bp has outlined three policy proposals aimed at expanding domestic production and utilization of renewable natural gas (RNG) in the United States. The company's Archaea Energy business, a leading producer of RNG in the US, generated 11 trillion British thermal units of RNG last year from landfills and farms across 32 states. With plans to increase production significantly, Archaea aims to bring more than a dozen additional plants online in the next two years. According to bp, implementing supportive government policies is crucial for unlocking the full potential of biogas and RNG in the US energy system.
One of bp's suggested policy measures involves addressing issues with the US Treasury Department's proposed guidance on the biogas investment tax credit (ITC). Under the current framework, RNG producers may not qualify for the credit if a separate entity owns the gas-collection system, despite owning the cleaning and conditioning equipment essential for biogas projects. bp has urged the Treasury to revise the guidelines to recognize the importance of cleaning and conditioning equipment and to amend the application of the “80/20 rule” to encompass entire RNG projects rather than individual components.
Furthermore, bp advocates for the establishment of a new pathway for RNG to power electric vehicles through the federal Renewable Fuel Standard (RFS). The company proposes the inclusion of tradeable credits, known as electric renewable identification numbers (eRINs), which would incentivize the use of biogas-generated electricity for electric vehicle charging. By expanding the market for biogas and RNG, bp believes this measure could benefit rural communities and contribute to the decarbonization efforts.
Lastly, bp suggests incentivizing the use of RNG for low-carbon hydrogen production by providing tax credits under the Inflation Reduction Act (IRA). However, the proposed guidance from the Treasury requires RNG molecules to flow directly to the hydrogen production facility, which poses practical challenges. bp recommends implementing an accounting system that allows hydrogen producers to receive credit for purchasing RNG injected into existing natural gas pipelines, similar to the approach used in the EPA's Renewable Fuel Standard.
By addressing these regulatory hurdles and promoting policies that support the growth of the RNG sector, bp aims to accelerate the transition to a more sustainable energy system in the United States
