INTERVIEW: Mexico biomethane market eyes stronger RTC pricing as volumes grow

Mexico's emerging market for Renewable Thermal Certificates could see stronger pricing as biomethane production expands, while carbon intensity and feedstock are likely to be differentials among certificates, CleanCounts CEO Benjamin L. Gerber told Platts in a Sept. 10 interview.

The Mexican biomethane market is relatively immature, with small production volumes and limited price discovery, Gerber said. Some facilities rely on multiple feedstocks, adding complexity to validation and affecting how buyers value their output.

"Like any commodity, the bigger the volume, the stronger the pricing power that the producer has," Gerber said.

Brimex Energy's Lagos de Moreno facility in Jalisco became the first Mexican renewable thermal project registered on the CleanCounts Registry in September, allowing verified production to generate Renewable Thermal Certificates, or RTCs.

Gerber said some Mexican digesters combine different waste streams because feedstocks such as tequila vinasse are highly acidic and need to be balanced with other materials, including whey or swine manure.

Mixed-feedstock generators have attracted discounts in other North American markets outside Mexico, partly because buyers may scrutinize how different inputs translate into production, he said.

Mexico's lack of domestic compliance requirements also weighs on pricing, but pricing power is expected to improve.

"As this industry matures, and it'll probably do it very quickly ... you will be able to see stronger pricing from producers," he said.

CI, feedstocks could segment demand

Carbon intensity, or CI, could become an important source of differentiation between RTCs.

CleanCounts does not require projects to report a CI score but allows the information to be included in its registry.

He distinguished between buyers seeking the lowest-cost renewable molecule and companies focused more specifically on reducing emissions, which tend to value more CI scores and feedstock.

"The customers that care about reducing their overall emissions are going to be very specific on the CI score," Gerber said.

Feedstock preferences may also affect purchasing decisions independently of CI, he added, with buyers potentially valuing pre-consumer food waste, post-consumer waste, agricultural residues or landfill gas differently.

"The consumers will value it differently," he said.

Mexico currently lacks an established benchmark for biomethane environmental attributes, with project economics depending on production costs, natural gas references and the value buyers assign to the renewable component.

North American integration could support liquidity

CleanCounts sees Mexico's physical gas connections with the US and Canada as supportive of a broader North American market for renewable gas attributes, although Gerber stressed that CleanCounts itself does not determine whether a particular cross-border claim is accepted by regulators or corporate reporting frameworks.

"All claims are administered by a certification body, and we are not a certification body," Gerber said.

Still, he argued that physical interconnectivity should be considered when defining geographic market boundaries for gaseous fuels.

"Borders shouldn't be the only reason," he said. "We should look at actual interconnectivity between the countries."

He mentioned CleanCounts' tracking of US-produced biomethane that was subsequently exported as LNG to Japan. Japanese entities retired the associated certificates within the CleanCounts system, while recognition of the claim ultimately depended on Japanese rules.

He also expects domestic demand to develop in Mexico, particularly from multinational companies that require subsidiaries to meet emissions-reduction goals.

Additional Mexican projects could emerge over the next year, he said, though he did not provide a specific timetable.

Increasing regional volumes could also improve liquidity and price discovery. Even in the US, Gerber said voluntary RTC trading remains less liquid than Renewable Energy Certificate markets, creating challenges for producers with surplus output.

Aggregating transactions across Mexico, the US and Canada could help address those constraints, he said.

Registry fragmentation, regulation

Gerber also questioned whether Mexico needs multiple independent biomethane registries operating in the same geographic market.

The International Tracking Standard Foundation's ITRACK(G) framework has previously been discussed in Mexico as a potential tracking tool for biomethane.

He argued that similarities in the Mexican, US and Canadian gas systems favor common regional infrastructure, while noting that CleanCounts would work with a Mexican government registry if authorities chose to establish one.

"With all the respect to ITRACK(G), I think that there's not really a need for that market now in Mexico," he said.

Gerber said broader work is also underway on transactional connectivity between biomethane registries to support cross-border activity.

On domestic regulation, he identified a clear definition distinguishing biogas from biomethane as the most important near-term priority.

Without a technical threshold, lower-quality biogas could potentially be marketed alongside biomethane produced through more costly upgrading, weakening incentives to invest in pipeline-quality gas, he said.

"If you don't [differentiate them], people will try to sell their biogas as biomethane," Gerber said.

Financing support is another major constraint, he added. A number of Mexican projects are currently waiting for financing to proceed, while the country's large agricultural waste streams offer significant potential for additional biomethane production, he said.

Platts is part of S&P Global Energy.