Biogas has potential to play a role as Canada transitions from fossil fuels to renewable energy

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Chris Perry tried for years to make a go of producing methane from farm waste to generate baseload electricity for his family’s big potato-growing operation near Lethbridge, Alta. Any excess power was sent to the provincial grid.

Standing beside his two cylindrical anaerobic digester units on a recent cloudless afternoon, the air hot and pungent, Mr. Perry explained how his attempt at building a do-it-yourself circular economy with his brother, Harold, looked ideal on paper: Rather than sending a stew of decomposing potatoes and other waste to the landfill, the fourth-generation farmer captured the methane as a fuel.

The operation, called GrowTEC, has processed 15,000 tonnes of waste annually since 2015. But with sizable upfront costs and inconsistent government policy toward supporting such projects, biogas-to-power proved to be a money-losing proposition.

Now, GrowTEC is getting a new lease on life – not as an electricity generator, but a source of renewable natural gas (RNG) for FortisBC, the main gas utility in British Columbia. This spring, the Perrys agreed to sell two-thirds of the biogas business to Vancouver-based EverGen Infrastructure Corp. EVGN-X for $2.1-million. EverGen will fund adding the gear needed to upgrade the gas so it can be injected into the pipeline network under a 20-year contract with FortisBC.

Utilities are embracing RNG for its potential to play a sizable role in helping to reduce emissions of methane by capturing the climate-warming gas, rather than letting it spew into the atmosphere from landfills. It’s changed the game for the Perrys, who employ a range of sustainable farming techniques as a supplier to food giants such as Frito-Lay and McCain Foods Ltd.

“What hasn’t been there is the price, and now with the renewable market and the environmental attribute that’s tied to the goodness of what we have always believed in with biomass, I just believe there’s a lot to come,” Mr. Perry said. “And it’s integrated with the farm.”

Besides dealing with waste, residue from the process – known as digestate – makes fertilizer for the Perrys’ fields. For utility customers, the gas itself is indistinguishable from the fossil fuel burned in furnaces and stoves. That means there is no need for new and specialized infrastructure. It can also be used as a transport fuel.

For many, natural gas is seen as a necessary bridge as Canada undergoes the transition from higher-carbon coal and oil to renewables such as wind and solar. Since 2010, global switching to gas from coal for power generation saved more than 500 million tonnes of carbon dioxide from spewing into the atmosphere, according to the International Energy Agency. That is equal to swapping 200 million internal combustion engine cars for electric vehicles.

But methane from conventional sources is a non-renewable fuel whose production disrupts ecosystems. Wells, plants and pipelines can leak methane if it is not properly handled. It is also at least 25 times more potent as a climate-warming gas than CO2. Many environmentalists would rather see a wholesale shift away from carbon-based fuels.

But the Canadian Biogas Association says biogas and RNG have the potential to cut the country’s methane emissions by 26.7 million tonnes of CO2 equivalent by 2030. That equals a reduction in methane emissions of 16.5 per cent by that year, which is half the country’s total, assuming favourable policies, the group said in a recent report. RNG used for transportation is fully eligible for carbon credits under new federal clean fuel standards, though there are limits on credits available for stationary uses.

EverGen buys interests in operations such as the Perrys’, and provides capital to make the necessary upgrades. It uses its business connections and experience to sign long-term supply contracts and arrange for projects to generate carbon offset credits that industrial emitters can purchase.

The company, which went public last year, also owns three renewable gas facilities in B.C., and has just acquired a 50-per-cent stake in three projects in Ontario. It aims to own more than 20 facilities across the country in five years.

The connection with the farm is an attribute that attracted EverGen to the buy the interest in GrowTEC, said Chase Edgelow, EverGen’s chief executive officer. There are also opportunities to expand GrowTEC to take in feedstock from the surrounding area. “There’s probably no better example of a circular-economy-type operation than what the Perry family has built there, so that was really appealing,” he said.

Some provinces have established mandates to boost RNG use. In 2019, Quebec set rules to blend a minimum of 1-per-cent renewable fuel into its gas grid, rising to 5 per cent by 2025-26. That could increase to 10 per cent by 2030.

Under B.C.’s climate plan, gas distributors must blend a minimum of 15-per-cent renewable fuel, such as RNG and hydrogen, into their supply by 2030. It has since said it will allow utilities to move to that goal quicker. The government also said a $30-per-gigajoule price cap for RNG can increase with inflation.

These numbers are a fraction of the volumes from traditional gas fields, but the industry’s focus on RNG is not greenwashing, said Scott Gramm, senior manager of renewable gas and low-carbon fuel development at FortisBC. The utility sources RNG from 12 suppliers, and will add another 18 over the next three years.

“I think it’s pretty clear strategically – when you look at the future and the continued pressure for reduced emissions, we see it as both a practical and an economic way to ultimately reduce emissions on behalf of our customers,” Mr. Gramm said.

Customers sign up voluntarily for some of their supply to be made up of RNG. Buying gas with 10-per-cent RNG content adds about $5 a month to the average bill, he said. (There’s no guarantee that RNG will physically be delivered, but FortisBC buys the equivalent volume for its grid.)

Enbridge Gas, the Ontario utility owned by pipeline giant Enbridge Inc. ENB-T, has set a target to increase RNG supply tenfold to 5 petajoules by 2025. Its strategy involves providing biogas upgrading and RNG injection services for producers in Ontario. For example, the company has joined Walker Industries and Comcor Environmental to build a $42-million RNG plant near Niagara Falls, slated to start producing fuel from landfill waste next year. Enbridge has also partnered with the City of Toronto to turn green-bin organic waste into RNG.

The company currently sources RNG from four projects, and aims to support 50 more beyond what’s needed to reach its 2025 target, said Gordon Lau, Enbridge Gas’s manager, renewable natural gas. “So there’s certainly a lot of activity in the marketplace,” he said.

RNG has its critics, who say the methane is still at risk of escaping from leaky pipeline networks. It is expensive compared with other sources and available supply is dwarfed by the fossil fuel variety. “Although there may be some modest climate benefit for a few niche applications like heavy industry, it cannot be a replacement for the way we use natural gas now,” researchers Laura Feinstein and Eric de Place wrote in a report for the Sightline Institute, a U.S. think tank, last year.

Mr. Edgelow concedes RNG supply has a limit, but he said it is just one of several ways to help reduce emissions. “If you look back at the benefits of bringing in other sources of energy 20 years ago, there wasn’t one silver bullet for the electrical grid to be as renewable as it is today, with wind, solar and hydro,” he said. I think renewable natural gas can hold its own, and at the same time solve a massive waste problem and emissions problem from waste.”

Editor’s note: A previous version of this article incorrectly described Enbridge Gas’s strategy to increase RNG supply. In fact, the strategy involves providing biogas upgrading and RNG injection services for producers in Ontario.

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