What if you could find an investment that can address the world’s climate crisis, power transportation, and produce electricity while having loads of growth potential?
That’s how many see renewable natural gas or RNG, a clean and affordable fuel that truly turns trash into treasure and potentially waste into wealth.
The world can use this biogas alternative fuel to run homes, businesses, and vehicles. Since RNG production and use are on the rise, it could also power your investment portfolio to new heights.
Want to know more about this alternative fuel, its production, and stocks tied to RNG? And about renewable natural gas (RNG) stocks?
Here we have the 411 on RNG, it’s future as fuel, and investments you could make in RNG.
When you learn more about this burgeoning clean energy option, we think you’ll be interested in adding this sector to your portfolio for future growth.
Table of Contents
- What is Renewable Natural Gas?
- Our Methodology in Selecting the Best RNG Stocks
- Risk Tolerance
- Time in the Market
- Investor Activism
- Stocks vs. ETFs
- Passive Income
- Analysts’ Ratings
- Multiple Sectors
- Best Renewable Natural Gas Stocks
- 1. Alps Clean Energy ETF (ACES) – Best for Clean Energy
- 2. Ameresco Corp. (AMRC) – Best for Growth
- 3. Archaea Energy (LFG) – Best for Stability and Growth
- 4. Atlantica Sustainable Infrastructure (AY) – Best for Clean Energy Sector
- 5. BP (BP) – Best for Buy and Hold
- 6. Brightmark Energy (BMRK) – Best for Profit Potential
- 7. Cheniere Energy (LNG) – Best for LNG
- 8. Chevron Corp. (CVX) – Best for Low Volatility
- 9. Clean Energy Fuels Corp. (CLNE) – Best for U.S. Focus
- 10. Dominion Energy (D) – Best for the Long-Term
- 11. Enbridge (ENB) – Best for Passive Income
- 12. Invesco Global Clean Energy ETF (PBD) – Best ETF for Global Solutions
- 13. Southern California Gas Co. (SOCGP) – Best RNG Bargain
- 14. VanEck Low Carbon Energy ETF (SMOG) – Best for Low Carbon
- 15. Vanguard ESG U.S. Stock ETF (ESGV) – Best ESG ETF
- 16. Waste Management (WM) – Best Waste Sector Choice
What is Renewable Natural Gas?
Renewable natural gas is pipeline-quality biogas that can be used interchangeably with non-renewable natural gas. Since biogas is a product of the natural decomposition of organic matter, RNG can come from landfills, livestock operations, anaerobic digestion, or thermochemically.
After the gas is collected, it’s processed to remove water, carbon dioxide, hydrogen sulfide, and other trace elements, leaving pure methane.
RNG can be converted into compressed natural gas (CNG), or liquified natural gas (LNG), both of which can be used as a transportation fuel. The U.S. Renewable Fuel Standard lists renewable natural gas as an advanced biofuel.
Renewable natural gas collected from landfills – where the trash you set by the curb weekly goes – is known as landfill gas or LFG. Landfills are the third-largest source of methane emissions from humans in the U.S. Most LFG is used to produce electricity.
Biogas can also come from the manure associated with livestock operations. The RNG from this source tends to go towards powering natural gas vehicles.
RNG can also originate from wastewater treatment plants. This energy could potentially produce up to 12 percent of America’s electricity.
Our Methodology in Selecting the Best RNG Stocks
Choosing the best renewable natural gas (rng) stocks to invest in isn’t as simple as picking ones that will produce a healthy return on investment. Profits are important, but so is knowing that each investor has a unique personality and goals. With that in mind, we created a methodology with these considerations.
Volatility may not faze one investor while it will give another an ulcer. Since risk tolerances can run the gamut, we included stocks with low betas, a sign of little volatility, as well as ones that are aimed at growth but may have some ups and downs.
Time in the Market
An investor may plan to buy and hold an RNG stock for decades, while another one will have plans to use their funds in the short term to start their retirement or send a child to college.
For this reason, we chose a variety of RNG stocks, including riskier stocks that will grow over time as well as conservative and well-diversified options that would be safer closer to retirement.
Some investors want their money to make a statement as well as a profit. Those investors might balk at the idea of investing in a company known for fossil fuels even if that company is expanding into renewable natural gas.
