June 03, 2025

How “Renewable” is Renewable Natural Gas?

ELPC Economist & Energy Analyst, Saad Siddique, testified to the Illinois Commerce Commission about big economic & environmental questions behind "renewable natural gas"

By Saad Siddique, Economist & Energy Analyst

Update: On November 19th, the Illinois Commerce Commission (ICC) issued its final order in Illinois gas utilities Nicor and Ameren’s rate cases. The Commission sharply reduced rate increases sought by suburban gas utility Nicor and downstate utility Ameren, approving substantially smaller increases than the companies proposed. 

The ICC adopted both recommendations I made in my testimonies below:

• Ending Nicor’s “TotalGreen” pilot program, which charged customers a premium for carbon offsets and “renewable natural gas” credits that offered questionable environmental value, and;

• Rejecting Ameren’s “renewable natural gas” proposal, which Ameren failed to demonstrate would reduce carbon emissions or provide a cost-effective benefit.

We at ELPC thank the Commission for insisting on climate solutions that are cost-effective, evidence-based, and truly in the public interest.

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When Nicor and Ameren Illinois filed for gas rate increases this year, they didn’t just ask for more money to maintain their systems. They both proposed something new: programs to promote “renewable natural gas,” or RNG. The utilities’ RNG programs have a few key differences.

Nicor’s proposed “TotalGreen” program is voluntary and lets customers pay to offset their carbon emissions through the purchase of Renewable Thermal Credits, which offset 1%-20% of a customer’s emissions via methane capture and RNG production, and carbon offsets, which offset 80%-99%.

Carbon offsets are investments in environmental projects (like forest conservation or methane capture) that reduce atmospheric greenhouse gases elsewhere to compensate for emissions that continue to occur. For example, a business that burns natural gas and releases one ton of carbon dioxide may purchase an offset that pays to plant trees that absorb one ton of carbon dioxide.

In contrast, Ameren’s proposal targets upstream RNG producers, offering them financial incentives to connect to Ameren’s distribution network.

On the surface, these proposals might sound promising. We want Illinois to lead on clean energy solutions. We want its utilities to innovate in support of Illinois’ broader environmental objectives. This is a step in that direction.

But after reviewing the details, I testified on behalf of the Environmental Law & Policy Center (ELPC), Illinois State Public Interest Research Group and the Environmental Defense Fund to make clear that both RNG proposals fall short on emissions reductions, stringent verification of claims, and in justifying the costs.

Read my full testimony on NICOR’s RNG Plan

Read my full testimony on Ameren’s RNG plan

What is Renewable Natural Gas?

RNG is typically methane captured from landfills, farms, or wastewater treatment plants that’s blended into conventional gas supply. It’s sometimes pitched as a climate-friendly alternative to fossil gas. But it’s very difficult to prove that RNG programs offer meaningful environmental benefits. In both cases, the utilities’ filings did not demonstrate enough evidence that their proposals to incentivize RNG would meaningfully reduce emissions.

Natural gas infrastructure is already a major source of methane, a powerful greenhouse gas. U.S. natural gas pipelines leak millions of tons of methane per year. Continuing to invest in gas infrastructure, even under the guise of innovation, risks locking in polluting infrastructure for decades. We need to move toward cleaner, more efficient heating options – like electrification – not invest ratepayer dollars in expensive, unproven programs with marginal benefits.

The Economics of RNG

There are also concerns with the economics of RNG. Families and businesses across Illinois are already facing high energy bills and have no appetite to pile on more costs for speculative gas projects, especially with inflation squeezing household budgets.

And both RNG programs expose ratepayers to risk. For example, Ameren’s RNG program assumes the costs of its allowances will be fully recouped within seven years through the revenues it collects from RNG producers. However, that assumption is a risky bet, given the uncertainty regarding the future of the RNG market. The cost of RNG production is currently 4-6 times the price of fossil gas and is expected to become more expensive as the production scales.

I found that Nicor’s proposed RNG program would cost more than $2,400 per person enrolled and would only offset the equivalent of 0.0031% of the company’s yearly carbon footprint. Hardly a justifiable expense.

Our job at ELPC is to push for smarter climate solutions that are grounded in fact, incur no unnecessary costs, and provide concrete environmental benefits. Utilities should, and do, innovate – but we can only move forward on ideas that will actually move the needle on environmental protection.