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Retail energy providers should consider renewable natural gas (RNG) as a solution to help decarbonize the emissions of commercial and industrial accounts, a broker of environmental compliance products told MAGNIFYI recently.

Many companies manage their greenhouse gas emissions through renewable energy credits, power purchase agreements or carbon offsets, but those only cover electricity usage.

Drew Puchot, broker at Equus Energy Group, said these tools often overlook the use of thermal energy, fleet fuel and downstream logistics. The usage of RNG and the value of renewable thermal credits (RTCs), a tradeable asset that accompanies the fuel, covers this gap.

Many companies seek to comply with the Greenhouse Gas Protocol, an international framework to quantify emissions and track progress in reducing them, driven by an effort to manage increased global temperatures.

Renewable energy certificates (RECs) cover emissions from purchased or acquired electricity, steam, heat, and cooling, known as Scope 2 emissions.

RNG goes a long way to cover Scope 1 emissions, which are produced from company-owned boilers, furnaces, and vehicles, Puchot said.

The compression of RNG into a vehicle fuel abates Scope 3 emissions, which are indirect emissions across suppliers, logistics and product lifecycles.

“If you have a gas meter in your facility, you have Scope 1 thermal emissions,” Puchot said. “RECs do not touch those. Only RTCs address that directly.”

Biogas is the precursor of RNG, derived from the decay of organic matter, and it will be created if the gas is captured or not.

When biogas is captured and upgraded, meaning that CO₂ and other impurities are removed, it becomes RNG and is fully fungible with fossil natural gas.

RNG feedstocks are mostly agricultural and livestock waste, landfills, food waste and sewage sludge. Feedstocks are treated and subject to anaerobic digestion, which are tanks or pits without oxygen, which produces biogas. Each treatment process is unique.

The trade association RNG Coalition said there are 570 operational RNG plants in the country, with 153 under construction and 300 planned.

RNG production and usage has expanded in the last decade for several reasons, notably its inclusion in the federal Renewable Fuels Standard (RFS) and in California’s Low Carbon Fuels Standard (LCFS).

The programs produce valuable credits that are additive and exceed the monetary value of fossil gas.

End-users with international emissions exposure are among the leaders in RNG usage.

The value of RNG varies because each feedstock has a different carbon intensity, expressed in grams of CO₂ equivalent per unit of energy, typically measured in megajoules. The carbon intensity of dairy farm RNG is deeply negative because of captured bovine waste emissions. This makes the RNG desirable to purchasers and gives it a premium price.

Organic waste such as unwanted food or fibrous agricultural waste produces RNG with a moderately negative carbon intensity, while wastewater sludge and landfills produce RNG with a slightly positive score.

When RNG operations and carbon intensity scores are verified by independent engineers, the result qualifies for an RTC, which can be listed and exchanged on many registries, most notably CleanCounts.

Puchot said it is important for international companies to close their thermal emissions measurement gap for many reasons. First, a corporate sustainability reporting directive has become a mandatory European Union (EU) regulation.

Second, corporate efforts can be validated by the Science Based Targets Initiative, an international group that provides the guidance and tools for companies with net zero emissions targets.

Third, accurate measurement is crucial for the Carbon Disclosure Project, which is a worldwide environmental disclosure system that allows for collaboration in the supply chain.

Finally, a new regulation is proposed at the EU called the Green Claims Directive, aimed at combating greenwashing. Misleading environmental claims can result in penalties.

The combination of audited carbon intensity scores and physical delivery verification, from receipt point to delivery point, lowers the risk of a poor environmental audit when RNG is used.

Puchot says natural gas users could start the process by calculating their annual usage of the fuel.

“If they are buying through a utility, they are immediately covering Scope 1 emissions if they buy RNG,” he said. “And when you deal with gas, there are not many options.”

Buyers that want dedicated supplies can request a financial model for an RNG project from an established developer with proven agreements to acquire feedstocks.

