Meeting_Body
OPERATIONS, SAFETY, AND CUSTOMER EXPERIENCE COMMITTEE
APRIL 16, 2026
Subject
SUBJECT: RENEWABLE NATURAL GAS (RNG) PROVIDER
Action
ACTION: AWARD CONTRACT
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to:
A. AWARD a five (5) year Indefinite Delivery/Indefinite Quantity (IDIQ) contract, Contract No. OP132076000, with Shell Energy North America (US), LP for Renewable Natural Gas (RNG), inclusive of a five-year base in the Not-To-Exceed (NTE) amount of $140,004,228.05 and one three-year option in the NTE amount of $88,902,684.81, for a combined NTE amount of $228,906,912.86, subject to the resolution of any properly submitted protest(s), if any; and
B. EXECUTE individual Task Orders, Transaction Confirmations, and Contract Modifications up to 10% of the contract value.
Issue
ISSUE
Metro uses Renewable Natural Gas (RNG) fuel to power the engines on the majority of the bus fleet. RNG fuel is currently being procured under four contracts due to previously limited RNG availability from one single supplier.
RNG remains a critical bridge fuel during Metro’s transition to a fully Zero-Emission Bus (ZEB) fleet. As charging infrastructure is constructed and new electric buses are phased into service, RNG ensures uninterrupted transit operations while maintaining progress toward greenhouse gas and criteria pollutant reduction goals. Maintaining a reliable RNG supply during this transition period protects operational continuity, safeguards service reliability, and provides flexibility as Metro refines future fleet and energy demand projections.
Background
BACKGROUND
Metro’s energy choices have far-reaching implications for climate, air quality, community health, and the stability of our transportation network. Recognizing this, Metro has made long-term commitments to energy efficiency, renewable energy adoption, greenhouse gas reductions, climate adaptation, and systemwide energy resilience. These commitments have been in place since 2007 and are reaffirmed through the Board-approved 2019 Climate Action and Adaptation Plan, 2025 Climate Action and Adaptation Plan Update, the 2025 Energy Master Plan (EMP), and the 10-Year Strategic Plan, Moving Beyond Sustainability, and the 2026 MBS update.
Metro continues the development and installation of the electric bus charging infrastructure and procurement of new electric buses. Metro will continue to achieve greenhouse gas emissions and criteria air pollutant reduction goals during this transition by using Compressed Natural Gas (CNG) buses using RNG fuel during this transition.
Renewable natural gas can be difficult to differentiate from fossil fuel based natural gas, since both gases can be used interchangeably in the same applications. The main difference between natural gas and RNG lies in each gases’ production methods, and consequently their environmental impacts.
RNG is a carbon-neutral fuel that captures human-generated biogas already present in the environment in landfills, wastewater treatment plants and livestock operations. Raw biogas or methane from these sources is then converted into RNG at a treatment plant. Methane capturing helps mitigate climate change by capturing harmful gases that would otherwise be released into the atmosphere and pollute the communities where landfills and livestock operations exist. RNG is considered renewable as it comes from naturally occurring sources.
Discussion
DISCUSSION
As Metro phases in Zero-Emission Buses (ZEBs), beginning with the G and J-Lines, staff will be able to collect data to inform the pace of RNG reduction over the next few years. The phasing of new ZEB deliveries and completion of ZEB infrastructure will further refine the information. The contract’s end date synchronization will provide staff with time to accurately assess future gas consumption needs, although RNG consumption is anticipated to decline with the expanded delivery and use of ZEBs. The procurement of electric buses is currently underway, and construction of the charging infrastructure is in process. As additional electric buses are placed into service, staff will be able to more accurately assess the declining demand for RNG as CNG buses are systematically retired from service. Additional funding is required to fuel the existing fleet of Metro buses operating on RNG to prepare Metro for any future significant cost fluctuations. This provides reliable, essential transit service to our customers through the smooth, uninterrupted operation of the bus fleet.
