianne Mintz who leads the deployment and analysis team within Argonne Energy Systems Division. She has over 30 years experience in transportation and energy analysis and has authored over 100 publications in the field. Her current work centers on infrastructure requirements of alternative fuel pathways, especially renewable natural gas and hydrogen and economic impacts for fuel cells, biofuels and hydrogen and natural gas fueling infrastructure. She's an active member of the transportation research board, past member and emeritus member of TRBs transportation energy committee and a current member of TRBs special task force on climate change and energy. She holds a masters degree from UCLA and has completed postgraduate work at the University of Illinois in Chicago.
Our second speaker today is Mr. Shashi Menon, a founder and managing partner of EcoEngineers, a consulting firm and project developer in the renewable energy sector. He is an authority on clean energy regulations and has advised numerous companies on compliance matters related to U.S. clean fuel credits. Under his leadership EcoEngineers has become the premier provider of compliance management and facility planning services to companies operating under global clean fuel regulations.
Currently Mr. Menon is focused on developing renewable energy projects at wastewater, industrial food processing and the agricultural sector. He is a proponent of new carbon, of a new carbon economy that will proactively drive energy recovery and reuse from all residual organic materials. Now without further ado I'd like to turn things over to Ms. Marianne Mintz. Marianne, you may begin.
Marianne Mintz: Thank you Sandra. And good morning or good afternoon as the case may be. Ok. As Sandra indicated I'm going to present a, pretty much a high level overview of renewable natural gas, talk a little bit about its composition and source, production, how Clean Cities has related to renewable natural gas in the past and what we're doing now, the advantages of renewable natural gas and environmental benefits and a little bit about incentives and other funding sources. Basically the presentation could be summarized as why RNG and why now?
Before we get started I'd just like to do a quick review of how renewable natural gas is produced. You basically start with organic materials. They could be at municipal solid waste or MSW. They could be yard waste, could be food waste, sewage, manure, many different types of organic materials. They're placed in an oxygen free environment which could be a landfill or a free standing digester in which bacteria are present. And then the output is biogas which then has to be upgraded to renewable natural gas.
If you look at the last column in the table you see that the heating value of raw biogas is significantly less than of either the second column which is the fossil natural gas that is in our pipeline system and of the upgraded or purified natural gas and that is from a landfill. But once it is upgraded, that raw biogas to the landfill gas you can see it's basically within the range of fossil natural gas.
And the same is true for many of the other parameters that are shown on the table. The main things that are removed from the biogas in the process of upgrading it are carbon dioxide and hydrogen sulfide. So those are the main differences but basically after purification renewable natural gas contains at least 90 percent methane, usually quite a bit more than that on the order of 97 – 98 percent and it's comparable to fossil natural gas. And the key point is that renewable natural gas can be used in any natural gas fueled engine. It's essentially the same thing.
Now this figure shows what I just said in a little bit prettier way and explains it a little bit better in that renewable natural gas can close the loop so to speak by taking the material that's generated on the farm either in terms of produce or livestock or whatever. It would – if you follow the circular arrows around would come to a residence or a food processing facility or whatever and the scrap material, the waste, even yard waste, all of those things can be collected in a either a conventional collection facility, a disposal system, refuse collector would be transported to – you can see a little building there.
This is a pretty good representation of a standalone example of anaerobic digestion where the material would be processed, be received first and that's where the term tipping fee comes from. The truck is tipped on the floor of that facility. It goes through shredding if necessary and into a digester and then the outputs would be energy. Well it could go in a gas engine as a biogas and then from the gas engine it becomes electricity which could be fed to the grid or it's also used to power the upgrading system and then the energy use in the upgrading system then becomes renewable natural gas you can see in the area with the green box around it. And renewable natural gas can then be injected into the natural gas grid or used to fuel a vehicle.
And if you look on the left hand side there are some byproducts that would also come out of the process. They're primarily liquid or solid fertilizer which then can go back to the farms. The renewable natural gas can go to the farm. And so in this sense you have a cycle. As far as example of wastewater treatment or landfill, livestock based renewable natural gas those cases you don't have the same collection steps and you might be able to skip some of the processing like shredding but essentially it's the same type of process.
I just want to make the point that renewable natural gas projects can be complex and they're a bit different from some of the projects that Clean Cities has been involved in in the past. Clean Cities is known for connecting various parties and in that sense it's a good, it's a good venue for renewable natural gas projects because multiple players are involved. You have waste generators. Those waste generators would be residences. They could be commercial establishments, institutions like universities, hospitals. They could be food processors. They could be dairies or concentrated animal feeding operations. Those animal feeding operations could be beef. They could be swine farms. They could be poultry farms.
You have a series of waste handlers or collectors. They could be your conventional disposal companies. They could be contract haulers who haul waste trap grease for example. In fact oils and greases and fog are a very important input into many of these projects because fog adds a lot of calories which produces, increased the yield. So you may have these contract haulers involved. You also have waste managers. They manage landfills or disposal facilities. They manage resource reclamation facilities like wastewater treatment plants or materials recovery facilities or composting operations.
You've got anaerobic digestion, digester operators. You have the various off takers and they can be utilities. They could be the byproducts purchasers or they could be fuel retailers. You have a number of third parties perhaps. Because of all these parties you have multiple regulations, multiple regulatory authorities which makes everything very complex and often can lead to long lead times. And if I didn't say it before you could have high capital costs as well.
Clean Cities has supported renewable natural gas through several of the coalitions. And I show here some examples. I listed a few, Fair Oaks Dairy and the image on the prior slide actually came from Fair Oaks Dairy in Indiana where they're taking the manure from several dairies and producing renewable natural gas and then using that to fuel the vehicles that deliver the milk to various distributors up and down a corridor which runs from Michigan down through, I believe it goes through Kentucky. And Clean Cities involvement in that particular project was in the purchase of the trucks that use that transported the milk. And they are CNG trucks.
And Pierce Transit and Seattle-Tacoma Airport use shuttle buses and transit buses that run on renewable natural gas from the local landfill. The Solid Waste association of Central Ohio, that is a landfill operation. They produce renewable natural gas and they actually do have it on site for public fueling. Quaker Energy has several projects in Ohio where they produce renewable natural gas in freestanding digesters. The Altamont Landfill in California. They produce liquid renewable natural gas but Clean Cities was involved in the addition of the CNG station at that location. Clean Cities has also been involved in the Atlas disposal trucks that are used at the South Transfer Station in California which is a project with Clean World Partners in Sacramento.
So basically Clean Cities involvement has been primarily in terms of the fueling infrastructure and the purchase of the fueling equipment or the vehicles to use the fuel. And I show here locations of those various projects. You see several in California and Ohio, Indiana. And there's also a star shown for Georgia which is the next one I want to show. And that particular project was constructed with Recovery Act funds. That was at the DeKalb County Sanitations department Seminole Road Landfill, outside of Atlanta. And there's actually a nice video online that you can pull up and learn more about that particular project. That was a more expensive project because it involved more than just the refueling station and the vehicles. That actually did involve some of the processing equipment.
