Proposed Agri-food Renewable…

Proposed Agri-food Renewable Natural Gas for Transportation Demonstration Program

Ag Energy Co-operative Submission

INTRODUCTION

Ag Energy Co-operative Ltd. (Ag Energy) was founded by Ontario greenhouses in 1988. An independent, agriculturally focused, co-op that specializes in energy solutions for its membership. Ag Energy’s role is to commercialize energy policy for the benefit of agriculture: producers, processors, agri-tech and all-by minimizing costs and de-risking energy spend. Ag Energy currently has over 360 agricultural, agri-business and rural members; approximately 41% of its members are commercial greenhouse growers, 23% agri-processing and 11% ethanol. Ag Energy has been marketing natural gas and electricity, and providing advisory services, to its predominately rural members since 1988 (i.e. 29 years).

SUMMARY

Ag Energy applauds the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) for undertaking the development of the Renewable Natural Gas program. Ag Energy supports programs that allow the agriculture and agrifood industries to remain sustainable and competitive in the market place. OMAFRA should ensure an effective program design, one that is substantial in nature, otherwise it will make no true impact in the long term. Energy co-operatives play a vital role in agrifood and rural Ontario, and must be included in the design and deployment of the Agrifood Renewable Natural Gas for Transportation Demonstration Program. To assist with the additional requirements associated with an energy co-operative the program should include funding of $250,000 for qualified Ontario energy co-operatives to conduct a preliminary assessment to determine the viability of forming a Renewable Natural Gas Producer’s (RNGP) co-operative or service. A RNGP co-operative could provide benefits to small and medium size agrifood by aggregating smaller amounts feedstock supply to an economical level of operations. Additionally, the diversity of supply would reduce seasonal variations of single source feedstock operations, providing for potential year-round production of RNG. Further through the effective management of the RNGP co-operative the risk to operations of the RNG facilities will be reduced to both the Agrifood participants and the Program. The Program should allow for co-operators to act on behalf of the RNG producers to market the RNG to the transportation markets. This will allow small and medium size producers a cost-effective approach in marketing RNG to the transportation markets. For the Program to be successful, there are two main elements that need to be equally incentivised: 1) the RNG producer and 2) the transportation sector or vehicle operators. To design a program that provides incentives only to the production of RNG will cause the program to potentially fail, if the RNG is not price competitively. Equally, creating a program that only incentivizes the vehicle operators will not allow for sufficient RNG to be produced. A balanced approach taking both elements into consideration is required. The Program should be designed to effectively balance the incentives with the cost of producing RNG to the local market price of natural gas. Funding should be made available to the producers of RNG in order to reduce the capital and operational costs of producing RNG to a level so that it is at par with the local market price of natural gas. Currently, the cost to produce RNG is approximately $10 GJ, while at the point of this proposal, the local Ontario natural gas price is approximately $3 GJ creating a gap of $7 GJ. The program should consider funding of a minimal value of $7 GJ to the RNG producers for capital and operations support. The program should consideration specified funding of operations that allow for the conversion of on-farm/on-site vehicle operations. Converting on-farm/on-site vehicles such as tractors, harvesters, as well as light to heavy duty vehicles. Allowing the on-farm/on-site vehicle conversions will allow for the reduction of emissions of these types of operations while enhancing the sustainability of the on-farm/on-site operations. Such programs could be targeted to operations where currently natural gas infrastructure in not available to on-farm/on-site operations. Consideration should be given to the inclusion of various classifications in the program. The Program should include the following categories: 1.On-farm operations with sub categories of small, medium and large operations. 2.On-site Agrifood operations with sub categories of small, medium and large operations. 3.Renewable Natural Gas Producer Co-operatives. 4.On-farm operations with no access to natural gas infrastructure. 5.On-site Agrifood operation with no access to natural gas infrastructure. 6.Conversion/modification to existing digester operations to produce RNG. Funding or incentive amounts can be set by type and size of RNG production facilities. The funding should reflect typical cost of construction and operations of a RNG production facilities, relevant to size and type. The Program should incentivise existing, new and developing technologies. Technologies such as gasification and other technologies should be considered and incentivised to participate in the Program. The Program should require the producer to possess a full agreement or an agreement of intent with a third party (transportation related) off-taker for at least ninety (90%) of the RNG volume produced by the facilities annually. The third-party contract term should be for no less than 5-years, preferably up to 20-years. The program should consider accepting an aggregator that can market the RNG on behalf of the Agrifood producer. An organization such as an energy co-operative could aggregate the small to medium RNG suppliers and market them on behalf of the Agrifood producer to the transportation markets. The Program should make monthly incentive payments to the producer, based on the amount of RNG produced and sold to a third party. The natural gas utilities can verify the amount of RNG injected into the natural gas distribution system as a source of measurement to base the monthly payments on. Further, the RNG aggregator could provide reporting on purchases and sales of RNG to the Program on a monthly basis. The Program would accept submission into the Program for those that meet the specified criteria. If the projects meet the all qualifications, they would be awarded a 20-year RNG agreement at the specified fixed price per m3 delivered to the natural gas network. There are several advantages to the linking the incentive to the amount of RNG produced. Firstly, the Program does not fund projects that do not get built or are built but are not operational. Secondly, the cost of the program spans many years. Thirdly, the program can be delivered in tranches, allowing rule and price modifications to reflect knowledge gained in earlier tranches of the Program. Finally, it will stimulate financial and other services to project participants, creating source of project validation and stimulus.

