Frequently Asked Questions
Environmental Considerations
IS pumping Co2 into the ground safe?
Yes, pumping CO2 underground is safe. Underground injection has been used for decades to dispose of a variety of fluids, including oil field brines (salty water) and industrial, manufacturing, mining, pharmaceutical, and municipal wastes. Injection wells are also used to enhance oil and gas recovery; for solution mining; and, more recently, to inject CO2 for geologic sequestration. As of 2018, EPA estimated that there were more than 734,000 permitted injection wells in the United States
Will it affect the drinking water/water table
The Safe Drinking Water Act ("SDWA") is the primary federal statute governing underground injection activities in the United States, including those associated with geologic sequestration of CO2. The SDWA protects underground sources of drinking water and prohibits any underground injection activity except when authorized by a permit or rule. The EPA oversees enforcement of the SDWA.
How much CO2 will the plant sequester?
it is estimated that the plant will sequester 1,500 tons of Carbon Dioxide per day. The equivalent of taking about 110,000 cars of the road every year.
Will the plant have any impact on the nearby river?
The plant will produce waste water as a byproduct. LGF have hired the same team that designed the water treatment process for the zero net emission Fischer Tropsch process Shell plant in Qatar. It is anticipated that the water will be cleaner going back into the river than it was coming out.
Plant Outputs
What type of fuel will the LGF plant produce?
It is anticipated that the plant will produce 32 million gallons of liquid fuel per year (equivalent to about 2,087 barrels per day). This will be split roughly 80% renewable diesel and 20% renewable naphtha.
What is Renewable Diesel?
Renewable diesel is diesel made from non-petroleum renewable sources. The diesel produced by LGF will be renewable diesel.
Are Renewable Diesel and Biodiesel the same thing?
No they are very different fuels. Biodiesels are made from waste fat's, oils and greases and requires a process that introduces oxygen into the fuel. This causes issues in colder temperatures, separation during storage etc. Renewable diesel is produced from a similar process to petroleum based diesel, does not contain any oxygen and is essentially chemically identical to petroleum based diesel. Renewable Diesel burns more cleanly and has less contaminants than both petroleum based diesel and Biodiesel.
Is this renewable diesel produced by the plant better than regular diesel/biodiesel?
Yes it is cleaner than biodiesel and has a significantly lower Carbon Intensity than either biodeseil or regular diesel. Renewable diesel is easier to store, easier to burn, produces less smoke and produces less soot when combusted. If renewable diesel replaced all diesel usage (unblended) on the roads in the US, it would reduce carbon monoxide production by 80%.As such we expect the LGF renewable diesel to replace higher Carbon Intensity diesels in the marketplace.
How big are the renewable diesel and biodiesel markets?
Renewable Diesel and Biodiesel make up about 25% of the diesel fuel market.
What is carbon intensity?
The industry uses a measurment called Carbon Intensity. The Carbon Intesity (or "CI") of a fuel is the amount of carbon by weight emitted over the lifecycle of the fuel per unit of energy consumed. A common measure of carbon intensity is weight of carbon per British thermal unit (Btu) of energy.
Carbon Intensity is a full lifecycle analysis that covers everything from source to final use e.g. the amount of carbon released from sourcing the feedstock, transporting the feedstock, processing the feedstock into fuel, how much CO2 is sequestered, how much CO2 is released transporting the fuel, storing the fuel, burning the fuel etc.
Carbon Intensity is a full lifecycle analysis that covers everything from source to final use e.g. the amount of carbon released from sourcing the feedstock, transporting the feedstock, processing the feedstock into fuel, how much CO2 is sequestered, how much CO2 is released transporting the fuel, storing the fuel, burning the fuel etc.
How does The carbon intensity of Renewable Diesel compare to that of Petroleum Diesel and Biodiesel?
Petroleum based diesel has a Carbon Intensity of +90 to +100. Biodiesel has a carbon intensity of +40 to +60. Renewable diesel's CI is +20 to +40. Using Carbon Sequestration as part of the process, LFG will take the carbon intensity of its Renewable Diesel down to lower than -200 Carbon Intensity, the lowest CI diesel fuels available in the US.
What is Renewable Naphtha?
Naptha is a flammable hydrocarbon.It has a variety of uses including mixing with petroleum, hydrocarbon cracking, producing laundry soaps, cleaning fluids and can also be used to denature Ethanol.
What other materials are produced at the plant?
The plant will produce about 3.5 tons of waste material (Ash & Slag) per day as well as some waste water. The Ash and Slag are harmless. They will likely be sold to local makers of concrete. Wolf Material Handlers will be responsible for handling the Ash & Slag output.
What will happen to the waste water produced?
The majority of the water will be recycled and reused by the plant, but any waste water runoff will be treated and cleaned on site. The waste water management system has been designed by the same person (Graham Lee) who built the water management system for Shell's Fischer Tropsch plant in Qatar - which is a zero emissions plant. The water will be treated according to Louisiana Department of Environmental Quality and released into the river - the water will be cleaner going back in than it was coming out.