In 2009 Clean Cities got involved with strategic planning and renewable natural gas was one of the key areas that was considered as part of that planning effort. There is a document online that you can look at if you're interested in seeing what was, what we were looking at at the time. In 2012 we had a workshop in Ohio in conjunction with Clean Fuels Ohio in which we brought together a number of the various players in the space. And that document – there's a document online that summarizes that workshop as well.
The natural gas vehicle technology forum is an ongoing effort from Clean Cities focuses primarily on natural gas vehicles. In the latest meeting there was a presentation and discussion of renewable natural gas as a very promising option for natural gas vehicles. And in 2015 as part of the current strategic planning effort a document was produced that considered all of natural gas including renewable natural gas and several strategic areas were identified. A toolkit is currently under development for the use of coordinators and anybody else who is interested in promoting renewable natural gas projects. We're also developing several case studies and a project database is under way and that project database will reside at the alternative fuels data center.
And mentioning the alternative fuels data center I should say that the renewable natural gas is up there under emerging alternative fuels. So if you go to the AFDC and search for emerging alternative fuels or renewable natural gas you'll find some materials there as well. And lastly I just wanted to mention that Clean Cities is involved with state, national and international stakeholders. Stakeholders include several groups in California and New York.
At the national level we're involved with the American Biogas Council and there are several other associations like Solid Waste Association of North America, the Air and Waste Management Association and even on the international level we're involved with the Canadian Biogas Association. And all of these groups produce a number of very interesting documents. They have a lot of material that is of use to coordinators and to anybody else who is interested in promoting renewable natural gas projects. And I urge you to go to those websites.
So the question is why is renewable natural gas important now? And there are several reasons. First of all that it greens the natural gas grid. Second, it enables continued natural gas uptake and petroleum displacement in transportation. And third that it furthers the environmental initiatives and mandates. And I'll go into each of those in a moment. I just want to show you these pictures. The one on the bottom right is from Fair Oaks Dairy and that's a picture of one of the milk trucks that hauls milk in that corridor from Michigan to Kentucky and it's refueling at their facility with renewable natural gas. And the image on the right is from Dane County in Wisconsin and that is the project – I believe that uses wastewater treatment.
As far as natural gas, greening fossil natural gas this first image is from the current version of the GREET model which is the development version. It has not been – it's a little bit different from what is available online but it's in that there's been a few changes. But basically you can see that if we assume distribution through the local distribution system, the local distribution company, which is how most natural gas is distributed in this country – so this is pipeline injection. We compare it – so we're comparing pretty much apples to apples. We're comparing diesel, gasoline, well to wheel from the feedstock through the consumption onboard the vehicle, for comparing that with fossil CNG, with renewable natural gas from landfill gas, renewable natural gas from manure and anaerobic digestion and from the wastewater treatment plant. All of them assuming that we're grid injection.
The blue bars are the well to pump which is basically upstream. The red bars are the pump to wheel which is the consumption on the vehicle and the red bars tend to be pretty much the same. They're a little bit higher for natural gas because you do lose a little bit in combustion. The inefficiency, I'm sorry. The green bars are the average of the two and when both the red and the blue are positive the green is simply the height of the red bar. When one is negative it ends up being the sum of the two and so it's a little bit, quite a bit different. Looking at well to wheel which is the sum you see that for diesel and gasoline we're around 93 or so, 92 – 93 grams of CO2 equivalent per mega joule. The units are not all that critical.
The key point is how they compare with each other. The fossil CNG is significantly less. It's on the order of 76. But it's not as low as it had been assumed a few years ago. And then renewable natural gas is significantly lower and it depends upon the source whether the feedstock is landfill gas or landfill, whether it's manure or whether it's a wastewater treatment plant. Now the range can vary quite a bit depending upon the reference assumption, what kind of facility it is, what the climate is, what kind of technology, the pathway. All of these things can vary and that's why I show a range in that black bar. But basically the average is the little green one. You see a reduction of 83 to 98 percent. That's possible assuming the average numbers.
Now if you look at a blend, an 80/20 blend for example you can reduce your greenhouse gasses from that base level, that line that I show on top by 30 to 33 percent. And if you look at an even smaller blend the 90 percent fossil natural gas and 10 percent renewable, you're in the range of 19 to 25 percent. So the point here is that a blend is an interesting option and it can yield significant reductions in greenhouse gas engines.
And I just wanted to mention here that the new version of GREET will update methane leakage, petroleum composition and renewable natural gas pathways and that's why what you're seeing here is not what is available online with the current version of GREET which is GREET 2014. Another key aspect of renewable natural gas is that it can enable natural gas uptake. And if you see here by this image and these are daily prices for natural gas and crude oil from 1997 through 2015 you see quite a variation from day to day and you see that historically natural gas and oil prices were what we call coupled. When one rose the other one rose pretty much.
Something happened however in the mid-2000s and they became uncoupled and as a result – and that's basically a shale gas revolution, the fact that we have a lot more shale gas available. And part of that was because of price, new technology. So we basically are now producing a lot more shale gas and the price is falling. Because of that lower price there's been an opportunity for natural gas to penetrate in transportation. And that opportunity also has occurred in stations. The number of natural gas stations or what we often call CNG or natural gas infrastructure in transportation has really increased tremendously.
It's essentially doubled in the last five years. And now the price advantage is less in the last year as oil prices have dropped. And station additions are down. But if we look at renewable natural gas which is a bit more expensive than conventional natural gas you can see that that can enable the price to drop down and provide quite a bit of additional incentive for natural gas. That's why I'm calling it enabling continued natural gas uptake.
Ok. The other point I wanted to make is that renewable natural gas supports climate and environment initiatives and it qualifies for some incentives, some very important incentives. One document that I want to bring your attention is the biogas opportunities roadmap which is a joint document issued by the U.S. Department of Agriculture, the EPA and the Department of Energy. It was released last summer and there's a progress report that's currently in the process of being developed to report on what's happened in this past year. In the roadmap it basically summarizes existing efforts and it lays out some goals, general goals for how to improve the opportunities for biogas and renewable natural gas.
That's not a funding document and that's why I list the number of U.S.D.A. opportunities here. The U.S.D.A is a funding source. They have a program to provide assistance to the bio-refineries. They have a new program called building blocks for climate action which includes livestock partnerships and a goal to develop 500 digesters by 2025. And the funding for that work will come from the rural energy for America program, the REA program, as well as perhaps some other programs and perhaps bio refinery systems which is something new. In California the low carbon fuel standard is another opportunity for renewable natural gas and that fossil natural gas may not qualify as a low carbon fuel. In the past it has qualified but given what is happening with the numbers carbon footprint if you will or what we call global warming potential of fossil natural gas it's looking less like a low carbon fuel and it may benefit from blending. And that's as I said revised leakage estimates are the main reason for that as well as the fact that methane is climate forcing later than prior estimates.
