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Chevron JV Targets Renewable Gas Use

Copyright © 2021 Energy Intelligence Group

Chevron sees a bright future in natural gas-powered auto transportation. But it will be cows, not dinosaurs, supplying the fuel. The California-based integrated major penned a joint agreement last week with renewable natural gas (RNG) specialist Brightmark. The venture, Brightmark RNG Holdings, will construct commercial-scale biomethane projects in Florida, Michigan, New York and South Dakota. Chevron will then market the manure-fed RNG to California's transport market (NGW Apr.27'20). "We're in the energy business, and we're looking for affordable, reliable and ever-cleaner energy," Andy Walz, Chevron's president of Americas Products, told Energy Intelligence in an interview. "And in California, there's infrastructure here where [RNG] has an opportunity to get to the marketplace." That infrastructure has evolved on the back of the state's low-carbon fuel standard and slate of other legislative initiatives to clean up California’s transportation emissions. Gov. Gavin Newsom (D) hopes to fully eliminate the state's petroleum diesel emissions by 2030. Carbon Neutrality Compressed natural gas- (CNG) and LNG-fueled vehicles still emit carbon dioxide when their fuel is combusted. But if supplied from carbon negative sources of RNG, the vehicle's life-cycle carbon footprint can support absolute emission reduction goals. The RNG that Chevron and Brightmark are pursuing ticks that box. The process captures what would otherwise be fugitive methane emissions from the dairy industry -- a significant source of greenhouse gases -- and fewer CO2 emissions come from a CNG/LNG tailpipe than a conventional diesel one. The combined result is a life-cycle emissions footprint that can be up to 400% lower than traditional vehicle fuels. "That's probably the most important" selling point of dairy-based RNG, Walz said. Chevron, of course, is not in the business of the anaerobic digestion of cow manure. And Brightmark is not in the business of marketing transport fuels. But rather than spend years and hefty sums to build out the respective expertise, the duo instead decided to team up. "We view Chevron as the Yen to our Yang," Brightmark founder and CEO, Bob Powell, told Energy Intelligence. "We have an expertise in developing these environmentally friendly RNG projects, getting them built and operating them on a long-term basis. And I think Chevron is really good once we create the RNG at finding the best use." At the same time, Chevron wants to learn how low-carbon alternative fuel systems work, so owning a piece of the production stream is key to its strategy, as opposed to just buying volumes wholesale. "We want to own the whole value chain," Walz said. RNG Drives CNG CNG and LNG vehicle uptake has been on the rise in recent years, but natural gas remains just a speck in the US transport fuel energy mix. It powers more than 175,000 vehicles in the US, according to the US Department of Energy. But these vehicles consumed the equivalent of just 980,000 gallons per day of fuel last year; by contrast, the US consumed roughly 129 million gallons per day of diesel in 2019. Still, the trajectory points to ever-increasing uptake among commercial and municipal fleets and port vehicles as cities and companies look to reduce their carbon footprint. Uptake from long-haul trucks presents a future opportunity as refueling infrastructure becomes more prevalent. "We do see momentum building" for low-carbon fuel standards in the US, particularly at the state level, Powell said. "So not only will we be opportunistic when it happens, we're trying to anticipate … so I would be bullish on RNG here for sure." Indeed, while the conventional gas industry has advocated CNG for years, it is more likely RNG will capture the bulk of future market share as policies incentivize its development and use. Conventional gas-fed CNG vehicles have a 34% lower life-cycle carbon footprint than diesel vehicles, according to fuel provider Clean Energy. But that is a far cry from the negative carbon credentials of dairy-based RNG. It is telling that overall gas consumption in California's transportation mix rose 140% from 2011 to 2019, but use of fossil fuel gas has fallen by nearly half, whereas biomethane production has skyrocketed.

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