WoodMac: North America RNG market capacity to reach 604 MMcfd in 2025
The North American renewable natural gas (RNG) market has grown 35% since 2023 and added an all-time high 139 MMcfd of production in 2024, according to recent analysis by Wood Mackenzie. The market will add another 70 MMcfd by 2025, bringing total capacity to 604 MMcfd, the consultancy said. The transportation sector consumes more than half of RNG production.
Texas leads US states with 73 MMcfd of capacity, followed by Pennsylvania (55 MMcfd) and Ohio (44 MMcfd). Canada currently has 46 MMcfd of capacity. Since 2023, merger and acquisition (M&A) activity in the segment has included Enbridge Inc.’s $1.2 billion acquisition of Morrow Renewables and asset acquisitions by Vitol Inc., Apollo Energy Resources, and Sagepoint Energy LLC. Ares Management (which launched Sagepoint), The Goldman Sachs Group Inc., and Stonepeak ($400 million into Clean Energy Fuels) have also made major investments in the space and TotalEnergies SE and Vanguard Renewables have formed a joint venture,
“Market participants have shown their confidence in the future of RNG through increased M&A activity,” said Natalia Patterson, senior research analyst at Wood Mackenzie. “We forecast RNG production to grow across all types of feedstocks and the resource potential for RNG could exceed 7.8 bcfd by 2050.”
RNG development prices remain high
Despite robust growth, RNG still faces some problems, particularly regarding project development costs. “High costs will remain an obstacle for new participants entering the market and extended tax incentives will be a key to continued growth of RNG development,” said Patterson.
Clarity on federal subsidies as well as unlocking demand outside the transportation sector, mainly through voluntary markets driven by utility and corporate decarbonization targets, would be key for the market’s future potential, added Patterson.
“As more states embrace RNG as part of their decarbonization strategy, more clarity on future policy development would also help stabilize prices for environmental attributes and boost confidence in the RNG sector’s long-term viability,” said Patterson.
Conglin Xu | Managing Editor-Economics
Conglin Xu, Managing Editor-Economics, covers worldwide oil and gas market developments and macroeconomic factors, conducts analytical economic and financial research, generates estimates and forecasts, and compiles production and reserves statistics for Oil & Gas Journal. She joined OGJ in 2012 as Senior Economics Editor.
Xu holds a PhD in International Economics from the University of California at Santa Cruz. She was a Short-term Consultant at the World Bank and Summer Intern at the International Monetary Fund.