And I should mention that in GREET we assume 29 was the global warming potential for methane. And that's significantly higher than what was assumed in a few years back. I think it was 21 first and then went to 23. So every time the international intergovernmental panel, IPCC, the intergovernmental panel for climate change, issue their new report that number keeps creeping a little bit higher and we do revise GREET to reflect that. The last thing I wanted to mention is basically the subject of today's webinar. And that renewable fuel standard is a very big incentive for biogas and renewable natural gas specifically in that renewable natural gas has been judged to qualify as a cellulosic biofuel so it is eligible for the renewable identification number or RINS associated with cellulosic biofuels.
And though few projects currently produce renewable natural gas, interest in those projects is growing. We have as I said earlier a database that we've been developing. Currently we show less than 48 landfills converting. They have waste energy projects but very few convert to – I said that wrong. Many projects have – many landfills have waste energy projects but very few produce renewable natural gas, less than 40 by our count. But with renewable natural gas qualifying and the incentives expected to increase demand it increased interest. And you see here in this figure the green bars are the requirements for cellulosic biofuel as we move forward. And as you can see they're growing substantially starting with 20………..
[Break in audio to from 0:27:30 to 0:28:01]
As I said earlier that as they make renewable natural gas more competitive with fossil natural gas and petroleum there's also state and local bans from organic waste going to landfill and so there's another opportunity for renewable natural gas. And there's a discussion of potential of renewable gas standards in some states and extending the low carbon fuel standards. In fact that's already happening in several states like Oregon.
I show here the current landfills that are producing waste energy. As you can see there are 645 and as I said earlier less than 40 of them are producing renewable natural gas. So a number of those could increase their production. Also we have 400 – over 400 candidate landfills that don't have any waste energy projects. So between increase in production from current projects and producing renewable natural gas and landfills that don't have projects there's quite a bit of potential for renewable natural gas production.
This one like factoid here that about half of U.S. food production is uneaten each year. So there's quite a bit of potential from food waste. And that renewable natural gas can be produced from food waste alone or it can be co-digested in wastewater treatment plants or free standing digesters. And with that I hope that Shashi can do a deep dive into renewable identification numbers and how renewable natural gas benefits from them. Thank you.
Sandra Loi: Shashi. Whenever you're ready you may begin.
Shashi Menon: Yeah. Thank you Marianne. And thank you Sandra. Can you see my screen? I just wanted to make sure that my screen is visible.
Sandra Loi: No. Go ahead. Try it again.
Shashi Menon: I think you may have to make me the presenter.
Sandra Loi: Ok. I've given you access. You should get a little box to accept. Ok. Let me switch it out really quickly. Did that do the trick Shashi? If you click on the show my – is it giving you the – Ok. Hold one moment. Sorry everyone. Shashi I'll go ahead and load up your slides for you if that sounds amenable. Ok. Go ahead Shashi. If you can see your slides have gone ahead and loaded them up for you.
Shashi Menon: Ok. So should I just start –?
Sandra Loi: Yeah. And I can advance them for you. If you want to cue me or you have mouse control as well if you want to go ahead and move it along that way.
Shashi Menon: So I – ok. So I cannot see my slides, Sandra. Do you know if everybody else can see it?
Sandra Loi: Ok. Marianne are you seeing the slides?
Marianne Mintz: Yes, I see it.
Sandra Loi: Ok. Wonderful.
Shashi Menon: Ok. Well I'm just going to start. I'm on slide – I'm going to start with the introduction. Thank you Sandra, Thank you Marianne. Sorry about that technical glitch. I'm Shashi Menon. I'm with EcoEngineers and I'm going to follow up with what Marianne just presented and dive deep into the renewable fuel standards. I think Marianne did a fantastic job setting the stage for why renewable natural gas is a huge opportunity going forward and I'm specifically going to look at the renewable fuel standards and talk to you about the RINS credit program within it. Next slide please.
So the agenda for today is really the renewable fuel standards and under, within that I'll be addressing several issues that is the renewable volume obligations set by the EPA, renewable identification numbers, the RINS, and registration and compliance issues related to that. So while I think Marianne brought up a very important point in one of her presentation, in one of her slides and that is that the RFS is not the only regulation that is driving interest in RNG. There's a variety of other regulations at the state level and especially the low carbon fuel programs that are popular in the west coast. And the U.S.D.A, the D.O.E. and the biogas roadmap have all played really important roles in driving interest into biogas.
But having said that I'm going to explicitly focus on the RFS for today. So I have some housecleaning to do first. The next slide please. EcoEngineers is a leader in carbon credit realization and we have over six years of experience working with RFS since its inception. We've been in over 150 biofuel plants in 18 countries and we have over 50 producers enrolled in our RINs compliance program. We administer a platform that helps producers generate their RINS by – it's a more user friendly system than the EMTS. And in that platform actually witnessed generations and transactions of over 1.7 billion RINS in 2014. So we see a significant portion of the market and we're very, very active in this space. Next slide please.
So our vision is to develop solutions that, sustainable solutions for the world. And what we do is we understand clean fuel regulations and standards. We connect our clients to carbon credits and fuel markets and we give our clients confidence in the compliance and value of their investments. And which is like many of our biofuel clients have invested like billions of dollars into their projects and they want the confidence that their fuel and their – and the facilities that they have invested in are fully compliant under the various regulations and are eligible to monetize the carbon credits that they're trying to access and which are critical to their success. And lastly we also develop our own projects. We design, build, own and operate renewable energy projects primarily in the biogas space. Next slide please.
So we have a global presence. We've been in – well I think the key takeaway here is that especially in liquid fuels there's a great deal of interest in many foreign countries in what the U.S. is doing right now and we're seeing a lot of their production being brought into commercial levels because of our programs that is our renewable fuel standards. Next slide please. And this just lists some of the services that we provide. Next slide.
So I wanted to put in a small brief plug for an energy conference. Our partners, the petroleum marketers and convenience stores of Iowa are hosting an energy conference on September 21st-23rd in Des Moines, Iowa and we will be providing a track on RINS at this energy conference so I strongly encourage you if you want to like learn more about this topic to attend the conference and that will be a great place to network with other people as well. You can please call either of those two individuals listed on the slide or you can also call us at any time and we can connect you with the right people. Next slide please.
Ok. So that brings me to the end of this obligatory plugs that I had to do and so it brings me to the meat of the presentation today. The renewable fuel standards and that's what I'm going to discuss for the rest of these slides and it's specifically the RFS2. So in a nutshell the renewable fuel standards requires the blending of renewable fuels with the nation's motor vehicle fuel supply. And that is the intention and spirit of the program.
