Decarbonization Success: Lessons Learned from AstraZeneca and Vanguard Renewables Partnership
The Renewable Thermal Collaborative recently unveiled a case study spotlighting an unprecedented collaboration between AstraZeneca and Vanguard Renewables. This pioneering partnership aims to facilitate the provision of renewable natural gas (RNG) to all AstraZeneca sites across the United States by 2026. By leveraging this alliance, up to 650,000 million British thermal units (MMBTu) of RNG annually will be utilized across AstraZeneca's U.S. sites, a quantity equivalent to heating over 17,800 U.S. homes annually by 2026.
The Renewable Thermal Collaborative (RTC) is at the forefront of a coalition dedicated to advancing renewable heating and cooling solutions at various facilities, thereby significantly reducing carbon emissions. Vanguard Renewables is a prominent player in the United States in converting organics into renewable energy. AstraZeneca, a global biopharmaceutical firm centered on scientific innovation and the commercialization of prescription medicines worldwide, is the driving force behind this initiative.
Project Overview
AstraZeneca, headquartered in the UK, is teaming up with Vanguard Renewables, a U.S.-based firm specializing in developing, owning, and operating farm-based anaerobic digestion projects. Through a comprehensive agreement spanning 15 years or more, AstraZeneca will procure renewable natural gas (RNG) for its U.S. facilities. This collaboration marks one of the most significant business-to-business RNG procurements in the North American voluntary market to date.
As per the agreement, three newly constructed anaerobic digesters on farms managed by Vanguard Renewables will supply 650,000 MMBtu/year of RNG, catering to nearly all of AstraZeneca's gas demands at its U.S. research and manufacturing sites by the conclusion of 2026. While these dedicated anaerobic digesters are currently being built, the delivery of RNG has already commenced. Since June 2023, AstraZeneca's Newark Campus in Delaware has been receiving RNG from one of Vanguard Renewables' facilities in Vermont through common carrier gas pipelines.
RNG, also known as biomethane, is high-quality gas generated by capturing and refining methane emitted during the decomposition of organic matter, including food waste, dairy manure, and biomass. Methane is a potent greenhouse gas (GHG), and producing RNG helps mitigate harmful atmospheric methane emissions by capturing it.
Sourcing renewable natural gas (RNG) from Vanguard Renewables aligns with AstraZeneca's commitment to transitioning to 100% renewable energy, a pivotal aspect of the company's flagship Ambition Zero Carbon strategy. This strategy is aimed at achieving significant decarbonization by reducing the company's entire value chain footprint by 2030 and attaining science-based net zero emissions by 2045 at the latest. AstraZeneca is poised to slash greenhouse gas (GHG) emissions from its global operations (Scope 1 and 2) by an impressive 98% by 2026.
Andy Wirths, Senior Vice President of Supply Americas at AstraZeneca, expresses enthusiasm about how Vanguard Renewables has expedited their sustainability journey, positioning them at the forefront of innovation.
John Hanselman, Founder and Chief Strategy Officer of Vanguard Renewables, emphasizes the ambition to showcase the voluntary decarbonization pathway through RNG utilization. He highlights AstraZeneca's comprehensive commitment to decarbonization from top management to operational levels.
Project Origin
In line with the targets set forth in the Ambition Zero Carbon strategy in 2020, AstraZeneca explored various renewable thermal decarbonization approaches, such as electrification and renewable fuels. Factors like deployment and operational expenses, complexity, scalability, and climate impact were carefully evaluated. After thorough assessment,
AstraZeneca identified RNG as the most viable option to decarbonize its U.S. operations. Given its extensive natural gas-based infrastructure in U.S. medicine research and manufacturing facilities, AstraZeneca recognized the significant value of RNG as a renewable alternative to fossil natural gas. This choice helped them avoid costly production interruptions and the necessity for widespread boiler portfolio replacements or retrofits. Subsequently, AstraZeneca established a clear goal and timeline to procure RNG by the conclusion of 2026.
In 2020, AstraZeneca's procurement team issued a Request for Information (RFI) to RNG suppliers, subsequently selecting multiple respondents, including Vanguard Renewables, to participate in a Request for Proposals (RFP) process.