Stocks vs. ETFs
Having a diversified portfolio has never been easier. Rather than buying shares of just one stock, investors can now buy shares in exchange-traded mutual funds that will expose them to multiple companies in one sector or across various sectors. We included a few exchange-traded funds with exposure to renewable natural gas companies.
Some investors are looking for a dividend yield for income or reinvestment to grow their portfolios. RNG stocks with solid yields are in our renewable natural gas roundup.
Wall Street analysts rated our selection of renewable natural gas stocks and ETFs. We focused on options rated “strong buy,” “buy,” and “hold,” giving you top options for portfolio additions related to RNG.
Our choices include stocks in energy, clean energy, utilities, and more.
See Related: Best Fossil Fuel Free Funds for ESG Investing
Best Renewable Natural Gas Stocks
Plenty of investors like green investments such as RNG because they seek to reduce carbon emissions and solve environmental problems.
RNG can power more than natural gas vehicles and electric plants. Stocks related to renewable natural gas can also power your investment profits.
Don’t think investing in renewable natural gas means you’ll have to buy shares of a volatile start-up stock that’ll take you on a rollercoaster ride.
As you consider these equities and ETFs, note how these RNG options range from conservative to growth. Whatever your risk tolerance, there is likely to be a renewable natural gas stock or ETF to match it.
As with all investments, past performance does not predict the future. However, here are 15 RNG stocks and exchange-traded funds that are worth consideration. This selection includes options for investors with a variety of goals and risk tolerances.
1. Alps Clean Energy ETF (ACES) – Best for Clean Energy
This clean energy ETF offers exposure to U.S. and Canadian companies with a biogas focus along with those working toward solutions using solar, hydropower, geothermal energy, and wind power as well as energy efficiency.
ACES has rewarded its environmentally conscious investors with a three-year return of 38.95 percent.
- Broad clean energy exposure
- Healthy returns on investment
- The focus isn’t entirely on renewable natural gas.
2. Ameresco Corp. (AMRC) – Best for Growth
Ameresco Corp. is one of the leading renewable energy companies in the U.S. With an eye toward energy efficiency, Ameresco is building renewable natural gas and landfill gas production facilities in America and the United Kingdom.
Ameresco is a growth option for investors with higher risk tolerances or for those looking to profit over a more extended period.
- Higher profit potential over time
- U.S.-based company
- It could be a volatile investment.
3. Archaea Energy (LFG) – Best for Stability and Growth
One of the nation’s leading renewable natural gas companies, Archaea Energy, has a portfolio of sustainable RNG and landfill gas projects. Its focus is on selling RNG under long-term fixed-price contracts to credit-worthy partners. Rated a “strong-buy” in December 2021, Archaea Energy has growth potential as well as stability.
- Rated a “strong buy.”
- Focused only on renewable natural gas projects
- May not have the diversification of other clean energy companies.
See Related: Best Weapon Free Funds to Invest In Today
4. Atlantica Sustainable Infrastructure (AY) – Best for Clean Energy Sector
Atlantica owns a diverse portfolio of projects in renewable energy, storage, transmission lines, and water in North and South America. Atlantica Sustainable Infrastructure stock could give investors exposure to RNG as well as other climate change solutions.
- Includes a diverse selection of clean energy and water projects in North and South America
- Likely to profit from clean energy projects in the U.S.
- While Atlantica has diversified projects, ETFs may provide a more comprehensive selection.
See Related: Best Robotics Stocks to Buy Now
5. BP (BP) – Best for Buy and Hold
One of the world’s major oil producers, BP, is expanding, through a partnership with Aria Energy, into the production of renewable natural gas from dairy farms.
BP is an excellent option for buy-and-hold investors, plus its dividend yield is 4.4 percent.
- Already a major force in the energy sector.
- It delivers a strong dividend yield for passive income.
- Clean energy investors may not want what is still considered a fossil fuel stock.
6. Brightmark Energy (BMRK) – Best for Profit Potential
Brightmark Energy, founded in 2016, is focused on turning solid waste into sustainable fuel. Brightmark is a growth stock with a higher beta, but its quarterly revenue growth of more than 800 percent is higher than the sector average.
- Addressing solid waste and clean energy problems
- Healthy growth above the sector average
- It may be too volatile for conservative investors.
7. Cheniere Energy (LNG) – Best for LNG
Like its ticker symbol implies, Cheniere Energy is a leading producer of liquified natural gas. This Houston-based company is worth considering as a stock to hold since renewable natural gas use needs LNG technology and distribution.
