Republic Services and Archaea Energy form renewable gas JV
Republic Services and Archaea Energy have formed a $1.1bn joint venture to develop 39 renewable natural gas (RNG) projects across the US.
The partnership, billed as the country's largest RNG portfolio build-out to date, will convert landfill gas into pipeline-quality RNG that can be used for a variety of applications to displace gas from fossil fuels.
Archaea Energy will contribute approximately $800mn and Republic approximately $300mn over five years.
The initiative will support Republic's long-term sustainability goal to reuse 50% more biogas by 2030.
"Sustainability is a platform for growth at Republic, and our continued investment in landfill gas-to-energy projects delivers meaningful environmental and economic benefits to our stakeholders," said Jon Vander Ark, Republic Services President and CEO.
"Market demand for renewable natural gas to reduce greenhouse gas emissions is growing significantly, and providing additional sources of RNG furthers Republic's ambitious sustainability goals, while also helping customers and communities meet their own climate action goals."
Archaea Energy will develop, engineer, construct and operate the RNG facilities, which will be located at Republic Services' landfills in 19 states. Construction is slated to begin on projects in late 2022, with completion and commissioning of the projects planned through 2027.
When fully operational, the 39 projects are expected to generate more than 12.5mn MMBtu of RNG annually. The joint venture has signed a gas sale agreement with Republic to provide for the long-term ability to process landfill gas and sell RNG and related environmental attributes.
Archaea is one of the largest RNG producers in the US, with an RNG platform primarily focused on capturing and converting waste emissions from landfills into low-carbon RNG and electricity. It develops, designs, constructs and operates RNG facilities utilizing an innovative, cost-efficient manufacturing approach to project development which is supported by a commercial strategy focused on long-term, fixed-price contracts.
Nick Stork, Archaea's Co-Founder and CEO, said: "We are focused on long-term, value-oriented capital investments that make a meaningful sustainability impact for future generations. We could not be more aligned in this vision with our partners at Republic, and we look forward to seeing the collective benefit this partnership will deliver to our respective shareholders, partners, and communities."
As a low-carbon fuel, RNG displaces a meaningful amount of greenhouse gas emissions and is increasingly being recognized as a near-term climate strategy to lower the carbon footprint of existing energy assets. Decarbonisation efforts are expected to propel demand for RNG, with landfill gas providing greater scale and predictability than other sources for reliable renewable energy production.
The strategic partnership is expected to expand Republic Services' renewable energy portfolio to more than 100 projects. It builds on a growing slate of environmental commitments including fleet electrification and investments in plastics circularity.
Moelis & Company is serving as exclusive financial advisor to Republic Services, and Davis Polk & Wardwell and Katz Barron are serving as Republic Services' legal counsel.