It was originated in the energy independence and securities act in 2005 in RFS1 which was promulgated in 2007. But the rules that we live under today was promulgated in July 2010 and that is what's commonly known as RFS2. And RFS2 created four new renewable fuel categories and it set a very ambitious goal of 36 billion gallons of renewable fuel to be consumed in 2022. It expanded the RIN program and it developed what is today the platform for RIN trading, the EPA moderated transaction system or ENTS. Next slide please.
So I mentioned the, that the EPA created four fuel types and it's important to get some of this jargon right as we talk about the RIN program. And the four fuel types are cellulosic biofuel, biomass based diesel, advanced biofuels and renewable fuels. So each of those fuel types have specific RIN types. Cellulosic biofuels have RIN types D3 and D7. Biomass based diesel has RIN type D4 and advanced biofuel has RIN type D5 and renewable fuel has RIN type D6. They also have specific greenhouse gas reduction requirements ranging all the way from 60 percent for cellulosic biofuels down to 20 percent or less for your standard renewable fuels. So each of these fuel categories have specific fuels within those categories.
Now the, the focus for us today is renewable natural gas and renewable CNG and LNG falls under the category of cellulosic biofuels. And it also falls under the category of advanced biofuels D5 depending on which category your project ultimately qualifies for. You may generate a cellulosic RIN or you may generate to the point of advanced biofuel RIN. And I will discuss those differences in a little bit more detail further along. The key – well one of the key aspects of this, the way the EPA structured this is – next slide please – is the nested nature of the mandate. And the nested nature of the mandate really requires you to focus in on the smallest category within this picture.
Now if you think of this as one big egg the entire renewable fuel category, if you're an obligated party you have to fulfill the requirement of the smallest egg in that image. So in other words you must meet the volumetric requirements set for the biomass based diesel category, the D4 and the cellulosic biofuel category which is D3 and D7. Now you can exceed the requirements for those two categories but you cannot go below what the EPA has set for those two. And similarly those for the advanced biofuel category you must meet the requirements of D4 and D3 and D7 within it. And what is left over after that is the undifferentiated D5 category. And again you can exceed the requirement for the D5 category but you cannot go lower than that.
And finally anything that's left over after you fulfill the requirements of advanced biofuel, biomass based diesel and cellulosic biofuel, what's left over is the plain renewable fuel which is really – which is really corn ethanol or starch ethanol from corn and that's the D6 RIN. So if you have a D4 or D3 or D7 RIN you can really meet the volumetric requirement for the entire bucket. They are all nested within each other. And that's a key concept of the renewable fuel standard. Next slide please.
So I'm going to talk a little bit about the actual volumetric requirements in the RFS and the original RFS volume mandate that were set by the EPA had a schedule from 2010 all the way to 2022. So I removed the first three years of the schedule because it's all, it's gone. And I have the schedule here that was originally put in place by the EPA from 2014 through 2022. And here you'll notice for 2015 that we are supposed to use a total of 20.5 billion gallons of renewable fuel of which 15 billion gallons will come from the undifferentiated renewable fuel D6 category and 5.5 billion gallons will come from an advanced biofuel category and of that 5.5 billion, 3 billion will come from cellulosic biofuel category.
So this was what the EPA originally set in place and a couple of points to note here. One is that the, the starch ethanol bucket is capped out at 15 billion gallons and that is something that was, that the EPA set out very early on. They didn't want the undifferentiated renewable category coming from starch ethanol to be greater than 15 billion gallons. And the other point here is that the EPA had very aggressive advanced fuel mandates. By 2022, the EPA wanted 21 billion gallons of advanced biofuels of which 16 billion was going to come from cellulosic biofuels. And that was a very aggressive mandate at that point. Next slide please.
So what are the current volumes? The current volumes are a little different. Now the EPA just announced this, our RVO for 2014, '15 and '16 and just comparing the 2015 RVOs right now you'll notice that instead of 20.5 billion gallons it's actually 16.3 billion gallon mandate and of which 13.4 billion is coming from the undifferentiated D6 category and 2.9 is coming from the advanced biofuel category and of which only about 106 million gallons is coming from cellulosic biofuels. So there is some big changes that have happened here. One is the starch ethanol volumes have been reduced and the other is the advanced biofuel volumes have also been reduced.
Now they, both of those reductions have happened for different reasons and want to briefly touch on that. The D6 category which is the starch ethanol category that was really reduced by the EPA in response to concerns expressed by some groups about the concept of a blend wall. And the blend wall really stated that we are, as a nation we have a limit to how much ethanol we can actually blend in the motor fuel supply which is right now it's at 10 percent ethanol. And the argument was posed that we do not have the infrastructure, the distribution infrastructure to blend more than 10 percent ethanol. And since the overall consumption of gasoline in a year is somewhere between 130 to 140 billion gallons nationwide the 10 percent of that is somewhere between 13 and 14 billion gallons and the EPA should recognize that and not exceed those numbers.
That was the argument placed by the group that advocated for it to be reduced. Now the other side of that is the ethanol producers themselves, they're pointing out that the energy independence security act and the congress never intended this schedule to be reduced based on distribution constraints. And the only, the EPA only has the authority to reduce these volumes based on production constraints and they want the EPA to set the numbers exactly where they were at 15 billion gallons and force industry to push through that perceived 10 percent blend wall.
So this is a very highly charged debate that's raging right now. The EPA has taken a very politically astute middle ground. They have set that number so 2014 and '15 are somewhere in range of the perceived blend wall. But they'll also push 2016 numbers clearly beyond the 10 percent limit by 14 billion gallons. And so they are signaling that industry must push the ethanol consumption past D10. So on the other side the advanced biofuel volumes were also reduced and this was reduced for completely different reasons and this was really reduced because the majority of the fuel that the advanced biofuel originally was supposed to depend on was cellulosic fuels.
And there really has not been the kind of cellulosic fuel production that the EPA wanted to see in the first few years of the RFS. And that really forced the EPA to reduce those volumes because they were under significant pressure to not create a mandate when the fuel didn't exist. The big winner in all of this has been biomass based diesel. They have consistently produced the volumes required and they've increased their volumes each year and they are currently set to produce about 1.8 billion gallons for 2016 and 1.9 for 2017. Next slide please.
So the real question now is what will advanced biofuels be 2017 through 2022? We know that the starch ethanol volumes for 2017 to 2022 will probably be somewhere between 14 and 15 billion gallons. Right now it's set for 14 at 2016 and it's capped at 15. So it's probably going to be somewhere in that range. But the advanced biofuel schedule is set to grow from 9 billion gallons in '17 to 21 billion gallons in 2022. And so that's a significant increase from the 3.4 billion gallons for 2016 that the EPA has announced. So the real question is where is this fuel going to come from. And not only is that a question, it is also an opportunity.