Customer Base
Who will LGF sell its Products to?
LGF has a signed LOI with an Offtaker who will buy 100% of all diesel, naptha and carbon credits produced by the plant. The Offtaker will pay for the fuel, LCFS and RINs credits once the fuel has been loaded onto the trains, a bill of lading receievd by LGF and an invoice produced.
What is an OFftakeR?
The Offtaker is just the project's name for their customer.
Who is the offtaker?
As we're bound by an NDA, we're unable to disclose who the Offtaker is. However we can say that the Offtaker is a major marketer of diesel fuels and are one of the two largest private truck stop operators in the US. For a project off this nature to get financing you need to establish a long term fuel and credit sales agreement with a counterparty who is creditworth and has a strong financial standing. LGF has discussed their offtaker with their financing partners.
What is the term of the LOI?
The offtaker has signed a 15 year LOI, although LGF expect the term of the contract to be 20 years once finalised and signed.
When is the offtaker agreement anticipated to be finalised?
LGF anticipate having the final executed agreement in place by the end of FEL-2, which at the moment is expected to be the end of 2021.
Feedstock Agreement
WHat is Feedstock?
Feedstock is the product used by the LGF plant to produce liquid diesel and naphtha. In this case it is waste material from managed local forests. LGF will take first and second thinnings (which would otherwise be converted to waste or burned) as well as slash and rounds (parts of larger trees not suitable for lumber).
This benefits the feedstock providers for a number of reasons;
1) they can now sell the waste rather than having to burn it
2) demand for rounds has been declining as the buyer of this part of the trees was typically paper and pulp mills
3) paper and pulp mills would require the bark to be stripped from the rounds whereas LGF can use the whole round, so it increases yields for the feedstock providers
This benefits the feedstock providers for a number of reasons;
1) they can now sell the waste rather than having to burn it
2) demand for rounds has been declining as the buyer of this part of the trees was typically paper and pulp mills
3) paper and pulp mills would require the bark to be stripped from the rounds whereas LGF can use the whole round, so it increases yields for the feedstock providers
Where will the feedstock come from?
LGF will deal with with two local certified sustainable forestry feedstock providers who have formed a joint venture specifically to supply the feedstock and boiler fuel (JV called Renewable Porcurement Solutions) and they will sign a 20 year agreement (LOI signed, deal still to be finalised).
How much feedstock does the plant require?
LGF will require 550k wet tons per year for fuel production and 400k wet tons per year for the plant boiler.
Will there be sufficient feedstock for the lgf plant
The supply of feedstock nearby greatly exceeds LGF's requirements. The plant requires 950k wet tons of feedstock per year. There are 4 millions excess tons of feedstock available just from the two feedstock providers LGF have signed their LOI with.
How will LGF manage feedstock to avoid production slow down/shut down?
The plant will incorporate storage of 6 weeks supply of feedstock on site. In addition there will be 1-2 months worth of rounds in storage nearby, so any general disruptions should be easily managed.
Low Carbon Fuel Standards ("LCFS")
What Are the low carbon Fuel Standards?
The LCFS are State based programs designed to encourage the use of cleaner low-carbon transportation fuels, encourage the production of those fuels, and therefore, reduce GHG emissions and decrease petroleum dependence in the transportation sector. The LCFS standards are expressed in terms of the "Carbon Intensity" (CI) of gasoline and diesel fuel and their respective substitutes. The program is based on the principle that each fuel has "life cycle" greenhouse gas emissions that include CO2, CH4, N2O, and other GHG contributors. This life cycle assessment examines the GHG emissions associated with the production, transportation, and use of a given fuel. The life cycle assessment includes direct emissions associated with producing, transporting, and using the fuels, as well as significant indirect effects on GHG emissions, such as changes in land use for some biofuels. The carbon intensity scores assessed for each fuel are compared to a declining CI benchmark for each year. Low carbon fuels below the benchmark generate credits, while fuels above the CI benchmark generate deficits. Credits and deficits are denominated in metric tons of GHG emissions. Providers of transportation fuels must demonstrate that the mix of fuels they supply for use in California meets the LCFS carbon intensity standards, or benchmarks, for each annual compliance period. A deficit generator meets its compliance obligation by ensuring that the amount of credits it earns or otherwise acquires from another party is equal to, or greater than, the deficits it has incurred.
Which States currently have lcfs programs?
California, Washington and Oregon currently have LCFS programs signed into law. Other States such as New York, Colorado and Utah are currently drafting legislation to pass their own LCFS programs. In Canada, British Columbia currently has it's own LCFS, with the rest of the country expected to follow suit in the next couple of years.
As mentioned above, the State of New York are currently working on their own version of the LCFS. Please click here for a video interview with Julie Tighe from the New York League of Conservation Voters. The video is only 5 minutes long but Julie not only explains the legislation proposed in NY, but also explains the way the LCFS credits work in general.
As mentioned above, the State of New York are currently working on their own version of the LCFS. Please click here for a video interview with Julie Tighe from the New York League of Conservation Voters. The video is only 5 minutes long but Julie not only explains the legislation proposed in NY, but also explains the way the LCFS credits work in general.
