Aemetis closes on dairy digester RNG equity investment

By Aemetis Inc. | December 31, 2018

Aemetis Inc. announced on Dec. 26 that its subsidiary, Aemetis Biogas LLC, closed a $30 million equity investment without any dilutive stock issuances by Aemetis, Inc. and funded the first $8.3 million tranche to subsidiary Aemetis Biogas to build, own and operate dairy biomethane digesters, pipelines and gas cleanup/compression facilities primarily under 20-year agreements with dairy farms in California.  

Dairies produce about 25 percent of California’s methane emissions and have become targets of carbon regulations aimed to reduce climate change. With a carbon intensity under the California Low Carbon Fuel Standard of about negative 300, dairy biomethane is highly valuable, but needs to be collected at the dairy, pipelined to a central processing facility, then cleaned and compressed for use as Renewable Natural Gas in converted diesel trucks and other natural gas vehicles.  

The project will initially connect about a dozen dairies to Aemetis’ ethanol plant in Keyes, California, with expansion plans to more than three dozen dairies in the local area. The Aemetis plant supplies Wet Distillers Grain feed to about 100 dairies. 

“Dairy biogas is a below zero carbon biofuel that is a new source of revenue for dairies, which do not currently have a way to monetize their biomethane as a transportation fuel without the necessary pipeline and gas cleanup/compression infrastructure, as well as a customer that can use biogas to produce low carbon biofuels.  Our 60 million gallon ethanol plant is capable of using biogas to replace petroleum natural gas to produce a lower carbon biofuel and generate additional Low Carbon Fuel Standard credits,” stated Eric McAfee, Chairman and CEO of Aemetis.  “Since utilities in California have not yet completed the permitting and other requirements for injection of dairy biomethane into natural gas pipelines, collecting and converting biogas for use in ethanol production provides Aemetis a sustainable first-mover advantage in biogas pipeline and dairy digester construction for dairies in the area around our Keyes plant.”

“Importantly, this equity financing by our subsidiary, Aemetis Biogas, will permit us to execute this project without any dilutive stock issuances by Aemetis, Inc.,” McAfee noted. “Aemetis continues to execute on funding and building projects that generate highly valued, low carbon biofuels primarily from waste or reused materials under the California LCFS and Federal RFS.” 

The equity funding of Aemetis Biogas was provided by Protair-X Americas, an environmental investment unit of Protair-X Technologies in Canada, which has extensive experience in protecting livestock farming environments. Aemetis’ senior lender, Third Eye Capital, is a major investor in Protair-X Technologies.