And this is a key point that I want to make, that the EPA is going to start reviewing the case to set the standards for advanced biofuels between 2017 and 2022 in the very shortly and it's very important for supplier, producers of advanced biofuels to let the EPA know if the supply exists. So in other words if biogas which qualifies as an advanced biofuel and as a cellulosic fuel has the supply to meet those 9 billion gallons or 11 billion gallons then it is very important that we tell the EPA about it and they set those volumes in line with what industry can actually produce. So I cannot stress that, the importance of that enough.
There are several industry groups who are, that's on this call representing biogas and they're working hard and I strongly encourage everybody else to work with them to let the regulators know that there is a supply of biogas and that can meet a significant portion of this advanced biofuel volume and the any standards set by the EPA should take that into consideration. Next slide please.
So if we look at the actual RIN generation data you will notice that the cellulosic biofuel RIN generation has increased greatly over the past two years. And I think Marianne pointed out this in one of her slides that 98 percent of cellulosic biofuel was from biofuel for 2014. And here are some numbers. Those 800,000 cellulosic biofuel RINS generated in 2013. In 2014 we saw that number at 33 million and 2015 we're already seeing it 37 million number for RIN generation as of June 10th. So there's a big push. Biogas plays a big role in this push and think as an industry it's important to understand what is the total potential for this and how can this industry really grow over the next five years within the RFS. Next slide please.
So which kind of brings me now into some details on what are the biogas pathways that are available in the RFS. Now there are two biogas pathways that it's really just one pathway. It is renewable compressed natural gas, renewable natural gas or renewable electricity. Those are the fuel types and the feedstock is biogas from landfills, municipal wastewater treatment, digesters, agricultural digesters, municipal solid waste digesters and any form of digestion really. If you have methanogenic bacteria acting on organic materials producing methane then yeah, it qualifies as feed stock. Now in this schedule the EPA views biogas as feed stock and the fuel is the compressed natural gas, liquefied natural gas and electricity.
So there are two kinds of RINS you can generate. I mentioned this earlier. You can either generate a cellulosic RIN or an advanced biofuel RIN and this is really because in order to generate a cellulosic RIN you really must demonstrate to the EPA that your raw materials that went into the biogas production was cellulosic. So if it is, if you're using agricultural waste or municipal sludge then or landfill then the EPA recognizes that the majority of the feedstock that you're using is likely cellulosic and you're going to generate a cellulosic RIN. However if you have a waste digester that is processing starches and sugar which can also produce biogas and there is not much cellulosic content in your raw material then you are really not eligible for that cellulosic status and you have to take a D5 RIN. Next slide please.
So how does a biogas pathway actually work? I think again I don't want to spend too much time on this. Marianne touched on this. On the far left you have a landfill or you have a digester that produces raw gas. The raw gas is refined which is scrubbed to removed the hydrogen sulfide, carbon dioxide and teloxane and then the pure pipeline quality gas is injected into a pipeline and once it's injected into a pipe, interconnected pipeline it's completely _ with all other gas in the pipeline and even though the exact molecules of the gas don't actually travel to the end user the end user takes natural gas out of the pipeline which is connected to the, I mean the connection is like the EPA has a very broad definition of connection so if you belong to the natural gas grid that is a good place to start.
And in the CNG, LNG retailer on the other side he or she takes it out. He compresses it or liquefies it and sells it as transportation fuel and this entire picture is what the biogas pathway looks like. Now anybody along this pathway can potentially be a RINS generator. However whoever registers as a RIN generator is ultimately responsible for fulfilling all RFS reporting requirements and record keeping requirements pertaining to each step of this process from the extraction all the way to end use. So even if you're just one of the players along the supply chain and you want to be the RIN generator you are really the quarterback who is coordinating the entire game and you have to make sure that every piece, that all of the players in this picture is fulfilling the requirements of RFS. Next slide please.
So I'm going to talk a little bit about what is a RIN now. A RIN is proof that biofuels were blended. Now in a typical biofuel operation you have feedstock, catalyst and energy that produced a biofuel and they also produce co-products and they also produce a RIN. So a RIN is attached to the biofuel at birth and it is a carbon derivative created by the RFS. It's proof of compliance for obligated parties and it is attached to the gallon production of import. And there are very strict rules of separation. So essentially it's a type of derivative that is produced by the biofuel producer at the same time that the biofuel is produced.
So who is the obligated party? Now petroleum refiners and importers are required to prove compliance under the RFS. And an obligated party is really the entity that is regulated by the EPA. And an obligated party is defined as a refiner that produces gasoline or diesel within the 48 states and Hawaii or an importer that imports gasoline and diesel into the 48 states and Hawaii. This, these parties are the ones who ultimately buy the RINS from a RIN generator. Next slide please.
So I'm going to touch briefly on how the RINS are priced. There's a theoretical model for RIN pricing. Now this is economics 101. In a simple supply demand chart you have a supply that is proportional to price so the higher the price the greater the supply and demand is inversely proportional. So point A is where you have equilibrium between supply and demand in a natural environment without any outside interference and in the case of a mandate where the government tells you to increase supply then now you have an artificial equilibrium. So if the government moves the supply to eight on this chart. I've just used a hypothetical number here.
Now the new point B is where the supply is and at this point the price differential between the supply and demand is the delta and that delta is what is bridged by the RIN. Now this is a theoretical methodology to price a RIN and this does have – you will see that this does have validity in biodiesel and ethanol markets. We have seen this happen. It is the value you need to bridge any economical gap between production and demand. Next slide please.
So here's a chart from the of RIN prices that we maintain in EcoEngineers. We maintain RIN prices on a daily basis. You'll notice that there's a high degree of volatility. Successful projects must manage this volatility well and the volatility is usually caused by regulatory uncertainty and fraud. So we are delivering this space and we can identify the various peaks and valleys quite well. Every time the EPA comes out and signals that there is a reduction in the mandate RIN prices fall. If they signal that the mandate is going to be tightened the RIN prices rise.
If there's a perception that there's fraud in RIN markets then everybody stops buying and RIN prices fall. And conversely if those perceptions are removed then RIN prices stabilize and people start buying again. So although there is volatility there is a pattern. There's a method to all of this madness and you must be able to manage this to successfully manage a project in biofuels. Next slide please.
One question I get a lot is how many RINS can I produce. And it's really – the number of RINS you produce is dependent on the heat content of your fuel. A RIN is really, a unit RIN is based on the heat content in one gallon of ethanol. That's one RIN. And that's 77,000 BTUs. So if you take 77,000 BTUs of biogas you are eligible to generate one RIN. And so if you do the math it comes to about 12 or 13 RINS per, I mean MMBTU of natural gas. Now in the actual calculation that you do there is some, there's a loss factor that you have to use so you really end up with 11.78 RINS per MMBTU and that's the EPA's final methodology to calculate this. So 11.7 RINS per BTU at 80 cents a RIN, that can add significant value to an MMBTU of gas so which is why it makes these projects very interesting to us. Next slide please.
