At Energy Capital Ventures®, we view renewable natural gas (RNG) as a cornerstone of the Green Molecules® portfolio, offering immediate infrastructure compatibility and proven emissions reductions across transportation and industrial applications. Its ability to utilize existing pipeline networks while delivering carbon-negative fuel profiles makes it uniquely positioned within the evolving policy framework.

The recently enacted One Big Beautiful Bill Act (OBBB) brings both clarity and complexity to RNG’s market landscape. Rather than providing blanket support, the legislation tightens compliance requirements under key programs like RINs and LCFS while extending critical incentives through 2029. The result is a more performance-driven environment that rewards operational excellence and strategic positioning over scale alone.

For stakeholders advancing RNG development, OBBB serves as both opportunity and filter. It reinforces the sector’s growth trajectory through extended 45Z credits and improved transferability, while demanding greater precision in feedstock sourcing, emissions accounting, and regulatory compliance. The winners will be those who can navigate this refined landscape with technical competence and financial discipline.

What OBBB Means for RNG

The One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025, represents a significant recalibration of federal energy policy, building on and amending key provisions of the Inflation Reduction Act (IRA). While many renewable energy credits face restrictions or accelerated phase-outs, RNG emerges as a relative beneficiary under the new framework.

OBBB’s approach centers on three strategic priorities:

1. Favoring domestic feedstocks through geographic sourcing restrictions
2. Tightening emissions scoring via lifecycle performance benchmarks
3. Strengthening market tools like credit transferability and multi-year incentive timelines

For the renewable natural gas sector, OBBB introduces several key changes:

• Extended 45Z Clean Fuel Production Credit through December 31, 2029, providing multi-year visibility for project finance
• Separated RNG pathways for dairy, swine, and poultry manure to maximize credit generation potential
• Restricted foreign feedstock eligibility to materials sourced from the U.S., Mexico, and Canada only
• Streamlined transferability provisions that improve project financing flexibility
• Revised LCFS integration allowing continued dual-crediting with federal RINs programs

Unlike other segments of the energy transition facing tighter incentives, RNG stands out for its dual advantage: waste mitigation and infrastructure readiness. That positioning fuels strong federal backing and market momentum heading into 2025.

45Z: Multi-Year Support, New Structure

Among OBBB’s most significant provisions for the RNG sector is the two-year extension of the Section 45Z Clean Fuel Production Credit through 2029, coupled with important structural modifications that favor domestic biogas production.

Pathway-Specific Credit Enhancements:

Under the revised 45Z framework, RNG producers can access performance-based credits up to $1.00 per gallon equivalent, determined by lifecycle greenhouse gas emissions intensity. The legislation introduces pathway-specific improvements:

• Dairy manure RNG: Separate pathway recognition with greater avoided methane crediting
• Swine and poultry operations: Distinct classifications allowing optimized credit calculations
• Landfill gas projects: Still eligible under updated emissions modeling through 45ZCF-GREET
• Food waste digesters: Elevated credit potential through negative emissions recognition

This pathway differentiation reflects growing regulatory sophistication around feedstock-specific carbon intensity calculations, rewarding projects with verifiable low-emissions profiles based on lifecycle analysis.  

New Geographic Limits on Feedstock:

OBBB introduces meaningful changes to feedstock eligibility that will reshape RNG supply chains:

• Domestic Preference: Credits now limited to fuels produced from feedstocks sourced within the U.S., Mexico, and Canada, eliminating previous eligibility for most international materials.
• Supply Chain Impact: Projects relying on imported organic waste or international feedstock aggregation models face fundamental restructuring requirements.
• Market Opportunity: Domestic feedstock suppliers, particularly in agricultural waste and municipal organics, gain competitive advantages through policy-driven demand increases.

Credit Transferability Boosts Project Finance:

The updated credit transferability provisions under OBBB significantly improve RNG project economics by:

• Enabling developers to monetize credits without tax appetite constraints
• Reducing financing complexity through credit sale agreements
• Supporting merchant project development in advance of long-term offtake contracts
• Creating liquid secondary markets for RNG-derived environmental credits

Early market indications suggest transferable 45Z credits are trading at 85-90% of face value, providing immediate cash flow benefits for operational projects.

RINs: Stable Ground in a Shifting Market

The Renewable Fuel Standard (RFS) program continues under OBBB with important modifications that affect RNG’s participation in RINs markets. While broader biofuels policy faces uncertainty, RNG maintains favorable positioning due to its superior carbon intensity profile and domestic production advantages.

