RNG is produced by upgrading raw biogas captured at landfills, wastewater facilities and large livestock digesters into high energy content methane gas that is interchangeable with conventional natural gas that can be used as fuel for transportation, heat and power. The development of RNG projects has accelerated in recent years, largely in response to the EPA and California programs promoting the use of renewable and low carbon fuels for transportation. Diesel used mainly in buses and trash collection trucks is substituted with compressed natural gas (“CNG”) dispensed at specialized stations usually owned by the CNG user that draw gas from the utility pipeline and can claim credit for RNG that’s injected to a pipeline at another location.

In 2014, EPA revised its pathways for biogas-derived fuels and recognized RNG as a cellulosic biofuel, which is assigned a RIN code of D3, the highest value credit given to renewable fuels. RNG currently constitutes approximately 98 percent of fuel in the D3 category and is mostly credited to California CNG station use from landfills located in other states.

Individual state programs also promote the use of RNG in transportation such as California’s Low Carbon Fuel Standard (LCFS) that establishes requirements to reduce the carbon intensity of transportation fuels. In 2018, the LCFS program was extended, with a carbon intensity reduction goal of 20 percent by 2030 relative to 2010. Oregon has also implemented a similar mechanism through its Clean Fuels Program to reduce the carbon intensity of transportation fuels.

Colony is developing RNG projects in California with the first Project scheduled to come online in 2020 utilizing biogas produced at the City of Fresno WWTP digesters.