Adam Comora: Yes. No, it’s a good question. And I think your math, although, I don’t know if the exact number will be 100 million or not and refiners are able to carry forward some of their obligation into the following year. So, if the market is — ends up being short 2023’s, what a lot of the parties can do is roll forward some of those obligations and try and purchase additional 2024’s. And it does look like the market may remain tight through ‘24 and ‘25. And what — how the EPA may ultimately address that, we’ll see. I don’t think there’s going to be any actions at the EPA until we get really into the meet and part of 2024. I don’t think they’re going to take any actions until they really see how all of those production figures line up with the ultimate RVOs. And we’ll see if it’s a waiver credit mechanism that comes in place or they’re thinking about different ways to alleviate supply shortfalls.
It wouldn’t surprise us if at some point, toward the end of ‘24, if the industry is short, EPA looks at something. But for now, that price cap mechanism does not exist and we sort of agree with you in terms of supply and demand fundamentals.
Jonathan Maurer: Let me just add that clearly, the EPA is trying to encourage growth in the cellulosic sector. So, everything Adam said is spot on and, I just think that stance by the EPA kind of mitigates any premature changes.
Adam Comora: Yes. Thank you, Jon, for highlighting that. I think it’s really important, when you look at the EPA in all of their text that they bring around the RVO, cellulosic biofuels is the core tenet of the renewable fuel standard. And it’s really where they’re trying to push growth and investment. And we see that support continuing, and we’ll leave at that.
Matthew Blair: Sounds good. Thanks for all the color. And then can I ask why do you plan to end the year with the $20 million to $22 million backlog Of RINs and LCFS? Is that a play on future — expected future increases in prices for 2024, or is that just kind of a typical timing lag? And if so, we would expect a similar backlog each quarter going forward?
Adam Comora: Yes. That’s a good question. No, in our embedded guidance, we are assuming that we are snipping and selling the RINs that we are producing, which — for the balance of the year. And that ending year balance will really be based the RNG pending monetization. The cost that we incur in December to produce all that gas gets dispensed in December and then you get your RINs deposited in January. And we are going to continue to disclose both, which matches the value of the RNG that we are producing in a period where the costs are incurred to still provide that sort of clarity and granularity in current period economic activities. And I’ll just give you one example of that. As we think about and look towards 2024, we did a terrific job getting our Emerald project certified really quickly in order to be able to dispense and make RINs here in December.
And we’ve got our Polk project coming on line in the Q4 of next year. And that would provide an example where in the fourth quarter of next year, we will see if we can get those RINs certified in a similar kind of timeframe. And if for whatever reason, you don’t get your RIN certification monetizing those RINs, we still experience a couple of months of production cost, that’s why we are still detailing that and outlining it. So, for 2023, we are — that figure that we are highlighting towards the end of the year does represent the RNG that was produced and the cost incurred, not necessarily forecasting our RIN balance, based on where we see pricing going.
Operator: One moment for our next question. Our next question comes from Ryan Pfingst with B. Riley. Your line is open.
Ryan Pfingst: Yes. Thanks for taking my questions, guys. So with next year expected to be busy, as several projects likely come on line, can you talk a little bit about CapEx and potential ITC expectations for 2024?
Adam Comora: We’re not going to get into specific guidance for CapEx just yet. We’ll do that when we provide our full year 2024 guidance. What I would say is, as you see our projects coming on line with COD, it’s rational to expect that we could be receiving ITC proceeds within 30 days, 45 days. We are hopeful that, it is a smooth process at that point, as we are establishing our documentation and that sort of thing. So, we’ll give some ITC guidance when we also give our 2024 numbers. I think that answered your question.
Ryan Pfingst: Got it. Yes. Thank you. And then, you noted that the reduced production guidance stems more from the project delays than operating assets. But curious, have your operating assets faced any weather-related or other issues that might affect production at those facilities?
Jonathan Maurer: No. So, our operating assets continue to produce extremely well. We have really built a great team of gas collection experts that get the gas into the facility and of operating experts, who operate at a high degree of utilization for each of the projects. We’re seeing really good availability and efficiency numbers across our projects and really great prospects for maintaining that efficiency and seeing growth there. So, the projects are operating well. I think that the point that you mentioned about delays, which are mostly behind us now for several of the major projects, he’s right about in terms of timing of certain aspects. But we’re on track with our Prince William project for the first quarter, and we’re excited about that project coming on line.
We’re excited about the fact that we got our permits at both the Sapphire and Polk projects, which really help to anchor those projects in the third quarter and fourth quarter, respectively. And that we continue with the Atlantic project in construction for the middle of 2025 and look for future projects with that SJI partnership. So really happy about the operations of our projects. As these projects go through construction, there’s a little bit of variability in timing, but that tends to be small and identifiable.
Operator: Our next question comes from Martin Malloy with Johnson Rice & Company.
Martin Malloy: I wanted to ask about the impact of the Cummins 15-liter, as you look out to ‘24, ‘25 and build out of your stations and throughput there based on the conversations you’re having with the customers.
