Direct-use projects account for about one-third of the operational landfill gas (LFG) energy projects in the United States. In a direct-use project, LFG offsets the use of another fuel, such as natural gas, coal, or fuel oil. LFG has proven effective in a range of direct-use applications, including boilers, furnaces, greenhouses, kilns, process heaters, and radiant heaters. When purchased over short- or long-term contracts, LFG can stabilize fuel costs for industries struggling with fuel-price volatility, especially in competitive manufacturing markets where energy supply represents a significant portion of operating costs.
History and Growth of Direct-Use Projects
According to LMOP’s records, the first LFG energy project to provide fuel to an industrial facility began operation in 1979. In that year, a pipeline from the Ascon Landfill in Los Angeles County, California, began providing approximately 700 standard cubic feet per minute (scfm) of LFG to a nearby oil refinery. Since that date, the number of direct-use projects in the United States has grown to nearly 140, providing a cost-competitive source of fuel to approximately 110 companies.
Over the past five years, the growth of direct-use projects has accelerated considerably, with more than 50 new direct-use projects coming on line. This represents a 40% increase in the total number of direct-use projects in a five-year period. In addition, approximately 12 existing direct-use projects have increased the amount of LFG they utilize. LMOP is currently tracking 25 direct-use projects that are in the planning phase or in an advanced stage of construction. LMOP is continuing to work with corporations and industries to identify landfills near existing or planned facilities that may be feasible for project development.
This significant increase in direct-use projects occurred during a period when federal tax credits for direct-use projects were not being offered. This trend suggests other important factors have fueled the growth of direct-use projects. Perhaps one of the most important drivers has been the opportunity for end users of direct-use projects to stabilize (or reduce) fuel costs. While fossil-fuel costs have dropped to levels not seen in many years, current economic conditions have contributed to a reduction in overall fuel demand; however, long range energy analyses and futures pricing indicate that the price of natural gas is likely to increase over the long term. In addition, the use of LFG in a direct-use application can provide an assurance for industries struggling with fuel price volatility, which can be brought about by climate-related events—such as droughts that reduce hydroelectric capacity or severe storm events—independent of longer-term price trends. For example, in 2005, following Hurricane Katrina, natural-gas prices jumped to record levels and exceeded $15 per MMBtu. Additionally, natural-gas prices can fluctuate seasonally in response to winter cold and summer heat.
Environmental stewardship and corporate social responsibility are also drivers for direct-use projects. Companies committed to sustainability are utilizing LFG to offset the use of fossil fuels and to demonstrate their commitment to achieving environmental goals by including renewable energy in their energy portfolio.
The greenhouse gas (GHG) emissions trading market can be an additional incentive for direct-use project development. In 2008, LFG provided 16% of the total transaction volume in the over-the-counter market sector and 7% of the market share on the Chicago Climate Exchange. The overall weighted average price in 2008 for GHG credits sourced from LFG-related projects was $8.20. (Fortifying the Foundation: State of the Voluntary Carbon Markets 2009. Ecosystem Marketplace & New Carbon Finance. May 20, 2009.) Even though the price of GHG credits has fallen with the recent economic downturn, LFG-based credits continue to enjoy robust pricing in the GHG marketplace.
Resources from LMOP
In addition to the general information and resources LMOP provides to its partners and the public on LFG energy, the program has recently developed a number of additional tools that can help interested end users determine if their facility is a good fit for a direct-use energy project. For example, the recently updated Project Development Handbook provides an overview of direct-use technologies, energy requirements, and applications. Also, the Locator tool allows end users and landfill owners alike to search for prospective matches for direct-use projects.