Aemetis, Inc., a renewable natural gas (RNG) and renewable fuels company focused on negative carbon intensity (CI) products, has announced that the US Environmental Protection Agency (EPA) has approved the Aemetis Biogas Services subsidiary’s RNG production facility for the generation of D3 Renewable Identification Numbers (RINs) under the federal Renewable Fuel Standard (RFS).
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Six dairy biogas digesters are fully operational and a seventh dairy digester is scheduled to be operational in early June 2023.
The renewable natural gas (RNG) produced by Aemetis is expected to generate several revenue streams including:
- the sale of RNG for transportation use to replace petroleum diesel;
- the sale of the California Low Carbon Fuel Standard (LCFS) credits that are used by fuel blenders to meet California carbon reduction and pollution offset mandates;
- the sale of the D3 RINs generated under the federal RFS; and
- the sale of Inflation Reduction Act (IRA) Production Tax Credits, beginning in 2025.
In addition, the construction and placed-in-service of qualified biogas property, under Section 48 of the Inflation Reduction Act (IRA), generates Investment Tax Credits (ITCs) that are expected to be equal to 40 percent of the project costs.
The ITCs are expected to be transferable when the Internal Revenue Service (IRS) issues guidance for the transfer forms.
Temporary CI pathway
Six dairy digesters, more than 40 miles of biogas pipeline, the central biogas-to-RNG upgrading facility, and the utility pipeline interconnection unit are now fully operational.
RNG is being injected into the utility gas system and will be stored underground until Aemetis Biogas receives carbon intensity (CI) pathway approvals from the California Air Resources Board (CARB) for the sale of credits under the LCFS.
The 90 days of RNG production and data collection required for the CARB approval process have been completed.
A temporary CI pathway of -150 is expected to become available to use while the final pathway is under review by CARB, allowing Aemetis to begin revenues in Q3 2023 using the temporary pathway.
The approval of Aemetis Biogas for the generation of D3 RINs is a major step towards full product revenue. The significant investments made by Aemetis since 2019 directly reduce greenhouse gas pollution and improve local air quality in Central Valley communities, while creating jobs. Aemetis continues to rapidly deploy the infrastructure necessary to connect our network of dairy digesters and increase the production of carbon-negative dairy renewable natural gas to replace petroleum diesel, said Andy Foster, President of Aemetis Biogas, Inc.
Rolling out the remaining digesters
The dairy digesters, pipeline project, and biogas-to-RNG facility are funded in part by grants from the California Department of Food and Agriculture and the California Energy Commission (CEC).
In October 2022, Aemetis announced the closing of its first US$25 million of long-term financing with Greater Commercial Lending (GCL) supported by a US Department of Agriculture (USDA) loan guarantee.
The long-term, low-interest rate, 20-year project financing was guaranteed by the USDA through the Rural Energy for America Program (REAP) and carries a fixed interest rate for the first five years.
Aemetis has filed or is preparing to file for an additional US$100 million of REAP loans to fund the 31 additional dairies that are in engineering, permitting, or already under construction.
The maximum loan amount is US$25 million, so the Aemetis loan applications are a series of US$25 million loans, all with 20-year repayment terms.