Consolidating the existing RNG agreements into a single contract structure improves administrative efficiency, enhances pricing transparency, and strengthens Metro’s negotiating position in a maturing renewable gas market. A unified contract vehicle also allows Metro to better align fuel procurement strategy with long-term energy planning objectives outlined in the Energy Master Plan and Moving Beyond Sustainability framework. This structure enables Metro to respond to market conditions while maintaining consistency across divisions and fueling operations.
The issues and solutions to Metro’s energy and climate change challenges are intertwined. In fact, more than half of Metro’s climate change strategy is tied to energy, energy management, energy resiliency, and renewable energy. There must be an integrated approach moving forward, and the recommended award of Contract No. OP132076000 to Shell Energy North America (US), LP for Renewable Natural Gas (RNG) Provider Services is designed to fulfill that need. These services will ensure the protection of human health and the environment, address the challenge of operational sustainability while ensuring a renewable, resilient and reliable energy future.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
The award of this contract will ensure that all operating divisions have an adequate supply of renewable natural gas for the Metro bus fleet that provides safe, clean, and reliable transportation service for Metro customers. A reliable supply of RNG supports safe transit operations by ensuring uninterrupted fueling of the bus fleet. Maintaining stable fuel access reduces the risk of service disruptions that could affect customers who depend on Metro for essential travel. Operational continuity is a key component of system safety, and this contract ensures that bus divisions have the necessary fuel resources to operate safely and reliably.
The use of RNG further improves safety, as it is a carbon-neutral fuel produced by capturing human-generated biogas already present in the environment at landfills, wastewater treatment plants, and livestock operations. The capturing of these gases improves the safety of our communities by capturing the harmful gases that would otherwise be released into the atmosphere and pollute our environment.
Financial_Impact
FINANCIAL IMPACT
Funding for RNG will be included in FY26 and FY27 operating budgets in various bus divisions' cost centers, under project 306002 - Operations Maintenance, under line item 50402 FUEL CNG - REVENUE EQUIPMENT. Cost center managers and the Chief Operations Officer will be responsible for budgeting the cost of RNG in the future fiscal years.
Under the California Air Resources Board’s (CARB) Low Carbon Fuel Standard (LCFS) and the US Environmental Protection Agency’s Renewable Index Numbers (RINs) programs, Metro is currently generating carbon credits through the dispensing of natural gas for bus fueling and use of electricity for light and heavy rail propulsion. Specifically to renewable natural gas, the fuel's lower carbon index enables us to generate carbon credits. These carbon credits are managed through the Metro Office of Sustainability and sold by Metro’s Vendor/Contract Management, with proceeds reinvested towards Metro sustainability and resiliency initiatives, consistent with the 2020 10-year Sustainability Strategic Plan. Projected revenue from the future sale of carbon credits generated over the life of this contract is approximately $44.5 million.
Impact to Budget
The current sources of funds for this action are Federal 5307, Proposition A, Proposition C, Measure R, Measure M, and the Transportation Development Act. This funding is eligible for bus and rail operations.
Equity_Platform
EQUITY PLATFORM
Award of this contract advances Metro’s Equity Platform by delivering energy reliability improvements that protect communities most dependent on transit. lower-income riders, communities of color, people with disabilities, seniors, youth, and essential workers disproportionately rely on Metro for daily access to jobs, healthcare, and basic services-and they are the first and hardest hit when outages disrupt service. The Energy Master Plan projects a 200% increase in electricity demand by 2050 and identifies three bus divisions and three park-and-ride facilities already operating in constrained utility zones, underscoring the urgency of strengthening system reliability to avoid disproportionate service impacts on equity-priority riders.
This action ensures the uninterrupted operation of Metro’s bus fleet that serves Los Angeles County and disproportionately serves marginalized and vulnerable transit riders. RNG is needed to be able to provide reliable and safe bus service until ZEBs can be phased in and ensure that the bus fleet that serves most regions in Los Angeles County, including many underserved communities, can provide safe, clean, and reliable services to neighborhoods where disparities within the region can exist between residents’ access to jobs, housing, education, health, and safety. Bus Fleet Management works to maintain equity in bus assignments in accordance with Title VI of the Federal regulations. Fleet Management will continue to focus on maintaining equity in EFC/low-income communities as newer buses arrive in the coming years.
