Destruction vs. Monetization: A False Choice

The current U.S. policy framework for methane management has a structural bias: it rewards monetization and penalizes destruction. A site that converts methane to pipeline gas and sells credits is celebrated. A site that simply destroys 98% of its methane on day one gets nothing.

The Incentive Inversion

Under LCFS, a project that upgrades biogas to pipeline-quality RNG and displaces fossil natural gas generates credits worth $15-40 per MMBtu, depending on the carbon intensity score and prevailing credit prices. A project that destroys the same methane via enclosed flare generates zero LCFS credits.

The federal RFS operates on the same logic. D3 RINs are available for cellulosic biofuel, including RNG injected into the pipeline system. Methane destruction via flare does not qualify.

The 45Z clean fuel production credit follows the same pattern. Production is the operative word. Destruction is not production. Therefore, the most effective form of methane elimination receives no federal tax credit.

What This Means in Practice

A large dairy with a viable RNG project can generate $5-15M in annual credit revenue. The same dairy, installing an enclosed flare that destroys methane more completely and more reliably, generates zero credit revenue.

The rational economic decision is obvious: pursue the RNG project. Wait 24-36 months for permitting and construction. Accept 5-15% methane slip. Stack credits across three volatile policy instruments. Hope the economics hold for 15 years.

Meanwhile, the atmosphere absorbs every molecule vented during the development timeline. The enclosed flare that could have been operational in 6 weeks was never considered, because the policy framework made destruction worthless.