AstraZeneca outlined specific criteria in the RFP to ensure that the RNG agreement would meet both financial and sustainability prerequisites. Financially, AstraZeneca sought a long-term contract to guarantee a dependable RNG supply and ensure future price certainty. Regarding sustainability, AstraZeneca specifically prioritized solutions that emphasized environmental benefits through the creation of additional RNG production, the geographical proximity of new anaerobic digesters to AstraZeneca's sites, and the traceability of environmental attributes associated with RNG.
Achieving Consensus
Following AstraZeneca's selection of Vanguard Renewables through the RFP process, both companies embarked on a collaborative due diligence journey, engaging in open discussions to gain a deeper understanding of the proposed approach to renewable natural gas (RNG) delivery. AstraZeneca's senior leadership took the initiative to visit an on-farm anaerobic digestion facility operated by Vanguard Renewables. This visit aimed to grasp how Vanguard Renewables develops projects to capture methane emissions, enhance farm operations, and create diversified revenue streams for family-owned farms.
John Hanselman, Founder and Chief Strategy Officer of Vanguard Renewables, commended the cohesive vision set by AstraZeneca's CEO and senior leadership, which permeated throughout the organization. He highlighted the consistency of message and vision within AstraZeneca as a significant factor contributing to the smooth progress of the collaboration.
AstraZeneca and Vanguard Renewables established a project governance group comprising representatives from both entities to navigate contractual considerations, including those pertaining to greenhouse gas (GHG) emissions accounting and RNG traceability. Given AstraZeneca's emphasis on the geographic proximity of RNG production and consumption as a crucial sustainability factor, Vanguard Renewables' farm siting team played a vital role in connecting specific farms to AstraZeneca's research and manufacturing facilities.
Over time, the governance group proved instrumental in facilitating the successful collaboration between AstraZeneca and Vanguard Renewables. Moving forward, both companies intend to rely on this group to nurture the relationship, oversee contract performance, and support quarterly and annual environmental, social, and governance (ESG) reporting obligations.
The structure of the RNG contract resembles that of a power purchase agreement (PPA) for renewable electricity. Vanguard Renewables assumes the capital costs of constructing the digesters, while AstraZeneca commits to paying a fixed price (per MMBtu) for RNG deliveries with a predefined escalator over the 15-year duration. Additionally, the contract includes a five-year extension option and provisions to manage various considerations and risks, such as volumetric guarantees to ensure adequate RNG delivery volumes and long-term price stability to mitigate fuel price volatility. AstraZeneca's long-term off-take commitment provides Vanguard Renewables with the revenue certainty necessary to advance the construction of new projects.
Both companies approached GHG emissions accounting and carbon intensity evaluation through multiple frameworks, including the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model, the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (revised edition), and the International Sustainability and Carbon Certification (ISCC) standard. Vanguard Renewables conducted a comprehensive GHG emissions analysis across these frameworks for a prototypical on-farm digester producing RNG, revealing carbon intensity ranging from -15 to -120 gCO2e/MJ.
Carbon intensity serves as a measure of the lifecycle GHG emissions of a fuel per unit of energy, with the production of RNG from waste resulting in a negative carbon intensity. Through this rigorous GHG emissions accounting and carbon intensity assessment, AstraZeneca validated its strategy of collaborating with Vanguard Renewables to construct new digesters and produce RNG as a means to achieve its ambitious decarbonization objectives.
Following AstraZeneca's sustainability guidelines regarding RNG traceability, Vanguard Renewables will inject RNG generated from the new digesters into common carrier gas pipelines, matching AstraZeneca's U.S. gas consumption on an energy basis (MMBtu) as monitored by a gas marketer. AstraZeneca will subsequently procure and retain all associated environmental attributes linked with the RNG to diminish its Scope 1 emissions. The M-RETS platform will serve for independent verification and monitoring of renewable thermal certificates' generation and retirement. Additionally, AstraZeneca's energy consumption data will undergo an annual review by an independent third party to ensure accuracy and validity, substantiating claims related to RNG supply.
Andy Wirths, Senior Vice President of Supply Americas at AstraZeneca, expresses hope that this partnership sets a precedent for other companies aiming to decarbonize, facilitating a smoother transition for future endeavors. AstraZeneca aims to pave the way for others to follow suit, making the decarbonization pathway more accessible.
Key Outcomes
It took AstraZeneca and Vanguard Renewables approximately two and a half years from the Request for Information (RFI) and initial discussions to finalize the contract and commence RNG delivery from one of Vanguard Renewables' facilities in Vermont. While navigating the learning curve for this groundbreaking agreement presented challenges beyond those of a typical purchase order, both companies approached contract negotiations with transparency, collaboration, and a focus on shared values.