At the time of solicitation, the Diversity & Economic Opportunity Department did not establish a Disadvantaged Business Enterprise (DBE) goal for this procurement due to the lack of subcontracting opportunities. Shell Energy North America (US), LP is expected to perform the work with its own workforce.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED (VMT) OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
This item supports Metro’s systemwide strategy to reduce VMT through operational activities that will support Metro’s maintenance and continued success of its RNG bus feet, need to implement advanced strategies to meet our energy and climate goals and further encourage transit ridership, ridesharing, and active transportation. Metro’s Board-adopted VMT reduction targets were designed to build on the success of existing investments, and this item aligns with those objectives.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The RNG contracts support Strategic Goal 2: Deliver outstanding trip experiences for all
users of the transportation system. Renewable natural gas is required for the bus fleet, providing clean, safe, and reliable transportation services for Metro customers.
In addition to supporting Strategic Goal 2, this contract advances Strategic Goal 5 by strengthening Metro’s environmental sustainability leadership and accelerating progress toward greenhouse gas reduction and clean energy commitments. The use of RNG as a transition fuel aligns with Metro’s long-term electrification strategy and supports implementation of the Energy Master Plan and Moving Beyond Sustainability objectives.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternative is to continue procurement of RNG utilizing the four contracts with various contract end dates. In this scenario, Metro would still need to increase the contract authority for three contracts, Contract No. OP59812000A with Clean Energy, Contract No. OP59812000B with Shell, and Contract No. OP59812000C with Trillium as a separate board item. This approach is not recommended since conversion to a single contract for RNG is expected to provide better pricing and services for the delivery of natural gas. There is currently enough renewable natural gas supply accessible to any single supplier in the market. Procurement of renewable natural gas from retail stations outside of the contract is not feasible due to the large size of our bus fleet. The procurement of non-renewable natural gas is not recommended as it would result in the loss of environmental benefits, carbon credits, and revenues.
A single consolidated contract structure also improves coordination across divisions, simplifies contract administration, and enhances Metro’s ability to manage fuel procurement in response to evolving market conditions. This approach reduces duplication of effort and supports integrated planning across fleet operations and energy management programs.
Another alternative considered to address price volatility is hedging. Commodity Swap/Cash Settlement Agreements ("Commodity Hedges") can be entered into to mitigate the volatility in index pricing. Staff monitors the market pricing of Commodity Hedges regularly. Historically, on average the price of entering Commodity Hedges has either exceeded the price of purchasing RNG at market rates or RNG market rates have fallen within a reasonable range of annual budgetary tolerance. At this time, staff does not recommend entering into Commodity Hedges but will continue to monitor market pricing of these instruments.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Contract No. OP132076000 and proceed with issuing Task Orders as the need for these services arise. Material activities and work products relative to the support provided by this contract will be included in Metro’s annual sustainability report.
Staff will continue monitoring RNG market conditions, carbon credit performance, and fuel consumption trends as Zero-Emission Buses are deployed. Updates will be incorporated into Metro’s annual sustainability reporting and budget planning processes to ensure alignment with operational needs and long-term energy strategy.
Attachments
ATTACHMENTS
Attachment A - Procurement Summary
Attachment B - DEOD Summary
Prepared_by
Prepared by: Cris B. Liban, Deputy Chief Sustainability Officer, (213) 922-2471
Uduak-Joe Ntuk, Senior. Director, Environmental Compliance/Sustainability, (213) 523-9351
Debra Avila, Deputy Chief Vendor/Contract Management Officer (213) 418-3051
Reviewed_By
Reviewed by Tim Lindholm, Chief Program Management Officer,
(213) 922-7297
