美国垃圾行业可再生能源板块入门报告

US Waste: A primer on the Renewable Energy segment This note is part of a series expanding on the economics of the Waste Industry, followingprevious primers covering the Solid Waste Collection, Landfill, and Recycling segments. Connor Cerniglia, CFA+1 917 344 8472connor.cerniglia@bernsteinsg.com At <3% of Waste Industry revenue and EBITDA, the Renewable Natural Gas (RNG)is the smallest segment within the waste value chain.Capital requirements are real,but with attractive payoffs, with ~90% of profitability stemming from D3 RINs that drive1.5-3 year payback periods for investments, and EBITDA margins of 40-50% for the RNGsegment. RNG facilities capture methane that landfills naturally emit (14% of total USmethane emissions), which is then sold to a nearby gas pipeline or used by CNG trucks,generating a D3 RIN. These renewable fuel credits are then sold primarily to oil refiners andimporters, who must purchase them to comply with federal Renewable Fuel Standard (RFS)volume mandates. Bridget Alkin+1 917 344 8359bridget.alkin@bernsteinsg.com RNG is high margin and incremental to growth, but introduces materially higherearnings volatility.For WM, the Renewables segment should grow from 0.4% of sales inFY23 to 3.7% in FY28E, adding 70bps of growth from FY26-FY28E and ~1ppt to EBITDAgrowth. This is a more recent phenomenon. Historically, methane was flared and generatedelectricity that was sold back to the grid—an afterthought rarely discussed by investors. Thecommercial transformation came in 2014, when the US Environmental Protection Agency(EPA) qualified landfill biogas as a D3 cellulosic biofuel, and investments followed in 2018. With 90% of segment revenue from renewable fuel credits, profitability is ultimatelya function of government regulation.The Clean Air Act directs the EPA to set D3 RINvolume targets through a process that grants significant discretion: volumes themselves,small refinery exemptions, and retroactive waivers if production falls short of the mandate—all levers that can suppress or increase RIN prices. In April 2026, the EPA finalized volumethrough 2027, meaning the next rulemaking cycle will address 2028 volumes.D3 RINprices reflect policy sensitivity, trading as low as~$0.50 in 2019 to ~$3.75 in 2022,and are currently $2.70. That said, the D3 RIN program has support from a broad group of stakeholders—infrastructure operators, municipal governments, union labor, CNG fleet producers andoperators—that make it politically inexpensive to maintain. Since 2014, the program hassurvived both Republican and Democratic administrations. Waste Management, Republic Services, and Waste Connections all invest in RNGfacilities, but through a variation of wholly-owned projects (WM), joint ventures(RSG), or a combination of both (WCN).Waste Management was an early strategicleader in RNG, building facilities directly by spending $1.2bn in capex, with consensuscalling for $1.1bn in Renewables revenue by FY28E. RSG is pursuing projects throughpartnerships with BP-owned Archaea Energy and Ameresco with $100m in revenue by theend of the decade, paid out through royalties making the projects highly margin accretive.WCN’s hybrid structure means two-thirds of RNG investments are paid as royalties whileone-third is recognized in Other Revenue, together adding $150m-$200m in EBITDA bythe end of FY2027. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS The purpose of this report is to educate investors on the economics of the Renewables segment. Renewable Energy represents2-3% of industry sales and EBITDA for waste companies. Despite lower contribution at the total company level relative to othersegments, profitability is superior with 40-50% EBITDA margins, tied with the Landfill segment. Roughly half of a landfill’smethane is generated within 30 years of closure, although only about half of total emissions are ultimately viable for capture.With landfill closures expected to accelerate over the next decade according to EPA estimates, we expect an acceleration inmethane production levels and capture rates, driving an improved outlook for the RNG segment. We rate Waste Connections Outperform with a $205 PT, Waste Management Outperform with a $260 PT, and RepublicServices Market-Perform with a $220 PT. DETAILS AN OVERVIEW OF THE TRADITIONAL SOLID WASTE INDUSTRY At its most basic level the Municipal Solid Waste Industry collects waste from homes, businesses, and construction sites anddisposes of it through a recycling facility or landfill, with the latter often monetizing the methane gas it naturally emits. Theindustry is typically divided into 5 segments: 1) Collection (Residential, Commercial, and Industrial), 2) Transfer Stations, 3)Recycling, 4) Landfills, and 5) Renewables (Exhibit 1). Within Traditional Solid Waste the Collection segment is the largest (55-65% of sales), followed by Landfills (20%), TransferStations (10%), Recycling (5-10%), and Renewable Energy (<3%) (Exhibit 2). Renewable Energy is a