- A recognized leader in liquified natural gas and liquified RNG
- Rated a “hold.”
- Some may see LNG’s use of non-renewable natural gas as a negative
See Related: Best Renewable Energy Stocks
8. Chevron Corp. (CVX) – Best for Low Volatility
With a beta of 1.20, CVX is a renewable natural gas-related stock that would be an option for a value investor who doesn’t want the risk of growth stocks. Chevron is known for producing fossil fuels, but its partnership with Brightmark has it working to produce and market RNG from dairy farms.
- Low beta equals low volatility.
- Partnership with Brightmark boosting dairy-derived RNG
- CVX is still very much a fossil fuel company
9. Clean Energy Fuels Corp. (CLNE) – Best for U.S. Focus
This renewable energy company focuses on the production and distribution of renewable natural gas as compressed natural gas (CNG) and liquified natural gas in the U.S. and Canada.
Clean Energy Fuels also designs, builds, and operates vehicle fleet customer stations, sells RNG manufacturing equipment, and sells U.S. federal, state, and local environmental credits.
- CLNE looks to expand RNG use through customer stations across the U.S. and Canada
- Trades in environmental credits from selling RNG
- It may not be for the risk-averse investor.
10. Dominion Energy (D) – Best for the Long-Term
With a P/E ratio of 24.16 and a dividend yield of 3.28 percent, Dominion Energy is rated a “buy” by analysts.
Headquartered in Richmond, Virginia, Dominion provides electricity and natural gas to homes, businesses, and wholesale customers, making its interest in renewable natural gas a natural fit. With a beta of only 0.4, Dominion isn’t volatile, either.
- Low volatility
- Rated a “buy” by analysts
- Mostly an energy and natural gas company with an interest in RNG
11. Enbridge (ENB) – Best for Passive Income
Headquartered in Calgary, Alberta, Canada, Enbridge Partners is a multinational pipeline company expanding into the distribution of renewable natural gas. ENB was outperforming the market in December 2021, and the stock has a 7 percent yield.
- The highest dividend yield of stocks and ETFs reviewed
- Outperforming the market
- It may not have a strong enough interest in RNG for activist investors.
12. Invesco Global Clean Energy ETF (PBD) – Best ETF for Global Solutions
Given the global push to address climate change, ETFs such as PBD can be good options for investing in clean energy technology. PBD has surpassed its three-year and five-year benchmarks, but bears say this fund has a high expense ratio.
- Beating its benchmarks for profits
- Diversification with a global mindset
- PBD has a high expense ratio
13. Southern California Gas Co. (SOCGP) – Best RNG Bargain
A subsidiary of Sempra Energy, Los Angeles-based Southern California Gas is the largest provider of natural gas in the state. The scale of SOCGP’s operations will make it a significant player in RNG in the future. SOCGP’s profitability is rising, but its stock price could make it a bargain.
- The scale of America’s most populous state makes SOCGP a major player in natural gas.
- Stock is near 52-week lows.
- Southern California Gas Co. also provides non-renewable natural gas.
See Related: Best EV Charging Station Stocks
14. VanEck Low Carbon Energy ETF (SMOG) – Best for Low Carbon
Is anyone else entertained by the ticker symbols of some ETFs? SMOG includes exposure to biofuel companies as well as other alternative fuels.
- ETF focuses on reducing carbon emissions
- Includes stocks related to other alternative clean fuels
- It owns stock in Tesla and Lucid, so it has an interest in non-RNG vehicles.
15. Vanguard ESG U.S. Stock ETF (ESGV) – Best ESG ETF
For an investor who’s looking for broad exposure to Environmental, Social, and Governance (ESG), this exchange-traded fund includes environmentally conscious stocks from U.S.-based companies, including ones that produce and market renewable natural gas.
- Low fees
- Price is low now, which could make it a bargain
- May not have the RNG focus some investors want
See Related: Best Vanguard ESG Funds
16. Waste Management (WM) – Best Waste Sector Choice
Logically, renewable natural gas is tied to solid waste, so it makes sense that Waste Management would have an interest in RNG production. Analysts recommend WM as a “buy” or a “strong buy” for 2022.
- Recommended as a “buy” and “strong buy.”
- Working toward environmentally friendly solid waste solutions
- P/E ratio is a little high, which could make a short-term profit difficult
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