Today, I’d like to announce the formation of Burnham RNG, LLC and talk a little bit about why I chose the RNG industry. There are lots of great opportunities within the broader renewable energy world right now – so Why RNG?
About Burnham
Burnham is a platform company formed to build, acquire, own and operate RNG producing assets. We recently secured financial backing from Edge Natural Resources, a growth-oriented energy private firm based in Dallas. We have an initial pipeline of development assets and acquisition targets across the US, including a number of projects we are working on with our friends at Sustainable Energy Ventures.
What Is RNG?
That’s a larger topic for another day, but broadly speaking, it is captured methane produced from biological processes that would otherwise be released into the atmosphere. That methane becomes “RNG” when it is put into a pipeline to displace traditionally produced natural gas. Because this captured gas reduces emissions on a CO2 equivalent basis, various state, Federal and voluntary programs have been created to incentivize its production, creating significant demand. The primary sources of this biomethane production are landfills, livestock manure and wastewater treatment facilities. Biomethane can also be produced by separating organic waste before it gets to a landfill and putting that waste through an anaerobic digester.
Why RNG?
It’s been a goal of mine for as long as I can remember to start a company like this. Over the last 20 years, I’ve worked a little in almost every renewable subsector. When I left Enviva in the spring, the big question for me was which area of the industry to focus on, given the abundance of opportunity. I started with a somewhat vague thesis about waste to value and have recently narrowed down to focus in on RNG for three reasons:
Mission: Burnham’s mission is to End Emissions from Waste. I believe that over the course of the remainder of my career, the US will no longer emit methane from the sources listed above. It’s a huge, impactful source of global warming and I look forward to building a team that can be a part of ending this emission source. Besides RNG production, most of these projects produce a low carbon soil amendment that replaces synthetic fertilizers with a locally produced organic alternative that can be used in no-till and low-till farming operations. After watching Kiss the Ground, it’s exciting to be an early part of addressing this part of the climate change puzzle. Finally, one of my favorite things is that this is a domestically produced resource that we are capturing and creating value for the producers – it’s nice to work on projects that are going to put money back into the hands of dairy owners, farmers and other food producers, helping individuals and making the US agricultural industry more competitive and more sustainable at the same time.
Market: I’ve been intrigued by the RNG market for some time, but was initially scared to jump in. On the surface, it feels very crowded with several well financed competitors with a giant head start on us. Two factors changed my mind: (a) the total opportunity set is huge. The factoid I like best is that there are currently ~250 operating RNG projects in the US and about 40,000 operating in Europe. Europe has incentivized this activity for a while, while the US is just starting. A bottoms-up build of waste sources in the US yields a similar number of project opportunities. (b) real market feedback. We started making lists and cold calling sources several months ago and I was overwhelmed by the positive responses. Yes, there is competition out there, but there are also plenty of projects to do. We only need a handful of projects to build a successful company.
Challenge: This is the cool part. I was looking for an industry where I could apply a lot of what I learned at Enviva about optimizing assets by building disciplined, data driven & process driven operations. I think we are in the early innings of digester optimization. Actual biomethane production is much lower than theoretical biomethane potential across large swaths of the industry. Digester operations have a number of variables and data to manage (ph, temperature, C/N ratios, FOS/TOCs, etc.). Managing these variables does not seem easy, but I believe the right dedicated team can win more often than we lose, creating incremental 1% improvements to production that compound over time. There are also great logistics and commercial opportunities once an asset is up and running, including the opportunity for expansion into other products (e.g., hydrogen, compost, CO2 capture, etc.) that I am excited about chasing down.
So that’s the quick update. I look forward to providing additional updates from time-to-time as we work to turn the ideas above into actual steel in the ground.
Chris