RESPONSES TO SPECIFIC QUESTIONS POSTED IN DISCUSSION DOCUMENT

Question 1a: What are the best opportunities for successful agrifood RNG for transportation projects? Response: The best opportunities for successful Agrifood Renewable Natural Gas (RNG) involves a robust and predictable set of feedstocks and supply of RNG, a predictable long-term price for RNG, a supportive natural gas infrastructure, dependable transportation, a willing customer base and a supportive government. With all these elements in place, Ontario farmers and Agrifood operations are in strong position to produce a robust supply of RNG, while reducing Green House Gas (GHG) emissions in their own operations. To maximize results of the Program, the Program should be designed to accommodate small, medium and large farm and Agrifood operations. Many farms and Agrifood operations have invested in anaerobic digesters in their operations. These digesters could provide RNG to the natural gas distribution system, which would then in turn deliver the RNG to fueling stations. Ontario energy co-operatives should be encouraged to participate in the Program. A co-operative structure will allow for the aggregation of feedstocks into RNG operations, would provide benefits to the co-operative participants, would mitigate risks across the membership pool, create RNG supply and support the success of the Program. Fleet operators, whether in light vehicles, medium heavy duty, are best suited to convert and operate RNG vehicles. Particularly Return-to-Base (RTB) fleets, where the vehicle goes out daily and returns to the base of operations, where they can refill the Renewable Natural Gas Vehicles (RNGVs). Additionally, farms may be able to convert much of their operations to RNG, but modification may be required to farm equipment in order to accommodate the conversion.

Question 1b: Which businesses or organizations are best prepared to successfully deploy RNG anaerobic digesters and natural gas fueled fleets? Response: Farms (i.e. of all sizes) and Agrifood operations currently operating or have access to an anaerobic digester operation are best prepared to rapidly deploy RNG into the market. Farm operations and Agrifood facilities that are within close proximity to natural gas pipelines, will allow for a quick and cost-effective Program deployment. The Program should not consider projects that require construction of significant natural gas infrastructure other than connecting the project to the existing natural gas line. This will keep the overall Program spend to a reasonable level. Organizations that have secure or access to stable supply of feedstock should have priority to a project over a project with intermittent feedstock supply. Co-operatives will also provide a method to create a stable supply from small and medium feedstock suppliers. Again, co-operatives are well suited to provide a RNG producers platform for potential participants to engage in the program. The co-operative structure will lower shared costs, mitigate risk over the entire membership while providing a sustainable production of RNG for the markets. Furthermore, organizations that have documented evidence that they are already working with producers, have transportation off-take agreements or agreement of intent for RNG should be given preference in the program. Return-to-base (RTB) fleet operations that consume about 150 equivalent liters of RNG per day should be targeted. Fleet operations such as buses, medium-duty and heavy-duty fleet, municipal vehicles should also be in scope. RTB fleets could have RNG filling infrastructure located at their base facility available for filling the fleet once they return to base.