So I'm going to briefly run through these remaining slides. I'm running out of time and I want to make sure that there's enough time for questions in the questions and answers. But the rest of the slides I'm going to shift gears a little bit and talk about how to enter in the market and some details about RIN generation and compliance in general. So if you're planning on entering the market then the first thing is to identify your project, your fuel pathway, your feedstock and your eligibility to qualify for the desired RIN codes. So that's really where we start in the early days of RFS. It was pretty straight forward there was ethanol and biodiesel. But today with the advanced biofuel mandate is the big Holy Grail for most project developers.
And we're finding that people have a lot of creative ideas. There's a lot of presences out there. There's a lot of raw material and feedstock. And the first question is to understand whether your pathway, your feedstock and your process fits in with what the EPA has already identified as an approved pathway. And the next thing to do is to register your project with the renewable fuel standards and that is you have to get an engineering review done. You have to get a professional engineer to walk through your site and write a report saying that your project qualifies under the RFS. And the EPA reviews that, the EPA approves you and the EPA gives you an account in their system.
The third thing is the QAP. This is a voluntary program but it is strongly recommended especially if you are selling, producing and selling new kinds of fuel to advanced biofuels. The obligated parties are increasingly requiring that you participate in a quality assurance program that involves third party monitoring. I'm going to talk a little bit more about that in the next few slides but that would be the next thing to do. And finally once you do those three things you can generate RINS and you have to – you have an obligation to input data into the EMTS on a regular basis and you have all of your quarterly and annual reporting obligations with the EPA as well. Next slide please.
So the EPA moderated transaction system is EMTS and EMTS is something that the EPA developed along with RFS2 in 2010 and it is the – it's an online database where all RINS are maintained. I mean RINS are generated and transferred in the EMTS. RINS do not exist outside of EMTS. They're born, they die inside the EMTS. All parties with RFS2 related responsibilities must have an EMTS account. So you have to create an EMTS account and you can have your RIN inventory within EMTS. It's kind of like a bank account for RINS.
Now the good thing is it also allows the EPA to monitor the entire universe which allows it to make better decisions, policy decisions because it has a close understanding of how RINS are working. Starting 2015 all RINS in EMTS have to be tagged as QAP verified, unverified or legacy. Now I mentioned earlier that it's strongly recommended that you get a QAP, the status, because in the EMTS a RIN buyer can actually see whether you are in a QAP program or not and that sometimes determines whether or not they choose to buy your RIN. Next slide please.
So generating RINS. There is some specific protocol that you have to follow. You have to log into your EMTS account or you log into our, the platform that we have for generating RINS. And you have to submit some specific details such as the quantity of fuel, the pathway information, your facility code, the type of feedstock used. And you have to do all of this within five days of fuel production and sales. So there are some – so you can't just do it at the end of the quarter. You have to do it on an ongoing basis. In the case of biogas there's a little bit more latitude over the five day period but you still have to get EPA approval if you want that latitude.
Similarly, next slide please. Similarly in RIN separation and sale is also happens inside the EMTS. You have to log into your account and once your physical fuel is blended, designated or utilized as transportation fuel then you have the ability to go in and separate those RINS. And once those RINS are separated, once you have told the EPA that the fuel has been consumed or designated as transportation fuel, now at this point you're free to trade RINS in the RIN market. Now the RIN markets actually have been offline. They can – you may enter into an agreement with counterparty on paper, a paper agreement. But then you have to ultimately go into EMTS, log in to your account and transfer those RINS from your account to your buyer's account. Next slide please.
So I mentioned earlier about the quality assurance program that is becoming increasingly a part of the RIN culture. And that's really started because RINS do have a history of fraud. It's unfortunate that this happened but in 2011 – 2012 there was significant percentage of RIN markets were contaminated by fraudulent RINS and these are some of the stories that made the headlines. Most of these perpetrators of fraud have been arrested and sent to jail and other forms of fines have been imposed on them. But the negative impact this had on the entire industry was people did not know what to trust and what not to trust. So especially if there was a new entrant into the RIN markets, RIN buyers were suspicious about buying their RINS because they did not know if those RINS could actually be trusted. Next slide please.
And complicating the fact was the RFS actually has a whole laundry list of prohibited acts and these prohibited acts can actually – any of these prohibited acts could potentially invalidate a RIN and these include – you don't even have to be intentional about this. If you unintentionally make any of these mistakes you could potentially generate a batch of RINS that's invalid. So again there was a great deal of suspicion and lack of transparency in this market and this is really why the EPA came out and put out the RIN quality assurance program. The EPA enforcement requirements also pretty stiff. It's $37,500.00 per day per violation. So if they have the ability to actually make your life quite miserable if they think that you have intentionally committed some act of fraud.
So again I put all of this out here as a, not only to talk to you a little bit about history but also to emphasize the gravity of the situation. The EPA is very, very concerned about maintaining the integrity of the overall program and they just do not like participants in the program who don't take that as seriously as they do. And I would agree with them. Next slide please.
So what downstream parties want – these are RIN buyers. What they really want is that they want guarantees that RINS are valid. They want the ability to replace invalid RINS. They want someone to hold accountable and they want third party verification. Now especially if you're a new entrant or if you have a new process or if you have a new fuel the downstream parties are very particular about this. And what they're doing is they're doing enhanced credit and legal checks. They're trading on generator basis which is saying that I'll only buy RINS from a certain producer and not from anybody else. And they're conducting their own audits and they're requiring RIN QAP as a – it's a requirement if they're going to buy any RINS. So the RIN buyers are tightening up their requirements and this is part of the reality of anybody entering the market. Next slide please.
So that's really what a quality assurance program is. The quality assurance program is a third party review of all of your operations and it's a very effective and efficient record's management. The QRIN if you participate in a program it buys an affirmative defense. It buys an affirmative defense so anybody who buys a QRIN from you does not have to, will not be served with any civil notices. The EPA will not file any action or any civil violation against them if those RINS were from the, found to be invalid for some reason. However, the RIN generator is always liable. They're not eligible for any affirmative defense and these RINS are always marked in EMTS as ?. Next slide please.
So that kind of brings me to the end of my presentation. I think I stayed under 40 minutes so I guess I'm pleased about that. And I just want to touch on these points. The RFS is maturing into adulthood and the EPA is showing resolve in improving RFS implementation enforcement. Very proud of them for doing that. They're not going to make everybody happy but they're trying their best to fix programmatic details for efficiency and transparency by introducing new policies and new controls. And the EPA is also not generally backtracking on any policies. The 2014 to 2016 RVOs could be seen as an exception but overall in my view they're trying very hard to maintain a middle ground and to keep a program going that actually has really flourished over the past five, six years and still has a great deal of opportunity to grow.
