Originally published Biomass Magazine, c. 2007 · Updated and expanded March 2026
When Biomass Magazine profiled Environmental Power Corp. (EPC) and its subsidiary Microgy Inc. around 2007, the company's pitch sounded visionary: forget small, farmer-owned digesters — build large-scale, commercially operated anaerobic digestion systems and sell pipeline-grade methane into the wholesale natural gas market. It was an idea ahead of its time. Nearly two decades on, EPC itself did not survive the financial turbulence of the years that followed. But the model it championed — large-scale, commercially operated agricultural biogas — has been vindicated by the growth of the US Renewable Natural Gas (RNG) industry, which today is one of the fastest-growing sectors in American clean energy.
Key Takeaways
- Environmental Power Corp. / Microgy's large-scale commercial AD model proved conceptually correct but financially premature: the company ran into debt service difficulties by 2010 and its Microgy assets were transferred to a joint venture, effectively ending EPC as an independent operator.
- The number of operating US farm-based anaerobic digesters grew from roughly 100 at the time of the article to over 600 by 2024 — but still represents only around 16% of technically feasible sites on large dairy and hog operations.
- The big shift in the sector has been from electricity generation to Renewable Natural Gas (RNG) production, exactly the pipeline-gas model EPC was pioneering. As of the EPA's latest AgSTAR data, CNG as a vehicle fuel is now the single most common end use for farm biogas in the US.
- Policy drivers have transformed the economics: the Renewable Fuel Standard's D3 RIN credits, California's Low Carbon Fuel Standard, the 2022 Inflation Reduction Act's expanded Investment Tax Credit for biogas, and the new Section 45Z Clean Fuel Production Tax Credit from 2025 together make large-scale dairy RNG among the most incentive-rich renewable energy investments in the country.
- US biogas investment surged to $3 billion in 2024 alone — a 40% increase over 2023 — with farm-based systems growing four times faster than landfill gas projects and surpassing them in new installations for the first time.
- Despite this growth, the US lags far behind Europe: Germany alone operates nearly 10,000 digesters, compared to approximately 2,500 across all US biogas sectors combined. The untapped US potential is enormous.
Environmental Power Corp.: A Pioneer That Didn't Survive
When Richard Kessel took the helm at EPC in July 2006, he was stepping into a company that had spent years assembling what it believed was a transformative technology position. EPC had acquired Microgy Cogeneration Systems in 2001, gaining an exclusive North American license for a Danish-developed, high-efficiency anaerobic digestion system that had operated at over 25 facilities in Europe for more than 15 years. The pitch was straightforward: apply proven European technology to the enormous, underserved US market — particularly to large confined animal feeding operations (CAFOs) — and sell the resulting biogas as pipeline-grade methane on the wholesale market.
By 2007, EPC had development agreements with Cargill, Swift beef processing, and was building digesters at multiple dairy farms in Wisconsin and beyond through its partnership with Dairyland Power Cooperative. The $152 million sales pipeline the company cited was real. What it could not overcome was the combination of slow project timelines, high capital requirements, and the punishing economics of natural gas prices in the post-2008 downturn. By late 2009, the company was missing interest payments on its convertible notes. In January 2010, EPC and Microgy formed a joint venture with Homeland Renewable Energy (HRE), contributing Microgy's project assets for a 30% ownership stake while HRE took a 70% controlling interest. The EPC era was effectively over.
"What really makes us unique is the size of our projects. We're really looking to sell — in the wholesale market — a natural gas product and that's what really differentiates us."— Richard Kessel, CEO, Environmental Power Corp., c. 2007
Kessel's strategic insight — that the real prize was pipeline gas, not electricity — turned out to be exactly right. It just took the rest of the industry, and the policy framework, another decade to catch up.
From Electricity to RNG: The Sector's Great Pivot
For most of its early history, the US agricultural biogas sector focused on electricity generation. Farms installed digesters, burned the gas in engine-generators, and sold power under state net-metering or renewable portfolio standard programs. According to EPA AgSTAR data, the number of combined heat and power (CHP) and electricity-only projects grew steadily from 2000 to 2013, then plateaued as the economics of farm electricity generation stalled.
The catalyst for the shift to RNG was the Renewable Fuel Standard (RFS), created by the Energy Independence and Security Act of 2007. Under the RFS, biogas upgraded to pipeline quality and used as a vehicle fuel generates D3 Renewable Identification Numbers (RINs) — tradeable credits worth considerably more than the electricity revenue from the same gas stream. For dairy operations in particular, which the EPA's GREET lifecycle model rates as having a strongly negative carbon intensity (because capturing manure methane prevents it from escaping into the atmosphere), RIN values have at times made dairy RNG projects extraordinarily lucrative. The EPA AgSTAR data shows that since 2017, CNG as a vehicle fuel has overtaken CHP as the most common end use for farm biogas — a dramatic shift that would have validated EPC's original wholesale-gas strategy.
The Policy Framework That Changed Everything
When EPC was operating, the federal incentive landscape for agricultural biogas was thin: some USDA Rural Energy for America Program (REAP) grants, the Renewable Fuel Standard RIN credits for transport-fuel use, and state-level programs that varied widely in generosity. The absence of a dedicated federal investment tax credit for biogas was a persistent barrier to project financing, particularly for capital-intensive large-scale digesters of the kind EPC was building.
That gap was filled, partly, by the 2022 Inflation Reduction Act (IRA). The IRA expanded the Section 48 Investment Tax Credit to cover qualified biogas facilities for the first time, providing a base ITC of 6% — rising to 30% and potentially as high as 60% with bonuses for prevailing wage compliance, domestic content, and location in an energy community. For projects that began construction before 2025, this represented a step-change in financing flexibility, allowing developers to monetise a large portion of their capital cost as a transferable tax credit.
