With the first few weeks of 2021 underway, one thing is for sure – advancements within the alternative fuel space are continuing to develop, showing no sign of slowing down. As the new year continues to unfold, we will witness the following three key themes shape behavior from organizations, consumers and investors: regulatory advancements in clean fuel programs, sustainability reporting and renewable natural gas development. Keep reading to learn what key events are driving change within each respective theme.
Theme #1: Development and Expansion of Clean Fuel Programs
Governments have recognized the value alternative fuels offer in decarbonizing the transportation sector. As a result, clean fuel programs are being developed and expanded upon across the United States and beyond to increase adoption of alternative fuels.
Washington, New Mexico and New York are three states looking to develop such programs – as shown through their action to reintroduce legislation to adopt a clean fuel standard. In fact, on January 21, Washington’s House Committee on Environment & Energy passed legislation, with a vote of 7-6, to create a clean fuel standard. But – that’s not all. On January 14, Colorado completed their Greenhouse Gas Roadmap which notes their consideration to adopt a clean fuel standard in the future. On a similar note, last week the four jurisdictions of Massachusetts, Connecticut, Rhode Island and the District of Colombia signed a MOU to implement the Transportation and Climate Initiative Program (TCI-P): a bipartisan effort to reduce transportation related emissions.
Oregon on the other hand, is nearing the end of their discussion to award e-CFP credits under their existing Clean Fuels Program. If approved, this would enable fleets using electric charging solutions to benefit from credit generation. Finally, moving beyond the U.S., Canada recently released guidance on their clean fuel regulation – advising liquid fossils be used for transportation opposed to those in solid or gaseous form.
Theme #2: Need for Transparent and Accurate Sustainability Reporting
Moving beyond governments, consumers and investors are following organization’s sustainability reporting closely. Therefore, now, more than ever, corporations must provide transparent and accurate sustainability accounting – a step often initiated by investors. A leading climate-disclosure platform found that businesses are more than twice as likely to report climate risk data if actively pressured by investors. As a result, numerous companies around the world have pledged to achieve net-zero emissions, but in most cases, this won’t be attainable until roughly mid-century. Alone, this makes it difficult for stakeholders to assess if organizations truly are on track to meet these metrics. However, when organizations use carbon tracking and reporting, investors and consumers can monitor the progress being made by corporations – therefore, holding them accountable to their word.
Theme #3: Incentives for Increased RNG Development
Finally, renewable natural gas (RNG) development projects have experienced a recent surge in development. This is seen in that from early 2019 through 2020, the number of RNG facilities operating, under construction or being planned has increased 42%. This increase is particularly interesting given the cost to construct an RNG facility extends into the millions of dollars. Project leads and investors must be confident in RNG demand to invest in such projects and face the challenge of bringing new projects online quickly to meet the rapid growth in demand from transportation and voluntary markets.
Further, the market is hot and credit prices have reacted appropriately, specifically with D3 RIN prices hovering around $2.20/RIN or $25.80/MMBtu this past week. Not only is this in anticipation of potential RNG supply shortages, but in response to the new Biden administration that looks favorably on biofuels and renewables – as shown through President Biden’s decision to rejoin the Paris Climate Accord. However, while the World Resources Institute has verified the value RNG offers in helping states with their decarbonization efforts, they have noted the importance of assessing the benefits of RNG on a case-by-case basis – ensuring resources are being used optimally and sustainably to maximize emission reductions.
With significant advancements yet to come and key drivers yet to be unveiled, 2021 will prove to be a critical year in shaping the Future of Fuel as we know it. To follow in the conversation and initiate further discussion, subscribe to our blog series below, share with your colleagues and contact us today.