Question 1c: What other business partners and business relationships will need to be in place for projects to succeed? Response: To ensure a successful Program, the following business partners/relationships are deemed necessary: 1)Development companies – companies that have the skill and experience to develop bioenergy projects from concept to operations. 2)Engineering companies – companies experienced in the design of anaerobic digesters and processes to produce pipeline grade RNG. 3)Energy Co-operatives – co-operatives have the experience to market natural gas and electricity, and are a natural fit for RNG marketing as well as ownership/operations of a RNG production operation. 4)Equipment suppliers – anaerobic digester equipment suppliers of various sizes and types that can handle the various types of potential feedstocks. 5)Financial institutions – financial institutions need to be comfortable with the associated risk of anaerobic digesters. Typically, a long-term (up to 20-year) contract with a fixed or guaranteed price is an acceptable mitigation for such risk of new market developments. 6)Natural gas utility companies – natural gas utilities will play a key role in delivering success to any project. The companies must have clear and consistent processes in place to evaluate potential projects and confirm their ability to inject gas into the natural gas system. Further, utilities play a key role if that take responsibility for the ownership and operation of gas cleaning skids for RNG. Natural gas utilities must ensure they have sufficient apparatuses available to readily connect RNG producer projects. 7)Natural gas filling/compressor equipment suppliers – taking natural gas or RNG from the natural gas system and injecting it into vehicles will require compression. Fillings stations weather on farm or at a gas station will be required in strategic, accessible locations. Such companies need to work with both the natural gas utilities, service provider and endues customer to ensure project success. 8)Fleet operations - early buy-in from fleet operators will be required to ensure that sufficient demand is created for RNG productions. It would be advantageous to the program to have early conversions or purchase of RNG/CNG vehicles, this would allow the use of CNG until such time the RNG would be available. In this approach, the end-users are not impacted by any potential delays in producer projects. Of particular interest is the return-to-base operations where a refueling stations can be constructed at the base of operations to refuel the vehicles. 9)Ontario Government – the Ontario government needs to ensure that any regulation, permitting or approvals for siting RNG facilities whether producing facilities or filling stations are managed in a timely manner and are not delayed due to bureaucratic processes. Further the government needs to provide incentives to either the OEM’s or the customers in a similar fashion as electric vehicles. Unlike the electric incentives, RNG vehicles are available in most vehicle types (i.e. car, light and heavy-duty trucks); therefore, incentives should reflect a variety of vehicle types. The Ontario government could institute a policy requiring all intercity fleet operations owned by municipalities to use renewable fuels in the next 2-years. The majority of fleet operations operated by municipalities are return-to-base operations, and RNG operations would fit well within these operations. The Government needs to promote development of RNG vehicle engine options, initially targeting return-to-base vehicle fleet operations within the province. a)Regulatory bodies (i.e. TSSA, CSA, ESA etc.) – regulatory entities should be proactive in educating participants in to technical requirements that are general in nature, for both producers and filling station participants. b)Analysis has demonstrated that investment in return-to-base medium and heavy-duty NGVs can provide environmental and over-vehicle-life economic benefits, but the upfront capital cost vehicle premium and the risks associated with operating costs and achieving ongoing fuel savings are barriers to adoption. Fiscal measures implemented on a temporary basis could address these barriers and de-risk decision making for early fleet adopters. c)To introduce natural gas into the new market of over-the-road trucking, coordinated investments are needed to ensure that the development of key corridor infrastructure is consistent with projected demand, strategically located with fossil fuel to support end-users and dual fuel users, and installed in a timely manner across jurisdictions. d)Existing industry players could provide private onsite refueling stations. Fleets could further improve the business case for natural gas adoption by allowing other fleets to use these stations via cardlock and other arrangements. However, there are implementation details (e.g. liability issues) that would need to be addressed by all parties involved. e)Demonstration of the use of RNG is needed to address technical barriers, develop standards, and conduct feasibility studies and business cases.

