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AN ORDINANCE relating to the sale of environmental attributes held by the county; authorizing the county to enter into an agreement for the sale of environmental attributes related to biomethane produced at the South Treatment Plant to Karbone Inc.
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STATEMENT OF FACTS:
1. The wastewater treatment division of the department of natural resources and parks operates three regional wastewater treatment facilities, including the South Treatment Plant in Renton, Washington, which treats approximately twenty-eight billion gallons of wastewater each year.
2. Anaerobic digesters at the South Treatment Plant generate methane digester biogas as part of the wastewater and associated solid material treatment and purification processes.
3. Since 1988, the wastewater treatment division has been removing impurities from the methane biogas originating from the anaerobic digesters. Purified methane gas is also known as renewable natural gas, which is a direct substitute for geologic natural gas. The purified renewable natural gas that meets pipeline quality natural gas standards can be injected into the regional natural gas pipeline.
4. Renewable natural gas contains biomethane gas molecules that have an economic value similar to the value of geologic natural gas. In addition, the beneficial use of the wastewater biogas as a byproduct of the anaerobic digestion process provides significant greenhouse-gas reduction and other environmental benefits when compared to the consumption of fossil fuel-derived natural gas.
5. The environmental benefits, as an extension of the gas molecule energy content, are recognized as environmental attributes. Environmental attributes refer to renewable energy or other characteristics of a resource that are distinguished from a commodity and can have financial value related to both mandatory and voluntary environmental requirements and markets.
6. An example of a mandatory environmental attribute market is the Federal Renewable Fuel Standard, which was created in an effort to reduce greenhouse gas emissions and expand the nation's use of renewable fuels in the transportation sector. The legislation has created demand for transportation fuels sourced from renewable sources, including biomethane sourced from wastewater treatment plants.
7. In addition to the Renewable Fuel Standard, there exist other environmental attribute markets, including voluntary Renewable Thermal Credits, natural gas utility and corporate environmental attribute purchases, and foreign renewable natural gas markets.
8. From 2017 through the present, the biomethane and environmental attributes originating from the South Treatment Plant have generated over $63,000,000 of revenue to the wastewater treatment division, with the vast majority of the combined biomethane and environmental attribute value originating from the monetization of environmental attributes.
9. In 2021, the wastewater treatment division selected Bluesource, LLC (now named ANEW), for the sale of the South Treatment Plant biomethane and environmental attributes. The King County council adopted Ordinance 19448, on June 7, 2022, approving a contract with Bluesource, LLC, for three years, with two optional one-year extensions.
10. The first one-year extension with Anew is set to expire on June 30, 2026. Because environmental attribute markets have recently been dynamic and volatile, with market access to the Renewable Fuel Standard market becoming increasingly limited, Anew has chosen not to renew the contract for the second additional year.
11. Access to both the Renewable Fuel Standard and other market opportunities to transact environmental attributes originating from the South Treatment Plant can provide greater opportunities to market all available environmental attributes.
12. Karbone Inc. ("Karbone") has been a service provider for energy transition and environmental commodity markets since 2008. Karbone acts as a marketer that buys and sells commodities across energy markets to meet client financial and risk management needs. Through energy markets, Karbone transacts on average over 2 billion US dollars per year, including over 250 million gallons of renewable fuels and associated environmental attributes through both regulatory compliance and voluntary markets.
BE IT ORDAINED BY THE COUNCIL OF KING COUNTY:
SECTION 1, Findings:
A. Under K.C.C. 4.56.250, the provisions of K.C.C. chapter 4.56 related to the sale of real or personal property are waived for sales or transfers of ownership, rights, title, or interests in emissions credits, offsets or allowances or renewable energy certificates, credits, or benefits, environmental air quality credits and any similar rights, title or interests held by the county when such sales are in the best interests of the public and are authorized by the King County council.
B. A sale to Karbone Inc. ("Karbone") of environmental attributes associated with the South Treatment Plant biogas processing facility is in the best interests of the public because the market for the sale of environmental attributes associated with biomethane is highly specialized and is subject to market variability. The agreement with Karbone will facilitate the sales of these environmental attributes into different markets based on market conditions. The agreement with Karbone will generate revenue and support the decarbonization of the natural gas supply system in King County and in other geographic areas that purchase environmental attributes from King County.
SECTION 2. The King County executive is hereby authorized to execute a base contract and all related documents for the sale and purchase of environmental attributes with Karbone Inc. substantially in the form of Attachment A to this ordinance.
SECTION 3. Moneys from the sale of environmental attributes under section 2 of this ordinance shall be allocated to the wastewater treatment division and reinvested in Strategic Climate Action Plan-related actions, including efforts that increase the beneficial use of biogas.