Renewable Energy policy was a top-of-the-platform discussion point for the 2016 presidential candidates. For Hillary Clinton, and the Democratic platform, there were commitments to expand the policies of the Obama administration, which includes expansion of the use of renewable energy sources as a mechanism of addressing the commitments made under President Obama regarding carbon emissions reduction. For Donald Trump, and the Republican platform, there were commitments to strengthen our use of conventional energy resources, including domestic natural gas and clean coal. With the Republican Party gaining control of the Executive Office, the Senate, and the House, many are asking the fate of renewable energy development in the U.S. I believe the outlook for the U.S. bioenergy sector is very promising, and this blog will discuss the importance of bioenergy development, and offer compelling reasons on why it transects all political boundaries.
We must first recognize a fundamental unique attribute of bioenergy systems as compared to the more traditional renewable energy sources, such as solar and wind: Bioenergy systems create fuel, such as biogas – not electricity. Other renewable energy sources, such as solar panels, hydroelectric dams, and wind turbines only produce electrons. Bioenergy systems create energy-rich fuels that can be used to fuel electricity generating power plants if we determine that the best use of the fuel. Alternately, it can also be used to fuel cars, trucks, trains, boats, etc.; or, can be used to generate heat through combustion; or be used in manufacturing, such as the creation of plastics, in the same manner as traditional petrochemicals. Said differently, bioenergy systems create potential energy – the energy is stored in the biogas or biomass (fuel), and that energy can be released when and where we need it. Best of all, our ability to realize the benefits of this key attribute is not dependent on the development of new storage technologies – we already have a wonderful bioenergy storage system in the existing U.S. natural gas grid.
However, if this, alone, isn’t enough to convince you of the immense and important opportunity we have to develop our domestic bioenergy resources, here are a few more that may do the trick:
While all political parties have their own beliefs and strategies for creating a better U.S. economy, there are a few key concepts that transect all politics, and bioenergy systems seem to support a better U.S. economy from all perspectives. Certainly, the economics of bioenergy systems can be, and have been, influenced by policy. Incentives, tax credits, the creation of RINs (Renewable Identification Numbers – the way the U.S. government accounts for renewable transportation fuels), and the creation of RECs (Renewable Energy Credits – the way we all track renewable electricity in megawatt-hours) are some examples of policies that influence the present-day economics of bioenergy systems. However, these policy instruments are not the sole reason bioenergy systems have developed; and in many cases, these incentives had nothing to do with why some bioenergy systems are running today. In fact, many of the policy instruments developed previously to support renewable energy development were difficult to attain by bioenergy system developers, if applicable at all, as many were designed to incentivize electricity generation rather than renewable fuel development, as is the case with bioenergy systems.
Costs of Waste Disposal – Many, if not most, bioenergy systems were found to be economically attractive based on other economic drivers. For example, many manufacturers of organic products (such as participants in the agricultural, food, and beverage industries) have found that harvesting the energy value, nutrient value, and other value streams from the organic wastes they produce stemming from their manufacturing processes is an important way to manage their waste disposal costs. In many cases, harvesting the energy value through processing of the organic wastes through anaerobic digestion, for example, significantly reduces the costs of waste treatment and reduces the volume of materials remaining for disposal. Now add the ability to utilize that energy harvested to help power their waste treatment processes, or better yet, power the facilities used to manufacture of their products. Many food and beverage processors have found that bioenergy systems help them control their energy input costs as using the fuels produced from their organic wastes insulates them from price fluctuations and seasonal spikes, as well as overall market elasticity. The result is a more predictable bottom line. For these manufacturers that are also subject to commodity risk for their organic inputs, the ability to confidently control their energy input costs provides more confidence in their costs of goods produced, which is worth a great deal.
Costs of Energy – In other cases, the harvesting of biogas from their bioenergy system provides for fuel price hedging. For example, in cases where a facility is subject to curtailed natural gas usage during times when home heating needs for natural gas are at their highest, bioenergy systems can at least provide insulation from curtailment charges, and in some cases, provide for continued operation during curtailment, as some facilities simply shut down during curtailment periods as they cannot afford the increased costs of the fuel needed to maintain their production.
Other examples include the conversion of large fleets – such as was done by UPS, Frito Lay, Fed Ex, and others – to compressed natural gas (CNG) rather than gasoline and diesel. Similarly, conversion to CNG provides these companies price stability for their transportation fuels, as the elasticity of the cost of natural gas has historically been observed to be better than liquid fuels. To this point, bioenergy systems producing renewable natural gas (RNG) have constant and predictable fuel production costs, providing constant and predictable operating costs for these fleets. Data has also shown the vehicle life extended through the use of CNG and RNG, as these fuels contain less compounds that build up in engines and cause engine wear.