Question 2. What are the key financial opportunities that will help projects to succeed? Response: The Program published rates for RNG divided by technologies used and size of RNG production facilities in advance of accepting submission into the Program. The Program would accept submission that meet a specified list of criteria required to qualify. If the projects meet the all qualifications they are awarded an up to 20-year RNG agreement at a specified initial price per m3 delivered to the natural gas network. The Program should be targeting 100,000,000 m3 of Renewable Natural Gas (RNG) annually. This target would be considered substantial enough to make an positive impact on emissions reductions and the RNG market. The price per m3 would be indexed to inflation on an annual base. The Program should be designed to provide monthly incentive payments to the RNG producer based on the amount of RNG produced and sold to a third party. The Program should undertake long-term (up to 20-year) contractual indexed RNG priced contracts for production of RNG that is sold to transportation participants. The RNG producer would be required, as part of the program, to have an agreement or an agreement of intent with a transportation operator to purchase the RNG at a price that is at or below the local natural gas market price. An up to 20-year contract is required to provide early adopters the ability to secure financing for their equipment. Further consideration needs to be given to feedstock variability. Many feedstocks are variable, at least until the market can become organized, as such any contract should reflect the nature of the feedstock supply. The Program should be designed to effectively balance the incentives provided by the Program with the cost of producing RNG to the local market price of natural gas. Funding should be made available to the producers of RNG to reduce the capital and operational costs of producing RNG to a level so that it is equal to the local market price of natural gas. Currently, the cost to produce RNG is approximately $10 GJ, while the local Ontario natural gas price is $3 GJ creating a gap of $7 GJ. The program should provide funding of $7 GJ to the RNG producers for capital and operational support. The carbon credits would be provided to the transportation operator as part of the standard Program agreement. The Program should also comprehend funding of $250,000 for existing, qualified Ontario energy co-operatives to conduct a preliminary assessment to determine the viability of forming a Renewable Natural Gas Producer’s (RNGP) co-operative.

Question 3a: At what scale would a project have to be deployed to be successful? Response: The response is different for producers and end-users. For producers, the project size could be viable on a small to medium size farm/agrifood facility that produces 400 cubic meters (15 GJs) to 1,000 cubic meters (37 GJs) of RNG per day. In aggregate, 20 or 30 of these farms/Agrifood facilities could provide sufficient RNG for a large fleet operation. That said, there are many factors the will impact the ability of a small producer to economically deliver RNG to the market. Such factors will act as natural Program selection allowing only the economical projects to proceed. Many rural farms may not have ready access to natural gas distribution lines, and therefore may need to work cooperatively with other operations to have their feedstocks included. Fleet operators on the other hand require a larger volume of RNG consumption to make the capital investment in the filling stations and equipment. Therefore, targeting small to large scale farm/Agrifood facilities as RNG producers in the program makes perfect sense. For end-users, targeting the medium to large scale fleet owners may allow for a higher level of success in the program. Please note: a fleet owner with heavy-duty vehicles would require fewer trucks to recover the filling station costs. For clarity, Renewable Natural Gas Vehicles (i.e. RNGVs) face many barriers to development and conversion to RNGV has not been an easy endeavor as many barriers still remain. Return-to-base type operations where vehicles consume over 150 equivalent liters of diesel or more should be targeted. Operations such a municipal bus, shuttles and public works operations are natural fits for RNG operations. Further, commercial operations, again return-to-base type operations should be the focus of RNG development.

