Global investment in renewable natural gas is rising. More than 8 billion US dollars went into RNG projects in 2024. But not all projects succeed. About 40% of them fail to meet financial or operational targets. The reason is simple. These projects are not just about technology. They are about designing the entire value chain.
RNG comes from capturing biogas from sources like landfills, farms, or food waste. The gas is upgraded to pipeline-quality methane. But that is just the start. To make real returns, developers need to engineer for value from feedstock through to financing. This blog explains how.
Getting Feedstock and Design Right
The first thing to get right is feedstock. RNG projects live and die by the quality, reliability, and continuity of their feedstock supply. Technically, some feedstocks are more consistent year-round, such as dairy manure, while others, like mixed food waste, are seasonal or more variable in composition and harder to process. This variability affects both biogas output and upgrading efficiency, so project teams must map feedstock characteristics early and design systems that can adapt over time.
But technical design alone isn’t enough. Securing long-term supply agreements and forming strong partnerships with waste generators, farms, municipalities, and food processors is equally critical. These relationships ensure stable input volumes, reduce risk, and improve project bankability. The most successful RNG developers focus not only on the chemistry of feedstock but also on building durable commercial agreements that keep the digester full and the gas flowing.
Next comes the plant design. This is where modular thinking helps. Modular plants are built in parts. These parts can be moved and added over time. This makes the project flexible and faster to build. It also helps with cost control. Companies like Archaea Energy have used this method. Their landfill gas plants were built quickly and scaled more easily.
Modular plants reduce EPC (engineering, procurement, and construction) time. They use standard parts. This makes repairs simpler. It also allows developers to copy the model across other locations. With this approach, RNG projects move from one-off investments to repeatable systems. That is a big advantage.
Modular design also supports faster revenue generation and improved operational efficiency. By bringing gas to market more quickly, projects can start earning revenue earlier, improving cash flow, and reducing the risk of missing out on time-sensitive incentives. But the benefits go beyond speed. Modular plants are typically easier to operate and maintain due to standardized components and layouts, which can reduce operating expenses (OPEX) over time. Their repeatable design also allows for smoother operator training and more predictable performance. In contrast, custom-built plants that take years to complete may face delays, higher upkeep costs, and greater operational complexity. Modular systems help avoid those pitfalls.
Monetizing the Gas and Securing Revenue
Producing gas is only one part of the story. The greater value comes from selling the gas and the environmental credits associated with it. These credits include Renewable Identification Numbers or RINs, Low Carbon Fuel Standard credits or LCFS, and tax incentives from new climate laws.
A smart revenue strategy includes both gas sales and credit stacking. Many projects enter long-term contracts to sell RNG to utilities or fuel marketers. These contracts offer price certainty. That helps when raising loans. But they also limit the chance to earn more when prices rise.
Some developers choose a different path. They sell RNG and credits on the open market. This can bring higher returns but adds risk. The best projects do both. They secure a base price. Then they use collars or sharing agreements to keep some of the upside.
Choosing the right market also matters. Selling RNG to transport fuel markets earns more credits than selling to utilities. But it also comes with more rules and tracking. Some projects stack credits by using the RNG in vehicles in states like California. There, the combined credits can be worth 10 times the price of natural gas.
Tax credits now add even more value. The Inflation Reduction Act offers up to a 30 percent investment tax credit for biogas projects. This can be sold to investors or used to reduce upfront costs. One example is Vision RNG. In 2025, it raised nearly 29 million US dollars by selling this credit from a landfill gas project.
To unlock these credits, the project must follow the rules. For example, paying prevailing wages and starting construction before deadlines. Legal and finance teams must be involved early. They help structure the project to qualify and pass the benefits on to investors or lenders.
What’s Next in RNG?
The RNG sector is evolving beyond traditional landfill or manure-based plants. Emerging trends include:
- AI-enabled monitoring systems that optimize gas yield in real time
- Co-located hydrogen production using RNG as a feedstock (for blue or turquoise hydrogen)
- Digital traceability using blockchain for tracking credits and ensuring compliance
- Integration with EV fleets or sustainable aviation fuel, enabling new stacking of credits
- Expansion of LCFS-type markets to new states (e.g., New York, Washington)
Developers who keep up with these innovations will be better positioned to access new premium markets and stay ahead of tightening regulations.
9 Key Success Principles
RNG projects that succeed tend to follow a common path. These nine points sum how value is derived:
- Secure feedstock with clear volume and quality.
- Use modular plant design for scale and repeatability.
- Optimize gas yield through the right upgrading systems.
- Stack environmental credits like RINs and LCFS fully.
- Design off-take that balances fixed income and upside.
- Target the most valuable credit markets like transport fuel.
- Structure early to qualify for tax incentives.
- Blend long-term contracts with market sales for resilience.
- Build operations that scale and adapt to feedstock change.
Conclusion
Value engineering in RNG is also about designing a system that works across engineering, regulation, and finance. That means thinking about feedstock first. It means using modular systems that grow with demand. It means stacking credits smartly. And it means building partnerships that bring stable income and the chance for growth.
With these elements in place, RNG projects can deliver strong returns. They also help reduce emissions and support energy transition goals. When done right, they are a win for both business and the planet.
Authored by: Abimbola Osho and Abisola Otesile