From January 2025, a further mechanism came into play: the Section 45Z Clean Fuel Production Tax Credit, created by the IRA and subsequently extended to 2029 by the One Big Beautiful Bill Act signed in July 2025. The 45Z credit provides a production-based payment for clean transportation fuels, including RNG, scaled to the lifecycle emissions intensity of the fuel. For dairy-derived RNG — which carries a negative carbon intensity under the GREET model because it prevents methane from entering the atmosphere — the potential credit value is extraordinary. Aemetis Biogas has estimated a potential 45Z credit value of around $8.50 per gallon equivalent for its dairy RNG, on top of RIN credits under the RFS.
At the state level, California's Low Carbon Fuel Standard (LCFS) has been arguably the single biggest driver of dairy RNG investment, creating a credit-trading market that rewards low-carbon fuels and has at times generated tens of millions of dollars in annual revenue for large projects. The combination of federal RINs, federal 45Z credits, California LCFS credits, and USDA REAP loan guarantees means that a well-positioned dairy RNG project can stack multiple revenue streams in a way that was simply not available to EPC in 2007.
US Agricultural Biogas: Key Milestones Since 2007
Large-Scale Commercial AD: A Model Vindicated, If Belatedly
The lesson of EPC/Microgy is not that large-scale commercial AD was the wrong model — it is that the model was right but the timing was difficult and the capital structure fragile. Today, the companies that have scaled in the US agricultural biogas sector look remarkably like what EPC was trying to become: large, professionally operated businesses that develop, own, and operate multiple digester projects across many farms, aggregate the biogas, upgrade it to RNG, and sell it into the pipeline or transport market.
Companies such as Aemetis Biogas (California), BioTown Biogas (Indiana), Amp Americas, and Clean Earth Capital are all operating variants of this model, often with USDA REAP loan guarantees and a mix of federal and state tax credits stacking up multiple revenue streams per project. Aemetis, for instance, is processing waste from sixteen dairies across a network of twelve digesters, targeting more than 1.6 million MMBtu per year of RNG — a scale far beyond what EPC managed but philosophically identical to what Kessel described in 2007.
The operational and financing ecosystem has also matured in ways that EPC lacked. There is now a robust market for transferable IRA tax credits, with insurance products and legal frameworks to support transactions. The American Biogas Council provides industry advocacy and data. EPA AgSTAR offers technical assistance to farm operators. USDA's REAP program provides subsidised debt. When EPC was operating, essentially none of this infrastructure existed.
The Gap Between Potential and Reality
Despite the rapid growth and improved policy framework, the US agricultural biogas sector remains dramatically underdeveloped relative to its potential — and relative to peer countries. Germany alone operates close to 10,000 digesters; the entire US has approximately 2,500 biogas sites across all sectors, including wastewater and landfill gas. The American Biogas Council estimates there are over 17,000 sites ripe for development in the US today — including 11,200 dairy, poultry, and swine farms.
EPA AgSTAR estimates that biogas recovery systems are technically feasible at more than 8,000 large dairy and hog operations, with potential to generate nearly 16 million MWh of energy equivalent per year. Only around 400 are currently operating. The dairy sector in particular — where manure composition and volume make methane yields most predictable — sees adoption at only around 16% of farms with 500 or more cows. The structural barriers are well understood: fragmented farm ownership, high upfront capital costs, complex permitting across 50 different regulatory environments, and uncertainty about long-term policy support.
The American Biogas Council has pointed out that today's clean energy policies still do not fully recognise biogas systems in the way that solar and wind are recognised, and that further policy development is needed to unlock the sector's full potential. The ongoing regulatory uncertainty around Section 45Z — final Treasury guidance on GREET model emissions rates for various biogas pathways was still pending as of early 2026 — continues to complicate financial modelling for new projects.
Conclusion
Environmental Power Corp. and Microgy were right about almost everything: the scale needed to make agricultural biogas commercially viable, the target market of large CAFOs, and above all the destination — pipeline-grade methane sold as a commodity, not electricity sold at marginal power prices. What they could not overcome was the gap between their vision and the policy and financing infrastructure that the sector needed to realise it. That infrastructure has now largely been built. The irony is that the companies now doing what EPC pioneered are doing so in an environment of federal tax credits, carbon credit markets, and institutional capital that EPC's founders could only have dreamed of.
The untapped potential in the US agricultural biogas sector remains enormous. With only a fraction of technically feasible sites operating, and with the policy framework finally providing the incentive stack to make large-scale projects bankable, the question is no longer whether agricultural RNG will scale — it is how quickly and equitably the benefits will reach the rural communities where the feedstock is.
Frequently Asked Questions
Sizing-Up Anaerobic Digestion
By Bryan Sims / Photos By Jim Manganella
Environmental Power Corp. aims to become a premier player in the biomass industry by developing large-scale anaerobic digestion systems. Biomass Magazine talks with company officials about their thriving business model and how it could become the standard for others who want to convert waste into energy.
When Richard Kessel became the chief executive officer for the Tarrytown, N.Y.-based Environmental Power Corp. in July 2006, he was armed with more than 30 years experience in the energy field and the wherewithal to mold companies into formidable players in the renewable energy industry. EPC, and its single subsidiary Microgy Inc., is rapidly expanding its renewable energy portfolio by developing, owning and operating large-scale anaerobic digestion facilities that produce methane-rich biogas from agricultural livestock and organic wastes.
EPC's ability to design anaerobic digestion systems and to provide ongoing operational maintenance on a large scale sets it apart from the small-scale, farmer-owned anaerobic digestion model, according to Kessel. "What really makes us unique is the size of our projects," he says. "We're really looking to sell — in the wholesale market — a natural gas product and that's what really differentiates us."
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