Question 3b: How much RNG production? Response: Individual RNG production can be small if the capital costs of the facilities and required infrastructure are low. The size of the production can be defined by the economics of the project. If the project is under 400 cubic meters per day of RNG production, but has a reasonable payback to the owner, the project should qualify. RNG production would depend on size: 1)On farm would be in the up to 400 cubic meters per day. 2)Medium operations would be from 400 to 1,000 cubic meters per day. 3)Large operations would be over 1,000 cubic meters per day. The program should target production of 10,000,000 m3 (1,000 GJs or 20,000 tonnes) of RNG per year from all sources.

Question 3c: How many vehicles? Response: Although the number RNGVs on the road are important, the volume of RNG consumed will play greater role in the success of the program, the market penetration of RNGVs and emission reductions. Assuming the average light vehicle travel is 24,000 km per year, this will consume approximately 3,400 m3 of RNG annually. The number of vehicles required to make the project a success would be approximately 2,940 light vehicles, or approximately 10,000,000 m3 of RNG annually. For larger fleet operations assuming a bus/medium-duty trucks uses 150 equivalent liters per day, 36,600 kms annually would reflect a total of 270 buses/medium-duty trucks, or approximately 10,000,000 m3 of RNG annually. A combined total of RNG production of 10,000,000 m3 annually would present a successful program.

Question 4a: Are businesses and organizations ready to develop and deploy RNG for transportation projects? Response: Currently there is uncertainty in the RNG market. Uncertainty in the market creates barriers to market development and deters new market entrants. OMAFRA can assist in removing major barriers by deploying a RNG Program that is significant enough in volume and incentives to allow for the creation of a foundation from which to build a strong RNG market in Ontario. With a strong program, businesses and organizations will be ready to develop and deploy RNG transportation projects in Ontario.

Question 4b: Are there gaps in the supply chain? Response: While Canada has technology available at all stages of the supply chain in order to build the RNG market, the combined efforts of industry, government, and other stakeholders will be essential to achieve a widespread medium-duty and heavy-duty deployment in the future. In addition to increasing the deployment of medium-duty and heavy-duty vehicles, additional work will be needed to address the technological and market barriers that currently impede widespread adoption of NGV/RNG. The Program should contain support and incentives for developing and new technologies that will assist in the further evolution of the RNG market.

Question 4c: What would improve companies’ readiness? Response: Current retail fuel supply is characterized by a lack of availability and a lack of competition. Investments in fueling infrastructure could be financially attractive to companies. However, the business case depends on access to a sufficient market. Potential investors may require assistance to deal with risk and to overcome the initial market development period. NGV/RNG technologies are proven and commercially available for all automotive market segments. However, there remain incremental cost remain barriers for the technology in a competitive market. The NGV/RNG technologies need to be financially supported until the market growth is large enough to support a competitive price. Education to potential RNG producers through webinars, seminars and publications targeting the Agrifood industry on the benefits of becoming an RNG producer should be undertaken.

