Electric Power & Natural GasRenewable natural gas: A Swiss army knife for US decarbonization?Renewable natural gas plays a role in reducing emissions—scaling it is one potential near-term action on the journey to decarbonization.November 2023© Getty ImagesThis article is a collaborative effort by Kester Brons, Gracie Brown, Nathan Lash, Ruidi Lu, Andjelka Milutinovic, and Greg Santoni representing views from McKinsey’s Electric Power & Natural Gas and Oil & Gas practices.The energy transition is underway. Corporations and policymakers are embarking on ambitious decarbonization journeys to reduce dependence on fossil fuels. Renewable natural gas (RNG) emerges as an alternative fuel that could contribute to substantial emissions reductions across multiple industries. At present, fossil natural gas—which comprises 95 percent methane, 5 percent ethane, and trace amounts of other hydrocarbons—is the second largest source of primary energy in the United States, responsible for 33 percent of the country’s energy consumption in 2021.¹ And in the last decade, natural gas consumption has grown by approximately 2 percent per year.² As natural gas plays a significant role across sectors in the US energy system—including building and industrial heating, transportation, chemicals, and power generation—much infrastructure (such as wells, pipelines, power plants, and liquid natural gas [LNG] export terminals) has been built to extract, transport, and combust natural gas.RNG is a purified form of waste-derived biogas generated from anaerobic processes and then upgraded to pipeline-quality gas. It is virtually indistinguishable from fossil natural gas (both are more than 95 percent methane).³ RNG has the potential to decarbonize a portion of the emissions across many sectors and can be a like-for-like (in other words, a “drop-in”) replacement for fossil natural gas—meaning that end users do not have to modify engines, distribution systems, or other equipment when switching. Depending on the type of waste (feedstock) used to produce RNG, the associated greenhouse gas (GHG) reduction ranges between 50 percent (emissions intensity of approximately 50 grams CO2 equivalent per megajoule [gCO2e/MJ]) and 300 percent (emissions intensity could drop lower than approximately 300 gCO2e/MJ) compared to fossil natural gas (90 to 100 gCO2e/MJ). This calculation will vary based on feedstock as well as the calculated baseline emissions for natural gas used for comparison (see sidebar, “RNG can be produced from a variety of sources—with varying costs, availability, and carbon intensity”).⁴ This characteristic, combined with RNG’s ability to be used in existing gas infrastructure without infrastructure modification, points to its physical viability as an alternative to fossil natural gas. However, because RNG is feedstock limited and is not always economically viable, it is n...