D3/D5 Credit Value Drivers:

RNG projects continue generating valuable D3 (cellulosic biofuel) and D5 (advanced biofuel) RINs, with several factors supporting pricing stability:

• Supply Constraints: Limited cellulosic ethanol availability maintains premium pricing for D3 RINs, with landfill gas and agricultural anaerobic digestion projects benefiting from pathway certainty.
• Compliance Demand: Obligated parties face continued RVO requirements through EPA’s annual rulemaking, supporting baseline RINs demand regardless of broader policy changes.
• Market Dynamics: D3 RINs have traded in the $1.20-$1.75 range through 2025, reflecting both compliance value and relative scarcity of qualifying cellulosic pathways.

Domestic Supply Chains Gain Ground:

OBBB’s feedstock restrictions create both challenges and opportunities within RINs markets:

• Domestic Advantage: U.S.-sourced RNG projects avoid potential complications from foreign feedstock restrictions, maintaining full RINs generation capability.
• Supply Chain Verification: More robust documentation requirements for feedstock origin may increase compliance costs but provide competitive moats for well-positioned projects.
• Market Consolidation: Expect continued industry consolidation as smaller developers struggle with increased regulatory complexity while larger platforms achieve economies of scale in compliance management.

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LCFS: Policy Shifts and Long-Term Signals

California’s Low Carbon Fuel Standard (LCFS) remains a critical revenue driver for RNG projects, with recent amendments taking effect July 1, 2025, creating both opportunities and constraints for sector participants. 2025

Regulatory Updates:
The updated LCFS regulation introduces several key changes affecting RNG:

• Carbon Intensity Targets: More stringent CI reduction requirements through 2030, increasing to 9% below baseline levels, enhancing credit demand for low-CI fuels like RNG.
• Deliverability Requirements: New restrictions on out-of-state RNG projects’ ability to generate LCFS credits, potentially limiting project locations to in-state or pipeline-connected facilities.
• Auto-Adjustment Mechanism: New market stability measures designed to balance credit supply and demand, reducing price volatility that has historically challenged project financing.
• Avoided Methane Evolution: Phased changes to avoid emission crediting methodology, with full implementation affecting project economics after 2030. LCFS

Credit Prices and Market Trends:

LCFS credit values have responded to the regulatory updates with measured optimism:

• Current pricing: LCFS credits trading in the $130-$150 per metric ton CO2e range following July amendments
• Market surplus: Existing credit oversupply continues to moderate near-term pricing, though tighter CI standards support longer-term value
• Geographic arbitrage: In-state RNG projects maintain full LCFS access while out-of-state projects face increasing limitations

2040 Phase-Out: Timeline Still Favors Development:

While CARB’s proposed 2040 phase-out of RNG crediting under LCFS creates long-term uncertainty, the practical timeline provides substantial runway for current development cycles. Projects achieving commercial operation through 2030 can expect 10+ years of LCFS revenue contribution, sufficient to underwrite most financing structures.

RNG Market Momentum: Projects and Capital

The North American RNG market demonstrates remarkable resilience and growth momentum, with OBBB’s policy framework supporting continued expansion across multiple segments.

Production and Infrastructure Scale-Up:

Recent market data indicates accelerating development across the sector:

• Production Capacity: North American RNG capacity reached 604 MMcfd by 2025, representing 30% growth since 2023 and continuing the sector’s rapid expansion trajectory.
• Facility Development: Nearly 500 operational RNG facilities across North America by mid-2025, up from approximately 350 in 2023, reflecting both large-scale industrial projects and distributed smaller systems.
• Investment Activity: Over $3 billion in new biogas system investments during 2024, representing a 40% increase from the previous year and demonstrating strong capital market confidence.

More Feedstocks, More Regions:

Market development increasingly focuses on feedstock optimization and geographic diversification:

• Agricultural Expansion: Farm-based RNG systems showed the fastest growth in 2024, with new capacity additions surpassing landfill gas projects for the first time in industry history.
• Food Waste Processing: Despite complexity, food waste-only systems represent significant growth opportunity as municipalities implement organics diversion mandates.
• Regional Leadership: Texas leads the U.S. in capacity at 73 MMcfd, followed by Pennsylvania (55 MMcfd) and Ohio (44 MMcfd), with Canada contributing 46 MMcfd to the North American totals.