Question 5a: What barriers to do you foresee to developing a successful project? Response: Below are some of the many barriers to a RNG transportation market: 1)Low public perception or value of RNG in the market. 2)Lack of public awareness and benefits of RNG and RNGVs. 3)Biogas projects related to processing of source separated organics need to compete with composting which is generally less expensive. 4)Currently low price of natural gas. 5)Policies in provinces and municipalities across Canada are not sufficiently supportive of biogas projects. This could be changed through procurement specifications which require RNG fueled trucks or other requirements to support production of more renewable natural gas. 6)Financing of projects is challenging due to a reported lack of familiarity with the technology by financial institutions. Many more full-scale facilities need to be constructed in Ontario in order to address this barrier. Financial institutions need to be able to “kick the tires” of existing facilities to have a comfort level that their investment is secure. 7)The lack of access to capital, particularly for medium and small-sized carriers adds a barrier to investment even if the economics over the life cycle of the vehicles are favourable. 8)Project economics currently present the largest barrier to wider development and integration of RNG resources. While it is often economic to use biogas on site to produce process heat, or even to generate electricity for export to the grid, interconnecting RNG production facilities with the natural gas distribution system is typically more expensive than on-site use. The first interconnection cost is related to conditioning the raw biogas to meet minimum heating value and other quality specifications for pipeline gas. The methane content of raw biogas is usually between 50-60 percent, depending on its source, compared to 90 percent or more for traditional natural gas. The heating value and Wobbe number (i.e. a combustion interchangeability metric) of raw biogas is therefore often lower than that of traditional natural gas, making upgrading necessary before it can be injected into the gas distribution system. 9)Processing equipment must be installed to test for and remove unwanted gas constituents, to conform RNG to the standards of the accepting pipeline. The cost of upgrading the methane content and cleaning raw biogas can vary based on the biogas makeup and volume, but is typically capital intensive, requiring long-term project financing to be cost-effective. In addition to the capital costs for developing equipment, annual costs are incurred to maintain treatment systems. Operating costs could run into the tens or thousands of dollars per year per RNG production site. 10)Interconnection cost for the project to connect to the natural gas distribution system is substantial. The cumulative costs of gas treatment and interconnection facilities are potentially challenging to the economic viability of RNG development projects. These costs are often too high for RNG producers to absorb, and utilities cannot invest in most RNG infrastructure without regulatory approval. Utility commissions are responsible for protecting ratepayers and therefore generally operate on least-cost principles. As the costs of purchasing RNG and investing in related infrastructure are greater than the costs of providing service with traditional natural gas, utility commissions generally do not grant rate recovery for RNG-related costs. Customer demand for a low-carbon product and regional climate goals and policies are two key drivers for promoting RNG. 11)Increasing involvement of OEMs regarding how RNGVs are being built, sold, warranted and serviced provides a clear sign that these vehicles are approaching commercial maturity.

Question 5b. How can these barriers be overcome? Response: 1)The Ontario Energy Board (OEB) should allow the recover costs associated with RNG investments by natural gas utilities in order to advance other policy objectives by promoting the development of RNG resources. 2)Development of a multiyear, government sponsored standard feed-in tariff type program that reflects the cost of producing RNG, providing a stable cashflow for over a 20-year term for producers delivering RNG to the natural gas utility system. 3)Higher capital cost allowance rates would help to encourage investment in the given technology, as they would allow organizations to recover their investment sooner. 4)An education and outreach strategy to target end-users as well as market influencers and other key stakeholders. This strategy should consist of both a “top-down” and a “bottom-up” approach. A top-down approach would include a central website for all target audiences with local content tailored to specific jurisdictions. A bottom-up approach would feature a local support network for end-users and provide access to resources including workshops, case studies or knowledge transfer from local fleets. It would provide momentum if governments and other players were to provide essential information to enable markets to function efficiently, especially as there is no single private sector actor that operates across the entire spectrum of the RNGV value chain. Governments are regarded as unbiased providers of information in the vehicle and fuel market arenas, and this neutrality is important to end-users. Benefits of this measure include the development of a broader understanding and increased awareness of the applicability of RNGVs, which would facilitate adoption of these vehicles in greater numbers. 5)Appropriate training materials for stations, vehicle repairs, and RNG fleet operations are need to be developed and delivered. 6)The government should support the development of co-operatives to producer RNG. The government should provide funding to allow for the organization and development of a preliminary proposal for a co-operative operation.

Question 6: How long would it take to deploy an RNG for transportation project from conception to successful operation? Response: The deployment of an RNG for transportation project from conception to operations would depend on the size of the project. Typically, small projects can be designed, permitted and constructed within 6-8 months from point of approval while larger projects could take up to 24 months or longer.