It is acknowledged that some of the costs and revenue streams can be influenced by other policies regarding waste disposal and environmental regulations. However, you must also acknowledge the existence of policies that create economic advantages for other, competitive energy resources, such as the policies that have benefitted the expansion of conventional fuel resource development, transmission, and distribution.
So, for the manufacturing sector, reduced waste disposal costs and better management of energy input costs are compelling reasons for bioenergy system development, and to a great extent, will continue regardless of election outcomes. For the public sector bioenergy system development, the argument is somewhat different, but again transects policy through economic benefit.
For public sector facilities, the economic benefits of bioenergy system deployment also include asset optimization and efficiency, as well as improved economics through public-private partnerships and privatization.
Most of the wastes generated by our citizens and businesses are treated in municipal wastewater treatment facilities (WWTF). Larger municipal wastewater plants (>10 million gallons treated per day) typically include anaerobic digestion in the treatment process, which generates biogas that can be harvested and utilized through bioenergy systems. However, in nearly all cases, the anaerobic digestion systems employed at these wastewater plants are vastly underutilized – by design. These WWTF were typically constructed as major public works, utilizing millions of taxpayer dollars and rate payer dollars to design, permit, construct, and operate. When constructed, these facilities typically are designed to accommodate the planned expansion for 20, 30, or 50 years. This creates significant unused capacity at these WWTF for many, many years that is payed for by the taxpayer and rate payer. Even worse, some of these assets deteriorate simply through the passage of time, meaning continued investment in repair and maintenance of unused infrastructure; or, major capital expense when the assets are finally needed to ready them for deployment.
Currently, the average WWTF utilization in the U.S. is about 60% of capacity, which means there are billions of dollars in unutilized assets sitting at these facilities. The anaerobic digesters deployed at these facilities can become more fully utilized through diversion of organics destined for landfilling. Diverting organics from landfilling to the WWTF means that the assets currently underutilized, and being paid for, will create revenues through offset landfill tipping fees for the organic wastes diverted, and the revenues through harvest products of digestion, such as biogas and nutrients. The revenues created through better utilization of these assets can provide local governments the means of flat-lining user rates and taxes, if not providing a mechanism for rate and tax reduction. As additional WWTF capacity is needed resulting from population growth, addition of manufacturing, or etcetera, the capacity can easily be freed by diverting the appropriate amount of organics back to the landfill until additional digester capacity can be created.
Such an approach also fosters opportunity for public-private partnerships and privatization of waste management/disposal. Typically, the WWTFs used across America are paid for through taxes and user fees. Anaerobic digesters used at these WWTFs are the only mechanism for creating revenues that are not based on taxes and fees. As such, these independent revenue streams create an ability for private sector businesses to engage with local governments to streamline facility operations costs and create investment vehicles to fund expansion, repairs, and maintenance of these public assets.
The final, and perhaps most significant, reason bioenergy systems are supported by all parties is the role bioenergy plays in furthering our U.S. energy security. The U.S. is blessed with significant domestic energy resources, in the forms of coal, natural gas, and crude oil. However, the greatest energy resource of the U.S. is availed through the utilization of our organic wastes fueling bioenergy systems – which is infinitely renewable. Although we have increased our development of conventional fossil fuels over the past few years, we still import a significant amount – 24% or more – of our energy fuels from other countries. We have the opportunity to greatly reduce the import of energy fuels from other countries, if not eliminate it, if we choose, simply by recognizing the energy value of our ‘trash’.
Continued development of domestic sources of fossil fuels can help us achieve greater energy security, but there is great division among our elected leaders and citizens on the means by which we exploit these resources. Regardless of party, fossil fuel extraction systems are heavily debated and are contentious subjects at local, state, and federal levels. However, bioenergy systems do not create such a divide, as it provides for waste disposal, recovery of valuable products from the waste, and the economic benefits described above in every locality – not just where fossil deposits are mapped and found. Bioenergy systems create an ability for energy fuel development across the country, creating localized energy sources that leverage existing distribution assets (for natural gas) and creating realistic local distribution mechanisms through trucking and local pipelines.
Good for All
So, as you can see, the advantages bioenergy systems afford the U.S. economy and the support it lends to energy security are quite unique as compared with other energy resources, conventional and renewable. For these reasons, we should see our Country’s leadership take an even more aggressive position to further support bioenergy system development. Our leadership should focus on implementing policy and guidance that help us better realize these benefits that bioenergy systems afford: a base-load renewable energy resource produced domestically by American workers; one of our greatest treasures.
The coming weeks and months will certainly paint a clearer picture of the next chapter of the U.S. bioenergy development story, but I am confident that the U.S. will continue to advance the development of bioenergy and biogas systems.