ECV Spotlight: Osmoses, CarbonQuest & Vertus Energy Push Performance

While much of the policy conversation around RNG has centered on traditional anaerobic digestion and upgrading technologies, OBBB’s performance-based framework also opens space for emerging innovations that can meet or exceed efficiency benchmarks through alternative means. Three Energy Capital Ventures portfolio companies—Osmoses, CarbonQuest, and Vertus Energy—are advancing biogas production, monetization pathways, and upgrading models that align with the core drivers of OBBB: cost-effectiveness, infrastructure leverage, and superior emissions performance.

Osmoses: Low-Energy Biogas Upgrading

Osmoses has developed breakthrough membrane technology that has the potential to dramatically improves biogas upgrading efficiency, addressing one of the most energy-intensive steps in RNG production. The company’s patented polymer membranes achieve unprecedented flux and selectivity for gas separation, reducing energy consumption by up to 90% compared to traditional upgrading processes.

• Superior Performance: Membrane technology can purify biogas to pipeline-quality RNG with minimal methane slip and reduced capital requirements
• Modular Design: Systems integrate into existing biogas facilities with smaller physical footprint than conventional upgrading equipment
• Cost Advantage: Recent pilot testing demonstrates potential for 40-60% reduction in upgrading costs compared to amine or PSA systems

CarbonQuest: Monetizing CO₂ as a Revenue Stream

CarbonQuest offers a unique downstream opportunity for RNG producers by enabling the on-site liquefaction and sale of captured CO₂—a traditionally vented byproduct. By owning and operating the liquefaction systems, CarbonQuest turns what was once waste into a direct EBITDA contribution, adding pure profit to RNG facilities.

• New Revenue Channel: Liquefied CO₂ can be sold into food & beverage, concrete, or e-fuels markets
• EBITDA-Accretive: The fully-owned and operated model flows straight through to the bottom line
• Infrastructure-Light: CarbonQuest systems are compact, modular, and tailored for integration into RNG plant operations

Vertus Energy: Higher Yields, Faster Digestion

Vertus Energy’s BRIO technology addresses the production side of the RNG value chain, offering advanced bacterial control systems that dramatically accelerate biogas generation from organic feedstocks. Recent commercial demonstrations show the technology can increase methane yields by up to 60% while processing feedstock three times faster than conventional anaerobic digestion. What sets BRIO apart is its retrofit capability and feedstock flexibility:

• Enhanced Yields: Systems generate biomethane up to 3x faster than existing technology with 60% higher energy output from the same feedstock volume
• Retrofit Simplicity: Modular units integrate into existing anaerobic digesters without major infrastructure modifications
• Feedstock Agnostic: Controls existing bacterial populations rather than introducing new strains, enabling adaptation to diverse waste streams

Under OBBB’s domestic feedstock preference and enhanced pathway recognition, Vertus Energy’s model aligns with policy priorities while delivering measurable performance improvements that support higher credit values under both 45Z and RINs programs.

Momentum Builds at the ECV RNG Roundtable

The ECV team recently hosted an exciting and informative RNG Roundtable, bringing together a dynamic mix of stakeholders across the Green Molecules® ecosystem. The event featured engaging discussions with all of our Limited Partners, as well as industry leaders including Prodeval, Arco/Murray, Amp Americas, and several of our Strategic Advisors. Portfolio companies Vertus Energy and Osmoses participated in the conversation, sharing forward-looking insights on how their technologies can help advance the future of RNG. The dialogue continued well into the evening over a cocktail reception and dinner, with strong momentum and follow-up among attendees to explore new partnerships and accelerate the role of RNG in the broader Green Molecules®  landscape.

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Final Thoughts

The One Big Beautiful Bill reshapes the renewable natural gas opportunity landscape through enhanced but more selective federal support. By extending 45Z credits, improving transferability, and maintaining RINs program stability, OBBB provides a foundation for continued sector growth while demanding greater operational and regulatory sophistication.

At Energy Capital Ventures®, we view OBBB as validation of the Green Molecules® approach to infrastructure-compatible decarbonization. RNG’s ability to operate within existing systems while delivering measurable emissions reductions positions it favorably within the new policy framework, particularly for projects that can demonstrate feedstock security and regulatory compliance excellence.

The next phase of RNG development will favor developers who can integrate feedstock strategy, technology selection, and market participation across multiple revenue streams. Those who master this complexity will find substantial opportunities within OBBB's refined framework.

In our next newsletter, we'll examine how OBBB affects carbon capture and utilization projects, exploring the implications for industrial decarbonization and the evolving 45Q credit structure.

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