biocycle 2013 presentation - low carbon fuel standard, renewable identification numbers and carbon...
DESCRIPTION
TRANSCRIPT
Biogas and Environment
Markets
Peter Weisberg
Biocycle West 2013San Diego, CAApril 10th, 2013
Environmental Markets and Biogas
1. Carbon Markets2. Renewable Identification Numbers
(RINs)3. Low Carbon Fuel Standard Credits
1 2 3 4 5 6 7 8 9 10 $1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000 A
nn
ual N
et
Reven
ue
Environmental Markets - High Price (IRR = 34.36%)
Environmental Markets - Low Price (IRR = 15.30%)
Baseline - No Environmental Markets (IRR = 7.83%)
Low Carbon Fuel Standard Credits
Renewable Identification Numbers
Carbon Credits
California Carbon Market Key Insights• Buyers = large greenhouse gas
emitters in California• Project Types:
– Livestock manure– (Post-consumer food waste = voluntary,
not yet accepted by California)• Sunset: 2020
Offsets generated and owned by the digester
$5
$6
$7
$8
$9
$10
$11
$12
$13
$14
$15
California Carbon Offset Livestock CRT Prices
1 2 3 4 5 6 7 8 9 10 $1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
$2,400,000
$2,600,000 A
nn
ual N
et
Reven
ue
Carbon - Point Carbon Modeling (IRR = 12.48%)
Baseline - No Environmental Markets (IRR = 7.83%)
Carbon - Price Floor (IRR = 9.50%)
Carbon - ARB Modeling (IRR = 11.23%)
California Carbon Market Uncertainty
• February auction results– 2013 – 100% allowances sold, $13.62
clearing– 2016 – 46% allowances sold, $10.71
floor
Renewable Identification Numbers Key Insights• Buyer: Transportation fuel refiners
and importers• Project types: Biogas from
– Dairies– Waste water treatment plants– Landfills– (EPA currently considering food waste
pathway)• Sunset: 2022
RINs generated and owned by the fueling
station
RIN Prices• 77,000 BTUs = 1 Advanced Biofuel
RIN• Prices (May 2012 – March 2013):$/RIN $/MMBTU
Low $0.29 $3.77Average
$0.52 $6.75
High $1.07 $13.90
Current $0.955 $12.40
1 2 3 4 5 6 7 8 9 10 $1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
$2,400,000
$2,600,000
Baseline - No Environmental Markets (IRR = 7.83%)
RIN Low (IRR = 10.58%)
RIN Medium (IRR = 14.54%)
RIN High (IRR = 17.54%)
RIN Market Uncertainty
• Fraud – 5-10% of issued RINs found to be
fraudulent• Volatility• Annual adjustment of required RIN
retirement
No long term buyers
Low Carbon Fuel Standard Key Insights
• Buyer = Transportation fuel refiners and importers
• Project types:– Dairy biogas to CNG – High solids digestion food yard waste – Landfill gas to CNG
• Sunset: 2020 – (2020 target applies until legislation is
modified)
Low Carbon Fuel Standard Credits
LCFS credits generated and owned by the
digester.
*Must report data from fueling station
LCFS Credit Prices - 2012
Graph taken from Argus Media. “California’s LCFS: Economics and trade prospects.” Webinar given on Jan. 10th, 2013. Available online at http://info.argusmedia.com/uslib/ArgusWebinar_CaliforniasLCFS_Economicsandtradeprospects.pdf
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Baseline - No Environmental Markets (IRR = 7.83%)
LCFS - Current Price (IRR = 11.30%)
LCFS - Cieling (IRR = 23.66%)
LCFS - CEC Projection (IRR = 17.11%)
Low Carbon Fuel Standard Uncertainty
• Commerce clause violation– US District Court – Unconstitutional– Ninth Circuit – Stay of preliminary
injunction
• Cost of commercializing advanced biofuel unknown price of LCFS credits unknown
1 2 3 4 5 6 7 8 9 10 $1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000 A
nn
ual N
et
Reven
ue
Environmental Markets - High Price (IRR = 34.36%)
Environmental Markets - Low Price (IRR = 15.30%)
Baseline - No Environmental Markets (IRR = 7.83%)
Low Carbon Fuel Standard Credits
Renewable Identification Numbers
Carbon Credits
Climate Trust
• Carbon market buyer– Existing funds to purchase
• California carbon credits from dairy digesters
• Voluntary carbon credits from food waste digesters
– Project manager • Data and verification management• Commercialization
• Environmental market advisory services
www.americanbiogascouncil.org
Promoting the Use of Biogas
O 167 Members from the U.S., Germany, Italy, Canada and the UK
O All Industry Sectors Represented
Key Industry Goals:
O Promote biogas markets, technologies and infrastructure
O Achieve policy parity
O Promote as a best practice for environmental stewardship and greenhouse gas reduction
Changing the Biogas Industry through:o Legislative and Regulatory Affairs:
o Federal: Biogas Tax Credit; Clean Energy Standard; NAT GAS Act; Farm Bill
o Introduction of Biogas Investment Tax Credit(Rep. Kind and Rep Lewis)
o States: California, Massachusetts, Wisconsin, more
o Sharing Expertise:
o 4 Specialized Working Groups
o Marketing and Education:
o Briefings, presentations, and webinars for customers, policy makers, and the general public
o Member Exposure
o Speaking opportunities in ABC workshops, webinars
o Large Industry Network – 6,000+ member company contacts
o Entire supply chain of production, processing and use
Join Today!
Contact Josh Lieberman at [email protected] or 202-640-6595 x 322