As Vanguard Renewables prepares three new dedicated on-farm anaerobic digestion facilities to supply RNG to AstraZeneca before the end of 2026, the governance group will continue to convene and report progress on the anaerobic digestion facilities, RNG delivery, and emissions impacts. Expanding on this collaboration, AstraZeneca and Vanguard Renewables announced an enlarged collaboration plan in November 2023, aiming to significantly boost RNG generation productivity and improve the RNG supply chain.
AstraZeneca's adoption of RNG in the U.S. will further facilitate the company's transition to 100% renewable energy for heating and power. By partnering with small family-owned farms in proximity to AstraZeneca's facilities to capture food waste and dairy manure, Vanguard Renewables is not only providing a reliable and diversified revenue stream to family farms but also enhancing food waste and manure handling to safeguard the local environment and prevent atmospheric methane emissions.
Key Insights
Internal organizational support is pivotal. AstraZeneca's commitment to decarbonization was bolstered by internal buy-in and alignment, crucial for navigating the contracting process. The company's clear objectives, pathway, and timeline for RNG procurement, communicated by senior leadership, rallied employees around a unified global sustainability ambition. Clearly defined objectives communicated before procurement enhances project success.
Collaborative buyer-seller partnerships are instrumental. AstraZeneca and Vanguard Renewables surmounted procurement challenges through transparency and collaboration, pivotal for project success. Establishing a governance group during contracting fostered collaboration, and its continuation underscores a commitment to monitor project outcomes continuously.
Stringent sustainability criteria yield positive climate impacts. AstraZeneca and Vanguard Renewables prioritized climate impact from inception, shaping procurement to generate new renewable gas capacity, mitigate atmospheric methane emissions, and curtail AstraZeneca's Scope 1 emissions.
Transparent GHG emissions accounting is indispensable. AstraZeneca and Vanguard Renewables are diligently documenting the environmental attributes and impacts of the procurement, aligning with evolving Greenhouse Gas Protocol guidance on RNG emissions accounting. Their willingness to share this experience with stakeholders underscores their commitment to offering a model for evaluating and deploying RNG as a potent decarbonization solution.
John Hanselman, Founder and Chief Strategy Officer at Vanguard Renewables, underscores AstraZeneca's unified vision communicated effectively across all organizational layers, facilitating smooth progress through the process.
The Renewable Thermal Collaborative (RTC) is at the forefront of a coalition dedicated to advancing renewable heating and cooling solutions at various facilities, thereby significantly reducing carbon emissions. Vanguard Renewables is a prominent player in the United States in converting organics into renewable energy. AstraZeneca, a global biopharmaceutical firm centered on scientific innovation and the commercialization of prescription medicines worldwide, is the driving force behind this initiative.
Project Overview
AstraZeneca, headquartered in the UK, is teaming up with Vanguard Renewables, a U.S.-based firm specializing in developing, owning, and operating farm-based anaerobic digestion projects. Through a comprehensive agreement spanning 15 years or more, AstraZeneca will procure renewable natural gas (RNG) for its U.S. facilities. This collaboration marks one of the most significant business-to-business RNG procurements in the North American voluntary market to date.
As per the agreement, three newly constructed anaerobic digesters on farms managed by Vanguard Renewables will supply 650,000 MMBtu/year of RNG, catering to nearly all of AstraZeneca's gas demands at its U.S. research and manufacturing sites by the conclusion of 2026. While these dedicated anaerobic digesters are currently being built, the delivery of RNG has already commenced. Since June 2023, AstraZeneca's Newark Campus in Delaware has been receiving RNG from one of Vanguard Renewables' facilities in Vermont through common carrier gas pipelines.
RNG, also known as biomethane, is high-quality gas generated by capturing and refining methane emitted during the decomposition of organic matter, including food waste, dairy manure, and biomass. Methane is a potent greenhouse gas (GHG), and producing RNG helps mitigate harmful atmospheric methane emissions by capturing it.
