Chevron and California Bioenergy declared a joint investment in their second holding company to develop and sell dairy biomethane as a renewable natural gas (RNG) transportation fuel in the state.

At the time of signing, Chevron had agreed to provide the holding company, CalBioGas Hilmar LLC, with initial finance for the construction of infrastructure for dairy biomethane projects in Merced County, California.

Methane, a particularly potent greenhouse gas, is released from the manure storage on dairy farms. When dairy farmers install digesters and methane capture projects to transform this methane into renewable natural gas, which is deemed carbon negative on a lifecycle basis under California’s Low Carbon Fuel Standard, CalBio adds technology and operational experience to the table. A group of dairy farms in Merced County will receive additional cash from Chevron under the terms of the deal for up to seven digesters and one central upgrading plant.

Grants from the California Department of Food and Agriculture have been given to the cluster of digesters, but the projects still need to be funded in full. When everything is finished, which is anticipated to be in 2023, Chevron will purchase all of the renewable natural gas produced and sell it on the California automobile fuels market.

“This project brings together support from many groups, including seven California Dairy farmers, who are national leaders in milk and cheese production; Chevron, one of California’s largest energy companies; and grant funding from the California Department of Food and Agriculture. The strong support from these partners will help California with its emission reduction targets,” said Neil Black, president of CalBio. “These projects are also benefiting the local community through job creation and protecting local air and water quality.”

Chevron is bolstering the success of its traditional product business with new offers that assist customers in supporting a reduced carbon future as part of its lower carbon aspirations. Dairy biomethane-derived renewable natural gas, which is carbon negative, is a crucial component of its solution offering.

“We are excited to continue our partnership with CalBio and work with local communities and farmers to develop lower carbon fuel solutions,” said Andy Walz, president of Americas Fuels & Lubricants for Chevron. “The investment underscores our commitment to produce 40,000 MMBTU/D of RNG by 2030 and grow the lower carbon businesses that we believe will be a bigger part of the future.”