Why do We only hear about the Californian LCFS program?
California, Washington and Oregon each have their own LCFS program, however California is the biggest and most developed and also currently places the highest value on LCFS credits, so the Californian LCFS market attracts the most interest. As a result of this, almost all renewable fuel and carbon credits in the US are sold into California.
How Are the lcfs calculated?
The number of LCFS carbon credits are calculated using the amount of fuel produced and the carbon intensity of that fuel vs the benchmark. The Carbon Intensity of the fuel produced at the LGF plant is expected to be -90 (vs a benchmark of +90 approx). For every 10 unit change in Carbon Intensity, there is a corresponding change in value of carbon credits of ~$9mm approx.
Does California set the price of the LCFS credits?
The value of carbon credits is set daily by the market and is based on the supply and demand of those carbon credits.
You can see current and historic LCFS pricing here.
You can see current and historic LCFS pricing here.
Are there any requirements (compliance/monItoring/reporting etc.) ?
The State of California requires Obligated Parties to demonstrate compliance annually.
When are the LCFS carbon credits generated and transferred to the offtaker?
The importer of record is allowed to generate the LCFS credits. As such the offtaker, who has assumed ownership of the fuel once it is loaded onto their trains at the LFG plant, will generate the credits once they fuel crosses the state lines (into California in this case).
Renewable Fuel Standards ("RFS")
What are the Renewable Fuel Standards?
The RFS is a federal program, administered by the EPA, that requires transportation fuel sold in the US to contain a minimum volume of renewable fuels. It was established under the Energy Policy Act of 2005 and strengthened in the Energy Independence and Security Act of 2007. The amount of renewable fuel required each year increases e.g. in 2012 the amount of renewable fuel required was 15 billion gallons. in 2022 it will be 35 billion gallons. Obligated parties under the RFS program are refiners or importers of gasoline or diesel fuel. Compliance is achieved by blending renewable fuels into transportation fuel, or by obtaining credits (called “Renewable Identification Numbers”, or RINs) to meet an EPA-specified Renewable Volume Obligation (RVO). Obligated parties must demonstrate compliance annually.
How does fuel produced qualify for the RFS?
To qualify for the RFS, fuels must achieve a reduction in greenhouse gas (GHG) emissions as compared to a 2005 petroleum baseline. The EPA has designated 4 types of renewable fuel and their associated reduction in GHGs to qualify under the program; 1) Biomass-based diesel must meet a 50% lifecycle GHG reduction 2) Cellulosic biofuel must be produced from cellulose, hemicellulose, or lignin and must meet a 60% lifecycle GHG reduction 3) Advanced biofuel can be produced from qualifying renewable biomass (except corn starch) and must meet a 50% GHG reduction 4) Renewable (or conventional) fuel typically refers to ethanol derived from corn starch and must meet a 20% lifecycle GHG reduction threshold.
Is there just one type of RIN awarded under the RFS?
Each fuel type is assigned a “D-code” – a code that identifies the renewable fuel type – based on the feedstock used, fuel type produced, energy inputs and GHG reduction thresholds, among other requirements. The four categories of renewable fuel have the following assigned D-codes:
- Cellulosic biofuel is assigned a D-code of 3 (e.g., cellulosic biofuel) or D-code of 7 (cellulosic diesel)
- Biomass-based diesel is assigned a D-code of 4
- Advanced biofuel is assigned a D-code of 5
- Renewable fuel (non-advanced/conventional biofuel) is assigned a D-code of 6 (grandfathered fuels are also assigned a D-code of 6)
- Cellulosic biofuel is assigned a D-code of 3 (e.g., cellulosic biofuel) or D-code of 7 (cellulosic diesel)
- Biomass-based diesel is assigned a D-code of 4
- Advanced biofuel is assigned a D-code of 5
- Renewable fuel (non-advanced/conventional biofuel) is assigned a D-code of 6 (grandfathered fuels are also assigned a D-code of 6)
What RIN does the LGF plant expect to produce?
The LGF plant will produce Cellulosic Diesel and Naphtha, so is expected to generate D7 RINs
Are all RINs valued the same?
No. D3 RINs are worth about 75% more than D4, D5 or D6 RINs. D7 RINs are relatively new as they are for cellulosic diesel, but they are expected to trade in line with D3 RINs.
You can see more RINs pricing information by clicking here.
You can see more RINs pricing information by clicking here.
How many D7 RINs per gallon of fuel produced will LGF generate?
LGF estimates it will generate 1.7 D7 RINs per gallon of renewable diesel fuel produced at the plant.
Are there any requirements (compliance/monItoring/reporting etc.) for the Federal RINS?
The EPA regulates the feedstock and requires the forest be designated as a managed forest (occurred as a natural forest and then put under management) or managed plantation by a certain date (December 2007).
When are the RINs generated and transferred to the offtaker?
The RINs are generated at the point of production of the fuel. LGF will transfer ownership of 100% of the RINs generated by the plant to the offtaker.
