An economic assessment of renewable natural gas (RNG) as a potential low carbon intensity fuel alternative eligible under Canada’s Clean Fuel Regulations

Abstract

The purpose of this project is to determine whether the production of renewable natural gas (RNG) using corn stover or dairy cow manure in Canada is economically feasible using a discounted cash flow analysis. Further, this work seeks to determine if there is sufficient, reliable feedstock to sustain desired production levels over the lifetime of a production facility. This project also evaluates the effect of Canada’s newly introduced Clean Fuel Regulation (CFR) and CFR credit sales on the profitability of RNG production. This work calculates that the cost to generate a credit under the CFR using manure or stover based RNG production can be as low as $315 or more than $28,000 under unfavourable circumstances. This work provides better understanding of the economic challenges of RNG, showing that feedstock acquisition and transportation costs significantly impact a projects’ ability to be profitable, leading to credit generation costs which are not competitive.