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While Village Farms International Inc. (NASDAQ: VFF) is known for cultivating tomatoes and cannabis in its greenhouse facilities, the company has increasingly looked to the ground for another crop: renewable natural gas derived from landfill refuse.

The bid is shaping up to unlock an unexpected revenue stream while providing an unconventional way to greenify its bottom line, Jonathan Bos, Village Farms’ senior vice president of asset development told Green Market Report.

In 2002, the company established operations to capture potent methane emissions from decomposing trash at a landfill adjacent to its greenhouse facilities outside Vancouver, British Columbia. For 15 years, Village Farms simply burned off this collected landfill gas to generate electricity to sell to BC Hydro and heat its greenhouses.

Now the Canadian grower has invested $60 million to upgrade those facilities, allowing it to instead process the landfill gas into pipeline-quality renewable natural gas to sell directly to utility FortisBC. The company recently renegotiated landfill gas rights with municipal authorities through 2044 to underpin the venture, Bos said.

“The renewable natural gas solution was a much better solution for us,” he said. “It’s a more sustainable way of dealing with the gas, and it helps us on the economic side because it’s a better business model.”

Bos termed the renewable gas project “immediately accretive” to profits versus the company’s prior landfill operations due to the new plant’s lower operating costs and reduced maintenance needs.

“It’s less capital intensive for us and better economically,” he said.

The project was financed by a company called Terreva Renewables based in Atlanta, Georgia, which will also operate the RNG production facility going forward.

While the project has proved lucrative, replicating the model may prove challenging, according to Bos.

“Technically there’s no limitations, but you basically have to have the planets lined up,” he said, noting Village Farms’ facilities being directly across from the landfill was “very fortuitous.”

“Every landfill in North America, you would have to look at each one individually. …You need to know: Where is the landfill? What is the zoning like? What is the land availability around it? And then you need other support functions, right? You need water, you need labor, you need roads.”

The RNG upgrading process Village Farms uses essentially scrubs and refines the potent methane from the landfill emissions until it meets pipeline quality standards, which then permits injection into FortisBC’s natural gas distribution network.

“It takes landfill gas, and in technical terms, it’s called upgrading the gas to renewable natural gas standards,” Bos explained. “When you hear references to methane, that’s an important thing to know, that natural gas is a percent methane … but natural gas and methane are not technically the same term.”

While the landfill is currently the RNG plant’s sole source of landfill gas, Bos said the company is actively evaluating other feedstock sources to expand production over time. That could include agricultural waste, sewage, or even gas emitted from livestock operations.

“There may be other opportunities in our society, like there’s other places, other industries and agricultural procedures (with) types of biogas that can be upgraded to renewable natural gas,” he said. “The technology is not (feedstock) agnostic. You need to know whether it’s coming from anaerobic digestion or from decomposing something. Each application of the upgrading of the gas is very specifically designed for a particular situation.”

The project helps the company capitalize on rising demand for greener energy sources that can reduce greenhouse gas emissions. The renewable natural gas the company produces will meet an estimated 2-3% of the British Columbia government’s goals for emissions reductions by 2030 under its “Clean BC” plan, according to management.

While most renewable natural gas supply today comes from sources like landfills, livestock operations, and wastewater treatment plants, the market is expected to grow as companies commercialize new production methods, Bos said.

For Village Farms, the renewable natural gas venture builds on the greenhouse operator’s expertise in maximizing resources across its core greenhouse business, which utilizes 29 hectares for tomato production and 15 hectares for cannabis cultivation.

“We’re really very efficient at utilizing our inputs to produce our crops,” Bos said. “Being aware of recycling water and recycling fertilizers and using the CO2 from our boiler heat boilers is very much a normal process for us.”

While the core greenhouse operations still account for the bulk of Village Farms’ sales and profits, the renewable natural gas project provides a long-term growth avenue. Bos said the company is exploring ways to further reduce emissions and potentially increase gas yields, dubbed “a 3.0 challenge” for the venture.

“The beauty of that is that as it becomes more normalized in our society, the engineering and support functions and all the different discoveries also keep going,” he said of the renewable gas industry. “So, my hunch is that every year there will be potentially new opportunities to do more with less, which is exactly in our DNA.”

The post Village Farms searches for green gold with landfill emissions appeared first on Green Market Report.

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Adam Jackson, KahliBuds, 420GrowLife