Organics recyclers are bracing for a year of change as federal policy shifts. But with state policy drivers like California’s SB 1383 ramping up, investment is expected to continue.

Last year was another strong one for the developers of anaerobic digesters and renewable natural gas systems, as they continued to take advantage of state and federal incentives. But the industry will face fresh challenges and opportunities this year, including a renewed debate over the farm bill and other federal incentives in a Republican-led Congress. 

Meanwhile, investment in organics recycling has declined in recent years after reaching a peak in 2022, according to data from food waste solutions nonprofit ReFed. The nonprofit also tracks investment in a range of food waste solutions, including food rescue and upstream reduction initiatives, and charted a similar decline in overall capital spending over the past three years.

The Zero Food Waste Coalition, launched in 2023 and comprised of nonprofits like the Natural Resources Defense Council and ReFed, is pushing for policies that will boost investment in organics recycling and food waste reduction in the farm bill. Dana Gunders, president of ReFed, said the political focus on high food prices could play to the coalition’s favor. And with the industry seeing demand for recycled organics products continue to increase, there may yet be room for growth in 2025.

“We know that there is a strong bipartisan potential for the topic,” Gunders said. “I think we're pretty optimistic on that front.”

Federal policy

After roughly two years of delay, lawmakers this year could draft and pass an overdue farm bill. The legislation is meant to reauthorize and set the budget for the U.S. Department of Agriculture every five years and often includes several provisions related to food waste and organics recycling broadly. But the industry may not have to wait that long for legislative updates.

A federal tax bill also is due this year, and already industry voices are jockeying for a platform. Several tax credits benefiting the biogas industry were finalized at the end of 2024 and start of 2025. Some observers say the tax bill will be an opportunity to lock in those favorable credits for biogas and RNG projects on a longer timeline than was previously approved.

Other bills could see action before a farm bill update is announced. Food waste groups like ReFed remain optimistic that Congress could pass a federal food date labeling bill this year. Pressure for a federal standard increased after California passed its own date labeling law last year — Gunders argued grocers would benefit from one standard rather than a patchwork of state policies.

Other federal policy proposals, like support for composting that was cut from a federal budget proposal last year, may return to Congress this year. But composters and anaerobic digester developers face an uphill battle, as funding to build out infrastructure can be difficult to obtain but may be their greatest need, Gunders said. 

There is some room for optimism. The first Trump administration launched its Winning on Reducing Food Waste Initiative in 2018, an interagency collaboration between the USDA, EPA and the Food and Drug Administration. That same year, lawmakers passed a farm bill that created the food loss and waste reduction liaison position.

“I don’t think we can make the assumption that this administration is going to be anti-zero food waste or anti-reducing food waste,” said Linda Norris-Waldt, deputy director of the U.S. Composting Council. “I think we just have to understand the perspective that they're coming from.”

Business trends

Despite the uncertainty of what’s to come under the Trump administration, many anaerobic digester developers are running full-speed ahead. In a recent note to investors, developer Aemetis said Trump's executive orders regarding "Unleashing American Energy" could boost the company's work, as the order lists biofuels among supported domestic energy categories.

Aemetis also said it had received $50 million in loan guarantees for projects through USDA's Rural Energy for America Program, and it expects another $25 million REAP loan in the coming months. It's planning to build 10 dairy digester projects in 2025.

Patrick Serfass, executive director of the American Biogas Council, said 2024 ended on a good note for the industry. The California Air Resources Board voted to largely maintain incentives for anaerobic digesters, and the U.S. Treasury released favorable guidance for the Section 48 Investment Tax Credit. He expects that momentum will carry into the new year.

"More projects are going to get developed," Serfass said. "The biogas industry in the U.S. has been growing strongly for the last several years ... But now we expect even stronger growth for 2025."

Investment will also continue in composting operations, especially in California, where SB 1383 compliance remains a priority for local governments. This year is the first year jurisdictions must meet 100% of their recycled organic product procurement requirement, which may lead to excess demand for compost, mulch and other products. 

Bill Camarillo, CEO of Agromin, said his company plans to add two new composting facilities and one food waste processing center in 2025. The facilities are expected to have a combined 250,000 tons of annual processing capacity and could help meet the demand for organics products. 

Organics recyclers saw a wave of investment in recent years that crested with BlackRock’s $700 million investment in Vanguard Renewables in 2022. Norris-Waldt said investors in that first wave learned quickly that scaling the business can be complex, and the industry has yet to return to that peak.

But those looking to invest are increasingly savvy to the business environment for composting operations, even as facilities remain subject to hyperlocal zoning and climate considerations, she said.

“There’s a lot of lessons being learned by the [venture capital] side and the composters about the business model that we present. I don’t think it’s going to slow down in terms of the interest, but I think they may be learning what our model is,” Norris-Waldt said.

Change is also in store for the Composting Council — longtime executive director Frank Franciosi is stepping aside and Norris-Waldt, another veteran of the organization, will take the helm. Norris-Waldt said she will make data collection a focus of the organization, as the industry lacks clear and consistent data on how it’s growing nationwide. 

“At this point in time, we’re having to patchwork all of this different data together,” Norris-Waldt said. “We need to use this data to help develop the industry for our members.”