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How impact funds are reducing methane emissions

The circular economy offers crucial opportunities for impact investors to embrace net-zero waste management.

Methane produced from solid waste and sewage treatment facilities represents a major headache for policymakers. The greenhouse gas is 25 times more potent than carbon dioxide, and rapid population growth is only compounding its climate-changing effect. 

The Global Methane Initiative estimates that wastewater accounts for 7 percent of total global methane emissions. In the waste sector, landfills are the third-largest source of human-induced methane, producing approximately 11 percent of total global emissions. 

Against this sobering reality, capturing and mitigating methane production in the waste sector is crucial to limiting the pace and scale of global warming. Restricting the environmental toll on cities is also enshrined in the UN’s Sustainable Development Goals, a factor that has caught the attention of many impact investors, who recognise both the challenge and the opportunity that managing methane represents. 

In California, state authorities have mandated that 75 percent of organic waste must be diverted from landfill sites by 2030. Impact asset manager North Sky Capital is working to tackle the problem via its Project Golden Bear venture in the greater Los Angeles area. The project converts methane produced from the Victor Valley Wastewater treatment plant into renewable natural gas, eliminating any need for environmentally costly flaring. The gas is then sold under long-term contracts to the local regulated gas utility. 

“Project Golden Bear will prevent the release of 6,000 metric tonnes of methane per annum, which, according to the Environmental Protection Agency, is equivalent to preventing the release of 150,000 metric tonnes of carbon dioxide, removing 33,000 vehicles from the road or planting 2.5 million trees,” says Scott Barrington, North Sky Capital CEO. 

A virtuous cycle

Asset manager Meridiam also operates a portfolio of eight waste-to-energy investments that help to slash methane emissions and provide revenue to local communities. In Western France, the Agrimaine Biogas Cogeneration project offers local farmers an alternative means to dispose of their organic waste. The biomass helps power the 3.65MW power plant and farmers earn a share of the profit from the electricity and heat generated. 

“The project has effectively developed a virtuous circular economy,” says Marjorie Lemos, Meridiam’s Agrimaine project manager. “As co-shareholders, the farmers receive revenues from the plant; and by supplying their waste as feedstock, they now also get back a share of the plant’s digestate as an ecologically friendly fertiliser, which is helping to reduce their costs as well.”

Meridiam also invests in methane mitigation technology. In partnership with French SME Waga Energy, the asset manager converts biomethane produced at landfill sites in France into renewable natural gas. Sites typically hold about 10 to 15 years of waste and the converted natural gas supplies energy to more than 20,000 homes, preventing 30,000 tonnes of CO2 emissions from being released into the atmosphere. 

Across all its infrastructure projects, Meridiam tracks its carbon footprint to determine the volume of emissions avoided. The impact investor has also teamed up with industry peers to create the ‘2-infra challenge’ framework, which measures whether infrastructure projects are properly aligned with the goals of the Paris Agreement.