Sourcing renewable natural gas (RNG) from Vanguard Renewables aligns with AstraZeneca's commitment to transitioning to 100% renewable energy, a pivotal aspect of the company's flagship Ambition Zero Carbon strategy. This strategy is aimed at achieving significant decarbonization by reducing the company's entire value chain footprint by 2030 and attaining science-based net zero emissions by 2045 at the latest. AstraZeneca is poised to slash greenhouse gas (GHG) emissions from its global operations (Scope 1 and 2) by an impressive 98% by 2026.
Andy Wirths, Senior Vice President of Supply Americas at AstraZeneca, expresses enthusiasm about how Vanguard Renewables has expedited their sustainability journey, positioning them at the forefront of innovation.
John Hanselman, Founder and Chief Strategy Officer of Vanguard Renewables, emphasizes the ambition to showcase the voluntary decarbonization pathway through RNG utilization. He highlights AstraZeneca's comprehensive commitment to decarbonization from top management to operational levels.
Project Origin
In line with the targets set forth in the Ambition Zero Carbon strategy in 2020, AstraZeneca explored various renewable thermal decarbonization approaches, such as electrification and renewable fuels. Factors like deployment and operational expenses, complexity, scalability, and climate impact were carefully evaluated. After thorough assessment,
AstraZeneca identified RNG as the most viable option to decarbonize its U.S. operations. Given its extensive natural gas-based infrastructure in U.S. medicine research and manufacturing facilities, AstraZeneca recognized the significant value of RNG as a renewable alternative to fossil natural gas. This choice helped them avoid costly production interruptions and the necessity for widespread boiler portfolio replacements or retrofits. Subsequently, AstraZeneca established a clear goal and timeline to procure RNG by the conclusion of 2026.
In 2020, AstraZeneca's procurement team issued a Request for Information (RFI) to RNG suppliers, subsequently selecting multiple respondents, including Vanguard Renewables, to participate in a Request for Proposals (RFP) process.
AstraZeneca outlined specific criteria in the RFP to ensure that the RNG agreement would meet both financial and sustainability prerequisites. Financially, AstraZeneca sought a long-term contract to guarantee a dependable RNG supply and ensure future price certainty. Regarding sustainability, AstraZeneca specifically prioritized solutions that emphasized environmental benefits through the creation of additional RNG production, the geographical proximity of new anaerobic digesters to AstraZeneca's sites, and the traceability of environmental attributes associated with RNG.
Achieving Consensus
Following AstraZeneca's selection of Vanguard Renewables through the RFP process, both companies embarked on a collaborative due diligence journey, engaging in open discussions to gain a deeper understanding of the proposed approach to renewable natural gas (RNG) delivery. AstraZeneca's senior leadership took the initiative to visit an on-farm anaerobic digestion facility operated by Vanguard Renewables. This visit aimed to grasp how Vanguard Renewables develops projects to capture methane emissions, enhance farm operations, and create diversified revenue streams for family-owned farms.
John Hanselman, Founder and Chief Strategy Officer of Vanguard Renewables, commended the cohesive vision set by AstraZeneca's CEO and senior leadership, which permeated throughout the organization. He highlighted the consistency of message and vision within AstraZeneca as a significant factor contributing to the smooth progress of the collaboration.
AstraZeneca and Vanguard Renewables established a project governance group comprising representatives from both entities to navigate contractual considerations, including those pertaining to greenhouse gas (GHG) emissions accounting and RNG traceability. Given AstraZeneca's emphasis on the geographic proximity of RNG production and consumption as a crucial sustainability factor, Vanguard Renewables' farm siting team played a vital role in connecting specific farms to AstraZeneca's research and manufacturing facilities.
Over time, the governance group proved instrumental in facilitating the successful collaboration between AstraZeneca and Vanguard Renewables. Moving forward, both companies intend to rely on this group to nurture the relationship, oversee contract performance, and support quarterly and annual environmental, social, and governance (ESG) reporting obligations.
The structure of the RNG contract resembles that of a power purchase agreement (PPA) for renewable electricity. Vanguard Renewables assumes the capital costs of constructing the digesters, while AstraZeneca commits to paying a fixed price (per MMBtu) for RNG deliveries with a predefined escalator over the 15-year duration. Additionally, the contract includes a five-year extension option and provisions to manage various considerations and risks, such as volumetric guarantees to ensure adequate RNG delivery volumes and long-term price stability to mitigate fuel price volatility. AstraZeneca's long-term off-take commitment provides Vanguard Renewables with the revenue certainty necessary to advance the construction of new projects.
