As the energy landscape shifts and sustainability efforts grow, businesses are consciously doing more to lower their overall carbon footprint. Technological innovation allows power and fuels to be produced from new sources – and in new ways. One of these technologies is biogas. This white paper will review key factors for organizations to consider when planning to implement biogas technology, especially the choice to generate electricity with biogas or produce RNG from it. 

WHAT IS BIOGAS AND WHY IS IT IMPORTANT?

Biogas is a renewable fuel produced through the anaerobic digestion of organic matter. This matter is usually material such food waste, animal manure, sewage, and agricultural residues, and is broken down by microorganisms in the absence of oxygen. As these bacteria devour the waste, they release biogas, which is primarily composed of methane (CH₄), carbon dioxide (CO₂), and small amounts of hydrogen sulfide (H₂S), water vapor, and other gases like nitrogen. 

Biogas offers users several benefits and opportunities: 

• Environmental benefits – In addition to eliminating waste that is likely to have adverse environmental impacts, biogas use reduces greenhouse gas (GHG) emissions by capturing methane that would otherwise escape into the atmosphere. Methane has a substantially higher Global Warming Potential (GWP) than CO₂, trapping up to 28 times as much heat. 
• Energy security – Biogas provides a local renewable energy source, reducing dependence on fossil fuels and lowering net carbon emissions. 
• Economic benefits – As farms and municipalities turn waste into energy, they can reduce their power expenses and potentially be compensated for providing additional power back onto the grid. 
• Waste management – Biogas use allows farms and municipalities to turn a nuisance – like odour and pest issues into a vital resource. 

WHAT ARE THE MOST COMMON APPLICATIONS FOR BIOGAS TODAY? 

The most common biogas applications today include Renewable Natural Gas (RNG) production, heat production, and electricity generation. 

RNG is biogas that has been purified (or “upgraded,” to use a common industry term) in a process that removes CO₂ and impurities. RNG is typically injected into natural gas pipelines and primarily used as transport fuel but is becoming an interesting option for natural gas replacement in many applications where operators seek carbon reduction benefits. 

Heat production refers to biogas being used directly for space heating, water heating, or industrial processes through combustion in boilers. 

Electricity generation, the utilization of biogas as a fuel for generator sets, is used in widespread operations such as farms, municipal wastewater treatment plants (WWTPs), and food processing facilities. Combined Heat and Power (CHP) installations use biogas to produce power, then utilize waste heat from that process for heating tasks that a boiler would otherwise be utilized for. This reduces fuel costs and GHG emissions while dramatically increasing efficiency. 

WHAT IS THE CURRENT STATE OF THE US BIOGAS INDUSTRY?

The current industry is promising but uncertain. This is especially true when we consider biogas power generation. Uncertainty stems from market dynamics, infrastructure challenges, and sudden policy shifts. While a number of state and federal incentives remain, recent federal policy changes have reduced or eliminated incentives for several clean energy technologies including solar, wind, and hydrogen. Facilities that practice carbon capture and sequestration (CCS) can qualify for substantial tax credits, but the technical and regulatory demands of CCS, such as secure geologic storage and compliance with monitoring standards, pose significant barriers to entry. 

Despite the abundance of organic waste feedstock, infrastructure development for biogas-to-electricity systems remains limited. Due to stronger marketing incentives, most new biogas projects are geared toward producing RNG. Meanwhile, biogas-generated electricity faces challenges due to inconsistent federal recognition of its reliability and emissions-reducing potential. Without targeted support or inclusion in key clean energy incentive programs, the expansion of biogas as an electrical power source remains constrained but not unachievable, given its capacity to provide 24/7 renewable energy. 

WHY ARE RNG AND ELECTRICITY THE TWO MAIN FOCUS AREAS IN BIOGAS TODAY? 

Though each is a main focus in the biogas space, recent years have seen upgrading biogas to RNG become increasingly more popular compared to electricity production. This shift is driven by several factors: 

• Higher economic returns – RNG qualifies for significant environmental credits such as Renewable Identification Numbers (RINs) and Low Carbon Fuel Standard (LCFS) credits, making it more financially attractive than electricity generation in many regions. 
• Fuel flexibility and infrastructure compatibility – RNG can be injected into existing natural gas pipelines or used as compressed natural gas (CNG) for vehicles, offering broader market access and integration with current energy systems. 
• Policy incentives and climate goals – Governments promote RNG development as a strategy to reduce GHGs and diversify energy sources. 

This has led to a national trend of repositioning biogas assets toward RNG production, especially as utility electricity prices remain low in many states. However, recent increases in electricity rates (exceeding twice the rate of inflation in some areas) may swing the pendulum back toward electricity generation. 

WHAT ARE THE BENEFITS OF IMPLEMENTING CHP IN RNG APPLICATIONS? 

RNG producers often overlook the benefit of integrating CHP into their operation. In many cases, Cat Electric Power is engaged to help customers explore how CHP can be configured to align with their energy goals, site constraints, and operational priorities. They often assume the RNG they produce will be used as a fuel source. However, this approach is not cost-effective because the gas that’s being upgraded (either in raw biogas form or as upgraded RNG) is too valuable to use for this purpose. Instead, a CHP installation powered by pipeline gas can be used to power RNG upgrading equipment and utilize waste heat from power generation for processes. 

For this reason, natural gas CHP can be a profitable asset for pipeline-connected RNG producers. These systems can play a strategic role in lowering the life cycle greenhouse gas (GHG) emissions and carbon intensity (CI) scores of RNG projects, thereby boosting the market value of the RNG they produce. 