Now the big threat to the whole program is really funding cut backs, and bio packages that the EPA could put in place. That compromises their ability to implement or enforce the program. And finally I cannot stress this enough, there's a huge opportunity for advanced biofuels to prove to the EPA that the supply available 2017 to 2022. This is an urgent call for action and I think it's really important that we step up and do that. So with that I am available for questions. I know I covered a lot of data in a very short period of time. So please feel free to contact me at EcoEngineers any time. We'll be happy to answer your questions. And in the meantime over the next 10 or 15 minutes we can, I can answer questions then as well. Thank you.
Sandra Loi: Wonderful. Thank you Shashi and thank you to Marianne. Thank you to all of our attendees today for hanging in there with us. We've hit our hour mark and then some. We're going to go ahead and review the questions that were submitted today. I'm going to go ahead and open these up and we'll try to get to as many as we can and if anyone wants to follow up afterwards certainly can reach out to myself and I'll connect you with our presenters or you can reach out to them directly. One big question that we received quite a bit is whether or not you will get access to the webinar. We are recording it as I noted earlier and you will receive a link to it within the next few days in a follow up email.
And I'll also include a link to where we will be posting the Power Point slides as well. We'll be posting them on our Clean Cities webinar page on our past webinar page where we archive our webinars. So that's the Power Point slides like I said. In the follow up email you will receive a link to view the recording as well as copies of the Power Point where you can view the copies of the Power Point slides. So let me go ahead and start off with some of the questions here. One question I have here is what precedence is there for RNG without grid injection?
Shashi Menon: Could you please repeat that, Sandra?
Sandra Loi: Sure. And I think that's kind of when Marianne was giving her portion of the presentation so perhaps it's for her. What precedence is there for RNG without grid injection?
Marianne Mintz: Oh there are many, many projects that don't have grid injection or they have grid injection as an option. So for example at Fair Oaks they, at Fair Oaks Dairy, they do have an onsite refueling facility, refueling station that dispenses the renewable natural gas. They similarly at Altamont it's on site. Many of the projects do have it on site. The key reason why they like having the option for grid injection is flexibility. If the demand isn't there then you can always inject the product into the pipeline. And also you want to have the ability to draw from the pipeline if your production is down for some reason. So grid injection provides a lot of flexibility but there are a number of projects that do not – they don't rely on grid injection. They do have an onsite fueling facility.
Sandra Loi: Ok. Thanks, Marianne. We have a question from Sharon Hoff. Does WPT include a voided CH3 emissions since carbon intensity of CH3 is higher than CO2?
Marianne Mintz: That is a question I'll have to take up with the modelers. I believe it does but I'll have to get back to you on that. That's a question of what's actually in the GREET pathway. So if I could get back to you that would be great. I assume Sandra you have some contact information on that?
Sandra Loi: I do. Yes. Sharon is our coordinator in San Francisco so I'll connect you two and you can talk further afterwards.
Marianne Mintz: Thank you.
Sandra Loi: From Doug Spooner, if GHG emissions reduction is the primary objective why incentivize RNG use as a transportation fuel when fossil and natural gas is so cheap and utilizing the raw oil gas and stationary engines to generate electricity reduces GHG emissions, GHG emissions even more at a much lower capital investment level?
Marianne Mintz: Well that's basically what's happening is that because the capital investment is less for generating electricity they do tend to generate electricity but if only a certain amount of that electricity that can be used on site. They can get it onto the grid but often times they, without a heating tariff it's not economic to put that produced electricity onto the grid. And also the electricity that is produced on site isn't necessarily at the same efficiency as a central station electricity. So it really depends on the product but in many cases it's actually, it would be better to produce the renewable natural gas. But in some cases it might be better to do the electricity. It's kind of a decision that would have to be made on a project by project basis. That is a good point.
Sandra Loi: All right. Thanks, Marianne. From Steve Linnell he asks which fuel is which on that 80/20 blend?
Marianne Mintz: The 80/20 blend is 80 percent fossil and 20 percent renewable and similarly a 90/10 would be 90 percent fossil, 10 percent renewable. That's the average.
Sandra Loi: Ok. Thanks Marianne. What is the cost of an anaerobic digestion plant? If you have that number.
Marianne Mintz: It's on the order – well I'm assuming you're talking about the clean up and the whole shebang if you will several million dollars. I've seen numbers in the single digits of millions. I've seen number over 20 million. It really depends on the scale. It depends on the actual, the feed stock and what type of preprocessing is required, whether you require some type of grinding or packaging or whatever. Also whether you're including some of the other various other costs of refueling and things like that. So it can really vary quite a bit but it is, it does tend to be expensive.
Sandra Loi: Ok. Thank you. Let's see. I have here what is the premium charge dollar per MMBTU for RNG when compared to natural gas?
Marianne Mintz: Well production costs for natural gas or for RNG are also in the range of $5.00 to $10.00 per million BTU. And that was that shaded area I showed towards the end of my presentation. So a premium versus a conventional assuming conventional natural gas or fossil natural gas is around $5.00. That would be a pretty average price now. It would be about anywhere between $1.00 or so all the way up to $5.00. It would vary.
Sandra Loi: Ok. From Nico, what are the expected timeframes for RNG potential sources to scale up and become available in the markets to help meet regulatory targets and requirements?
Marianne Mintz: Timeframe is now. As I indicated 98 percent of the RINS are coming from biogas projects, renewable natural gas. So the technology is available. It's just a question of building the plants and getting the production up.
Sandra Loi: Ok. Let me skip down. RINS question for Shashi. Is the number of RINS traded high compared to the rest of the market? I'm not clear what the context is to understand the magnitude. Numbers may be low when knowing what total capacity is.
Shashi Menon: I'm not sure I understand that question. Is the number of RINS traded higher relative to the rest of the market average? Are we saying the advanced biofuel RINS?
Sandra Loi: I don't have any more details. They just generally asked if its traded high compared to the rest of the market.
Shashi Menon: Yeah. I'm not sure I understand the question but can feel free to like email me or call me. I mean the number of RINS traded is typically – I mean there's RIN trading happening every day and the overall RINS traded are within the obligations that are set out and people also bank RINS for the future. But as for if you ask specific questions about like how many RINS are traded in a given day, yeah, I don't have that answer right now.
Sandra Loi: Ok. Thank you. Another question here, I guess a point of clarification. So the GHG reduction requirement is a minimum threshold, correct?
Shashi Menon: Yes.
Sandra Loi: Ok. Let's see. I have another question here. How is hydrogen used as a fuel for fuel cell vehicles and generated from RNG considered in a generation of RIN? Does this pertain both to on and off road vehicles?
