Tailwinds other industries don't enjoy According to research firm BloombergNEF, demand for renewable natural gas that can be produced from waste and other renewable sources could jump 45-fold over the next two decades as gas utilities seek to reduce their carbon emissions in the U.S. Highlighting the importance of RNG as a key tool for gas utilities to decarbonize, BNEF projects that RNG consumption could reach as high as 3.15 trillion cubic feet by 2040 (or roughly 12% of current natural gas demand), versus 70 billion cubic feet in 2021.
In North America, RNG project and facility growth also look compelling as the RNG Coalition is projecting a doubling of RNG projects in the next 18 to 24 months, as close to 250 projects are under construction and/or have achieved development benchmarks. The trade organization also highlights the enormous demand potential for RNG in hard-to-decarbonize applications, such as heating demand for buildings, sustainable commercial transportation fuel, and maritime shipping applications. Another encouraging industry announcement was made recently by Waste Management, the largest landfill operator in North America, which will see the company invest US$825 million to expand its RNG footprint through 2025, increasing forecasted RNG production by 600%.
In the difficult to decarbonize transportation sector, we continue to see strong penetration of RNG as a heavy duty transport fuel. The latest data from NGV America and the RNG Coalition revealed that 64 percent of all on-road fuel used in natural gas vehicles in 2021 was RNG, equating to 13 percent growth over 2020 volumes and an impressive 234 percent increase since 2017.
In response to the Russian invasion of Ukraine, the EU remains more committed than ever to remove its dependence on energy from Russia, with an urgent focus on natural gas. According to the International Energy Agency, Europe imports approximately 90% of its natural gas consumption, 45% of which comes from Russia. The European Commission has proposed to rapidly increase biomethane production to 35 billion cubic meters by 2030, representing over 10-fold growth against the 3 billion cubic meters in 2020 and about 20% of Russian gas imports.