Biogas

Part of the university’s plan for carbon neutrality is to “replace” fracked methane with biomethane, which on the face of it seems like a wonderful solution. Biomethane is produced when organic materials such as manure, food waste, agricultural waste, and sewage decompose. Once treated to remove impurities, and pressurized, biogas is essentially identical to fossil natural gas and can be substituted directly for it. 

 Of course, we are all in favor of making energy from waste, but the role this substitution plays in the Carbon Neutrality Initiative (CNI) is complicated, and has some serious downsides. 

 The first thing to understand is that although the CNI language implies that the substitution is direct, in fact it’s an offset scheme. Starting in 2025, so they say, 40% of the methane infrastructure will be running on biogas. In truth, the campuses will continue to run on fracked methane, while the university pays for biogas production elsewhere. 

 To get into a bit more detail, the UC has contracts with five landfill sites. The biggest one is in Shreveport, Louisiana. This facility used to simply burn the methane (a cheap and dirty mitigation strategy, that produces carbon dioxide). The UC entered into a contract for a much better system, in which the methane is cleaned, pressurized, and injected into the national gas grid. We pay for this by buying the gas for a set amount. To meet the CNI goals, campuses will then pay the premium, and claim thus to be running on 40% biomethane.

 The economics of the program are interesting. Biogas is expensive to produce. At the outset, in 2016, the UC authorized a price of 70-80 cents per therm. It costs about $1.10 per therm to produce it under the terms that the UC was able to negotiate. But because demand – from institutions like ours wanting to neutralize emissions – massively outstrips supply, UCOP is able to buy it for $1.10, sell it on at a big profit margin, and then plow the money back into the program. The expectation is that the campuses will start paying money to the program to ‘offset’ their emissions, but meanwhile the program is being used to make profit from other clients.

 Biomethane has turned out to be a great investment. The downside is that its very profitability -due to its scarcity – is an economic signal that the UC biogas program is not actually reducing emissions. Clearly, given the demand, someone else would have got into the game of making energy from Shreveport’s landfill methane if the UC had not cornered the market early on. So, like all offset schemes that have co-benefits, it does not pass the additionality test. The other grave problem is that this is an inherently unscalable solution. There simply isn’t nearly enough to go round. It is estimated that all the biomethane in the US could meet a maximum of about 4% of the energy needs currently met by fossil methane. 

 So this “biogas solution” leaves the fossil fuel infrastructure in place – and, in the case of some of the planned new buildings, licenses new fossil fuel energy systems – without offering a real strategy for the transition.  

 Our position on biogas is the same as on any offset. Paying other people to reduce emissions on your behalf is like paying someone else to lose weight for you.