Montauk Energy, a JSE listed company, has inked a deal with a California-based dairy farm aiming to convert cow manure into natural gas for the first time. As per sources, the company mainly extracts & converts methane gas from waste landfills across the U.S. and is benefitted from subsidies provided through a federal program, RFS (Renewable Fuel Standards).

According to a statement released by the firm, the latest deal would assist it to own & operate a manure digester along with building, owning & operating a RNG (Renewable Natural Gas) facility for the next 20 years. Reportedly, the collaborative agreement was signed in July with Montauk acquiring around 80% stake in the dairy farm.

Montauk has been into the development of renewable energy facilities on a commercial scale for the last 30 years. The Pittsburgh-based firm was unbundled from South African black empowerment investment firm Hosken Consolidated Investments in 2014 yet it remains listed on the JSE.

As per Steph Erasmus, an analyst at Avior Capital Markets, Montauk came into manure business after it found that the USA lacked waste sites suitable for development. He added that producers of renewable gas have been making generous margins due to incentives being provided in the U.S.

For the record, the RFS program, which is administered by Environment Protection Agency (EPA), mandates that a transportation fuel sold in the U.S. must have a minimum volume of renewable fuels. According to it, fuel importers and refiners are legally bound to mix a specified volume of biofuels like ethanol, biodiesel in their products. The company plans to leverage these provisions and will also benefit under California’s low carbon fuel standard which sets carbon volumes instead of fuel volumes and applies to road transportation in the country.

According to sources, using manure to produce biogas is not a pioneering concept. Reportedly, BMW had launched a manure-powered facility at Bronkhorstspruit in 2015.