Both companies approached GHG emissions accounting and carbon intensity evaluation through multiple frameworks, including the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model, the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (revised edition), and the International Sustainability and Carbon Certification (ISCC) standard. Vanguard Renewables conducted a comprehensive GHG emissions analysis across these frameworks for a prototypical on-farm digester producing RNG, revealing carbon intensity ranging from -15 to -120 gCO2e/MJ.
Carbon intensity serves as a measure of the lifecycle GHG emissions of a fuel per unit of energy, with the production of RNG from waste resulting in a negative carbon intensity. Through this rigorous GHG emissions accounting and carbon intensity assessment, AstraZeneca validated its strategy of collaborating with Vanguard Renewables to construct new digesters and produce RNG as a means to achieve its ambitious decarbonization objectives.
Following AstraZeneca's sustainability guidelines regarding RNG traceability, Vanguard Renewables will inject RNG generated from the new digesters into common carrier gas pipelines, matching AstraZeneca's U.S. gas consumption on an energy basis (MMBtu) as monitored by a gas marketer. AstraZeneca will subsequently procure and retain all associated environmental attributes linked with the RNG to diminish its Scope 1 emissions. The M-RETS platform will serve for independent verification and monitoring of renewable thermal certificates' generation and retirement. Additionally, AstraZeneca's energy consumption data will undergo an annual review by an independent third party to ensure accuracy and validity, substantiating claims related to RNG supply.
Andy Wirths, Senior Vice President of Supply Americas at AstraZeneca, expresses hope that this partnership sets a precedent for other companies aiming to decarbonize, facilitating a smoother transition for future endeavors. AstraZeneca aims to pave the way for others to follow suit, making the decarbonization pathway more accessible.
Key Outcomes
It took AstraZeneca and Vanguard Renewables approximately two and a half years from the Request for Information (RFI) and initial discussions to finalize the contract and commence RNG delivery from one of Vanguard Renewables' facilities in Vermont. While navigating the learning curve for this groundbreaking agreement presented challenges beyond those of a typical purchase order, both companies approached contract negotiations with transparency, collaboration, and a focus on shared values.
As Vanguard Renewables prepares three new dedicated on-farm anaerobic digestion facilities to supply RNG to AstraZeneca before the end of 2026, the governance group will continue to convene and report progress on the anaerobic digestion facilities, RNG delivery, and emissions impacts. Expanding on this collaboration, AstraZeneca and Vanguard Renewables announced an enlarged collaboration plan in November 2023, aiming to significantly boost RNG generation productivity and improve the RNG supply chain.
AstraZeneca's adoption of RNG in the U.S. will further facilitate the company's transition to 100% renewable energy for heating and power. By partnering with small family-owned farms in proximity to AstraZeneca's facilities to capture food waste and dairy manure, Vanguard Renewables is not only providing a reliable and diversified revenue stream to family farms but also enhancing food waste and manure handling to safeguard the local environment and prevent atmospheric methane emissions.
Key Insights
Internal organizational support is pivotal. AstraZeneca's commitment to decarbonization was bolstered by internal buy-in and alignment, crucial for navigating the contracting process. The company's clear objectives, pathway, and timeline for RNG procurement, communicated by senior leadership, rallied employees around a unified global sustainability ambition. Clearly defined objectives communicated before procurement enhances project success.
Collaborative buyer-seller partnerships are instrumental. AstraZeneca and Vanguard Renewables surmounted procurement challenges through transparency and collaboration, pivotal for project success. Establishing a governance group during contracting fostered collaboration, and its continuation underscores a commitment to monitor project outcomes continuously.
Stringent sustainability criteria yield positive climate impacts. AstraZeneca and Vanguard Renewables prioritized climate impact from inception, shaping procurement to generate new renewable gas capacity, mitigate atmospheric methane emissions, and curtail AstraZeneca's Scope 1 emissions.
Transparent GHG emissions accounting is indispensable. AstraZeneca and Vanguard Renewables are diligently documenting the environmental attributes and impacts of the procurement, aligning with evolving Greenhouse Gas Protocol guidance on RNG emissions accounting. Their willingness to share this experience with stakeholders underscores their commitment to offering a model for evaluating and deploying RNG as a potent decarbonization solution.
John Hanselman, Founder and Chief Strategy Officer at Vanguard Renewables, underscores AstraZeneca's unified vision communicated effectively across all organizational layers, facilitating smooth progress through the process.
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