Shashi Menon: So that's a good question. So the EPA does – the second part of the question I'll take first, the EPA does recognize off road vehicle use as a valid avenue for RIN generation and use. So that's good. As far as hydrogen I'm not sure if EPA has a current approved pathway for hydrogen yet. So if they don't then I think we'll have to submit a new pathway petition to the EPA and get that instated. So the way the EPA works is that they, it's slightly different from the way the California works is the EPA actually has to model every single pathway that they approve and they designate the carbon reduction threshold for it so – and then they put it out there as an available pathway. And if they haven't done that then you have to petition them to do it. And that could be a lengthy process.
Sandra Loi: Thank you. Another question here for Shashi. On your slide current RFS volume mandates BTY just in EPA applicable for 2014 and 2016 there was no final rule yet for 2014 through '16, correct? Go ahead.
Shashi Menon: Yes. That is EPA has proposed those numbers and currently there's a comment period and there are people who are commenting. Some are commenting it's too high. Some are commenting it's too low. But what I put up there is what the latest proposal is. And we should see something within the next 60 days or so. The EPA pulls out this whole phase and they're going to move on.
They've already delayed the 2014 RVOs for – I mean it's the middle of 2015 now so and they were supposed to have announced that in November of 2013. So I think this whole issue about or the debate over what the 2014 RVOs should be, what the – we're halfway through 2015 now. They have to put this behind them. So they're under a great deal of pressure to close this debate and so the numbers they have put out are probably pretty close to what's going to be finalized.
Sandra Loi: Great. Thank you. Another question here. What happens during pro-digestion scenarios MSW and residual starch and sugars and what is the threshold for D7?
Shashi Menon: So if you are – if you are blending feed stocks then yes. We have to work with you on that so that EPA does have some procedures to document feedstock blends. So you actually have to generate cellulosic RINS for the cellulosic components of your feedstock and advanced biofuel RINS for the feedstock that you are, for the fuel that you're making from starches and sugars. And we have to develop a methodology to track and document your actual feedstock input and your methodology for calculating those RINS. So that is something – yeah.
We do that in other arenas like liquid fuels or other products where we, whether it's making biodiesel or ethanol. Sometimes you have a comingling of feed stocks that make you eligible for different RIN categories. And so it's not a – that's not a new concept and we can definitely work with that. Now with respect to the threshold for the D7 RIN I'm not sure if I understand the question. If the greenhouse gas reduction threshold for D7 is 60 percent. The only difference between D3 and D7 is really that D7 is cellulosic diesel and D3 is cellulosic biofuel which is probably cellulosic gasoline replacement. But the greenhouse gas reduction for both D3 and D7 is 60 percent.
Sandra Loi: Great. Thank you. Probably just take a few more questions before we wrap up at the top of the hour. The next question I have here can you speak to what opportunities exist for RIN generation from electricity production?
Shashi Menon: Absolutely. So renewable electricity is eligible for RIN generation. It's an exciting place to be in and they have laid out a specific pathway that your raw material must be biogas so if you're making electricity from biogas that is, that qualifies for RIN generation. And you have to do the same thing that you do with the CNG.
Either you think – in my slide I only mentioned cases where they were thrown into a common distribution grid. But however you can also have a dedicated system and that's what Marianne pointed out, like in her answer. Yeah. Whether it's dedicated or whether it's a common distribution if you throw the electricity into a common distribution or if you use it at your own place as long as you can demonstrate it is being used for transportation fuel then you can generate RIN. So it's actually an exciting opportunity and something that we haven't fully exploited yet.
Sandra Loi: Right. Thank you. Let's see here. Can petroleum based plastics be converted to biogas and qualify as an RF?
Shashi Menon: So the EPA is very clear on what qualifies as renewable biomass and renewable biomass is a requirement in order to qualify for RINS. So you can only make renewable fuel from renewable biomass and renewable biomass there are seven types of, seven categories of renewable biomass that the EPA has listed in their renewable fuel standards. And they are like crop and agricultural products. There's municipal waste. There's waste fats, oils and greases and tree residue and there's a couple I'm missing. But it's all listed in the rules. But they specifically do not have anything that is in plastic with plastics. So if you have a petroleum based products the challenge is like getting them to be qualified as renewable biomass.
And actually it's not just a question of petroleum based products and this is a challenge that some of our clients are seeing is even when you have a bio based product if it doesn't strictly fit in with what the EPA has listed as a renewable biomass it can get challenging to get that approved. And I think part of the challenges that the EPA feels that it does not have the authority to override the definitions as they are. So they are saying that the definitions were actually handed down in the congressional statute and they don't have the authority to change that. This is a sticky point because it limits the amount of raw materials that we can actually use to make renewable fuels.
Sandra Loi: Ok. Great. I'm going to go ahead and give you one last question and then we can wrap up. So a scenario here. Let's say a municipal wastewater treatment plant wanted to produce a renewable natural gas and register RINS that may produce about 100,000 gallons of diesel equivalent. How much would one pay to register, track and report on the RINs production, sale and transfer?
Shashi Menon: How much – yeah. So I think the question is asking whether the project could be economically feasible. I mean there's no cookie cutter approach to that. The cost of production, distribution and sale and transfers can vary widely from place to place. If you're using it all at site and if you have a dedicated fleet standing by they'll be lower cost but if you got – if you had to go out and build infrastructure to utilize that fuel it can be greater cost. So I don't know if there's like one easy answer to that. The thing to do would be to really take a harder look at your site and look at some of those numbers and try to come up with a better kind of economic viability analysis.
Sandra Loi: Ok. Wonderful. Thank you to everyone for all of your questions. I'm sorry we didn't get to all of them today but we will try to follow up on them afterwards. Before we wrap up just wanted to ask Shashi and Marianne if either of you had any final closing comments before we go ahead and wrap up today's webinar?
Marianne Mintz: I'd just like to thank you for the opportunity to talk today and I appreciate everybody hanging in here for the last hour and a half and if anybody has any questions my email address was posted at the end of my presentation and I'm sure that Sandra can provide it as well. Thank you.
Shashi Menon: I want to echo Marianne's feelings. Thank you very much for hosting, inviting us and I apologize if I wasn't entertaining enough. The subject matter is quite dreary but I'll be happy to take questions and feel free to contact by email or phone any time. Thank you.
Sandra Loi: Wonderful. Thank you so much. So thank you again Marianne and Shashi for great presentations today and thank you everyone for attending and hanging in there with us. If you have any other questions this is Sandra Loi. You can reach out to me. You've been getting all of the email reminders from me. And again you will receive a follow up email with a link to today's recording as well as a link to where you can find the Power Point slides that were presented today. Again thank you so much. Have a wonderful week.
Shashi Menon: Thank you. Bye bye.