Question 7: Describe the types of government support needed to successfully deploy RNG for transportation projects. Response: 1)The biggest thing the government can do is give certainty that this is an important part of the overall portfolio for the gas industry. A pragmatic element would be to have all associated policies associated contain an element of a renewable portfolio allowance. In other words, give clarity to project developers, the utilities, customers to say “yes”, the government believes this is important to RNG and to the province and here is the policy to support it. 2)While RNGV technology is already mainstream and commercially proven, support for RNGV R&D is needed to further reduce the incremental cost of RNGV-related technologies. In addition, assistance is needed to sustain market development through the expansion of the number of RNGV offerings for end-users. RNGV technologies would also benefit from R&D investments to reduce the incremental cost of these vehicles, which would ensure ongoing competitiveness for innovative low-emission Canadian technologies. By continuing to explore the potential for renewable natural gas use in other transportation applications, the renewable natural gas community will help expand the benefits of renewable natural gas as a fuel and potentially leverage infrastructure and R&D investments made for the medium- and heavy-duty vehicle market.

Question 8: What are some criteria or project attributes that should be considered or prioritized for a project to be supported through this program? Response: 1)Permit requirements – Status of permitting and approvals; 2)Funding sources – equity level anticipated by project proponent; 3)Feedstock security – identify where the feedstock will come from and how secure and consistent that supply will be; 4)Carbon reductions – calculation of expected carbon reductions that will result from the project if sufficient information is available to make that determination. 5)Biomethane purchase price – if the program is a bid program; 6)Volume estimates – volumes as feedstock, waste diversion and RNG; 7)Proximity to our existing pipelines – should work with natural gas utilities to set an ideal feasible distance as a standard; 8)Analysis of the levels of business and contract risk associated with the project.

Question 9: What should be included in the program to ensure broader uptake of RNG for transportation after the program is completed? Response: 1)CNG and LNG tanks store less energy (i.e. fewer DGEs) per volume and mass than diesel fuel tanks. Today, affordable CNG and LNG fuel tank packages are routinely customized for specific applications and range requirements. This provides sufficient vehicle range for heavy-duty NGVs to work quite well, especially in “return-to-base” types of operation. Although capital costs are significantly higher, an attractive fuel price spread versus diesel (i.e. up until 2014) has generally provided compelling payback for end users that switch their fleets over to natural gas fuel. These favorable economics, in addition to very significant air quality benefits, have been strong drivers for growing deployments of heavy-duty NGVs in the U.S. across a diverse range of applications that include transit buses, work trucks, solid waste collection vehicles, short-haul trucking, and even long-haul trucking. More discussion on heavy-duty NGV economics is provided in Section 5.4.

Question 10: Please comment on any other requirements or considerations for the Agrifood RNG for Transportation Demonstration program. Response: 1)Natural gas utilities, policymakers, and regulators have several options to increase the utilization of RNG and realize some of its potential environmental and economic benefits. The Ontario Energy Board can empower LDCs to purchase RNG from producers, investing in RNG infrastructure, or offering voluntary RNG programs to customers. To enable this investment, regulators could consider taking factors beyond cost into consideration. For example, regulators could consider the ability of RNG to contribute toward GHG reductions and the local or regional economic benefits of RNG investments. Finally, policymakers could consider options that assign a value to the environmental attributes of RNG consumed by end users outside of the transportation and power generation sectors. This would incentivize using RNG in the natural gas distribution segment and recognize the environmental benefits of RNG supplied by LDCs to all customers rather than for only specific end uses. 2)RNG can provide environmental and economic benefits including: greenhouse gas emission reductions, local jobs, and economic development. RNG is a local fuel source and makes use of resources that would otherwise be flared or emitted directly to the atmosphere. There are enough potential RNG resources to meet meaningful volumes of natural gas demand across the Ontario. Once it is processed and cleaned, RNG is pipeline-quality gas that is fully interchangeable with traditional natural gas. Ontario needs to be actively promoting RNG resource development, additional policy actions may be necessary to overcome cost barriers.

[Original Comment ID: 209729]