Buyers also can get RNG from major natural gas and fuel marketers and traders. These can be arms of major oil companies, international trade house and retail energy providers that also trade RECs and carbon credits.

RNG is often overlooked because of the complexity of its supply chain. Feedstock collection, digestion and biogas upgrading, along with pipeline injection and the ultimate creation of RTCs, all need to be carefully monitored.

The benefits of RNG are that it solves problems that others do not. An RNG pathway can start with waste management and finish with a low- or no-carbon route to a fuel cell that can feed a storage battery.

Along with verified emissions reduction, value is created from gas sales, renewable identification numbers (RINs) in the RFS, LCFS credits, RTCs and possibly credits for CO2 capture.

Tipping fees from accepting organic waste and sales of byproducts of the initial feedstock are other revenue sources.

“RINs and LCFS credits will partially or fully offset your initial investment or your long-term offtake agreement,” Puchot said.

Scope 3 emissions come from transportation market usage. The biggest win for RNG to date is compressing it for fleet vehicle use and knocking some diesel out of the motor fuel pool in California.

The combined value of D3 RINs and LCFS credits can reduce the net fuel cost of compressed natural gas from RNG below that of diesel fuel. Oregon and Washington have mandatory carbon credit markets similar to that of California, with New Mexico to follow.

D3 RINs come from cellulosic biofuel and are the equivalent of those in the ethanol program of the RFS. D5 RINs are generated from food waste RNG and are considered to be advanced biofuels, but trade at a lower value.

Utility purchases of RNG are limited

Utilities in North America and Europe have added RNG to their fuel portfolios, but the expense of the fuel limits its progress.

RNG with low carbon intensity delivered for west coast vehicle use in compliance markets has in past years been valued at $60/mmBtu or higher in long-term contracts. This depends in part on traded prices of state carbon credits.

Voluntary RNG for purchases outside of those markets has been priced in recent years from $18/mmBtu to $23/mmBtu. This is gas that some distributors might purchase.

Some state regulators permit sales of RNG to retail customers on a voluntary basis. About an equal number of traditionally regulated states seem to have these programs, compared with gas choice states.

Florida is a state with retail gas competition.

Florida City Gas has had a tariff in place since December 2023 allowing firm delivery to non-residential customers from either the distributor at its weighted average cost of gas or a retail supplier under a separate contract.

The RNG is required to have a heating value on the order of 1,100 British Thermal Units per cubic foot, a somewhat rich specification.

Florida Public Utilities allows for RNG delivery to customers, with no mention of rates or third-party suppliers, suggesting that a supply contract is highly negotiable.

Tampa-based Peoples Gas appears to have closed a program to new customers to upgrade biogas into RNG, according to its tariff. An interconnection service for RNG is still included in its tariff, with no specific rates.

In California, voluntary RNG tariffs were put in place in 2020 for SoCalGas and SDG&E, and were still active in early 2026.

Under NIPSCO’s GreenPath program in Indiana, an additional cost of 22.5¢/therm will be added to bills of participants, based on the proportion of RNG they want in their gas mix.

The Illinois Commerce Commission ordered Nicor to drop its TotalGreen program no later than June 30, 2027. The distributor was offering carbon offsets with low blends of RNG environmental attributes at 7.36¢/therm.

Higher blends of RNG environmental attributes and supplements to or offsets of the remaining CO₂ emissions were priced at 25.76¢/therm.

An environmental attribute is a fungible credit.

At the end of its second year, TotalGreen had 131 enrollments, and Nicor incurred administrative costs of $318,270, the commission said. After three years, TotalGreen has an enrollment of only 238 customers.

The Commission said “TotalGreen has failed to demonstrate significant benefits that warrant it moving forward at this time.”

The Massachusetts Department of Public Utilities has been pursuing a new regulatory strategy for natural gas since December 2023. The DPU rejected a recommendation to change the current supply procurement policy of distributors to enable inclusion of RNG due to cost and availability concerns, as well as its “uncertain status as a zero emissions fuel.”