WHAT RESULTS CAN AN RNG PRODUCER EXPECT WHEN INTEGRATING NATURAL GAS CHP? 

Improved Energy Efficiency 

By simultaneously generating electricity and useful heat from a single fuel source, CHP systems avoid the inefficiencies of separate heat and power systems. This allows them to achieve substantially higher efficiencies of 80%, compared to 50% or less for conventional installations that use grid power and burn fuels to provide the heat for their anaerobic digesters. This increased efficiency reduces the overall fuel required, directly owering costs and life cycle GHG emissions. 

Lower Carbon Intensity Scores

In carbon credit industries such as California’s Low Carbon Fuel Standard (LCFS), RNG projects are assigned CI scores based on their full life cycle emissions. Integrating CHP can reduce these CI scores by replacing grid electricity (which may be fossil fuel intensive) and utilizing waste heat. Lower CI scores translate into higher credit values, making production more profitable. 

Economic and Regulatory Incentives 

Facilities using CHP with RNG can qualify for additional incentives (such as renewable energy credits), avoid rising electricity costs, and see improved return on investment through faster payback periods. Integrating CHP also enhances sustainability by reducing emissions, lowering CI scores, and increasing energy efficiency, which improves project economics. 

EVALUATING ELECTRIC POWER GENERATION VS. RNG PRODUCTION 

A biogas producer evaluating whether to generate electricity or upgrade biogas to RNG must weigh stability against potential profitability. Electricity generation offers more predictable and steadily rising revenue generation, especially as data center demand continues to drive up local electrical rates. This path is less exposed to policy changes and economic volatility, making it attractive for long-term planning and financing. 

RNG production can generate more revenue, particularly when Low Carbon Fuel Standard (LCFS) credit values are high. However, LCFS prices have historically been highly volatile and, in some cases, have dropped sharply in recent years due to credit oversupply. Future regulatory changes may or may not boost LCFS values, and uncertainty remains a risk. RNG also requires higher capital investment and access to infrastructure such as pipeline injection or vehicle fueling networks. 

Ultimately, producers focused on stable returns and lower risk may favor electricity generation, while others may pursue RNG for its higher upside potential, provided they can manage the volatility. 

WHAT DEFINES TODAY’S BIOGAS SECTORS? 

There are four main sectors of biogas users, and it’s worth reviewing the current state of each. 

Wastewater Treatment Plants (WWTPs) 

Most WWTPs are currently using biogas in CHP systems. Electricity generation is preferred due to on-site energy needs, simplicity, and lower capital costs. However, some facilities upgrade biogas to RNG, especially where incentives and infrastructure allow. Co-digestion with food waste or industrial organics can improve biogas yield, making RNG more economically feasible. 

Landfills 

Landfills are currently split between electricity generation and RNG production, with RNG rapidly growing. Electricity generation is often chosen for older or smaller sites with limited gas quality or supply volume. RNG production is favored for larger, newer facilities due to higher energy yield and strong policy incentives that offer greater monetization potential. 

Livestock and Dairy Agriculture 

Ag operators have historically focused on electricity generation, but there’s been a strong shift in the market towards RNG production, especially at larger clustered farms. Electricity generation remains a viable solution for smaller farms or those without pipeline access. 

Food Waste 

RNG is gaining traction due to its high methane yield per ton of waste. Electricity generation is simpler and more cost-effective for local or municipal digesters while RNG production is favored when waste volumes are high and carbon credit markets can be accessed. 

CURRENT BARRIERS FOR PROJECTS 

Each type of project has notable barriers to overcome. Understanding these challenges is critical – not only for accurate planning and budgeting, but also for identifying where expert support or policy alignment can accelerate progress. 

Biogas-to-Electricity Projects 

Barriers to biogas power generation projects include grid interconnection challenges, limited incentives, operating costs, and competition from other renewables. Connecting to the grid can be costly and complex, especially in rural areas, and electricity projects (when compared to RNG) receive fewer carbon credits and subsidies. Maintenance and feedstock logistics can outweigh electricity revenue, and solar and wind are often cheaper and more scalable alternatives. 

Biogas-to-RNG Projects 

While biogas to RNG can be profitable, barriers include policy and industry volatility, high capital investment, pipeline access issues, and regulatory complexity. RNG revenue depends heavily on fluctuating LCFS and RIN credit markets. Significant upfront investment is required for expensive purification and compression systems used. Permitting and compliance for RNG projects can be time-consuming and region-specific, and they generally require proximity to natural gas infrastructure, which isn’t always available. 

SUMMARY 

Biogas represents a versatile and sustainable energy solution derived from organic waste, with applications in both electricity generation and RNG production. While RNG is gaining traction due to stronger policy incentives and higher financial returns, electricity generation remains a stable and resilient option, especially when CHP systems are used. The U.S. biogas industry is evolving, with sector-specific trends showing a shift toward RNG in agriculture and landfills, while wastewater treatment plants and food waste digesters maintain a mix of both technologies. 

Each type of project presents unique considerations that must be thoughtfully addressed. Recognising these challenges early helps teams plan more effectively, align with policy frameworks, and identify where expert support or infrastructure upgrades can unlock greater impact. Strategic integration of CHP and careful evaluation of project goals can significantly enhance both environmental and economic outcomes. 

With the right partnerships, technologies, and policy support, biogas is well-positioned to drive a more circular, resource-efficient energy future.