Last year began with strong RNG spot prices in the US, but as 2022 progressed, the prices declined. Prices for RNG from US dairy projects, a significant customer segment for Greenlane in recent years, were particularly hard hit with falling California LCFS credit prices due to a surplus of credits. At the beginning of 2022, spot prices for dairy-derived RNG were over $US115 per MMbtu, but by the end of 2022, the price had dropped to approximately $US70 per MMbtu. These factors, combined with inflationary pressures, rising interest rates and lack of clarity respecting the rules not yet issued under the Inflation Reduction Act (IRA) impacted our growth in the second half of 2022.
Having recognized that low LCFS credit prices may not achieve the GHG reductions they are looking for, the California Air Resources Board (CARB) has indicated that they will update their LCFS program including introducing more aggressive compliance targets for carbon intensity reduction by 2030 and beyond, with the objective to support continued investment in low carbon technologies. While we anticipate that these and other regulatory developments in the US will support RNG demand with improved economics for Greenlanes current and future customers, we are also increasing our focus in other markets where we see growth opportunities.
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