US waste management company WM is exploring the sale of its RNG business in a deal that could value the unit at approximately $3bn, reported Reuters, citing sources.   

The Houston-based company has engaged the services of JPMorgan Chase to assess interest from prospective buyers, which may include energy corporations and private equity firms. 

The sale could involve the rights to develop RNG operations on 115 landfills owned by WM, while the company would maintain ownership of the landfills themselves.  

RNG is a sustainable energy source produced by capturing methane from organic waste and converting it into electricity or fuel. 

If successful, this transaction could become one of the biggest asset sales in the emerging US RNG industry, following bp's $4.1bn (£3.24bn) acquisition of Archaea Energy in 2022.  

WM previously planned to invest around $1.2bn from 2022 to 2025 to expand its RNG segment but now intends to redirect this capital to other ventures, the sources said.  

The RNG division is projected to contribute more than $500m in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) by 2026, with current figures around $150m, the sources told the news agency.  

WM is aiming for a valuation that matches or surpasses the earnings multiple achieved by Morrow Renewables when it sold its landfill RNG operations to Enbridge in late 2023 for $1.2bn. 

Recently, Archaea Energy launched its largest RNG facility in Shawnee, Kansas.  

This plant can process 9,600 standard cubic feet per minute of landfill gas, providing enough RNG to heat an estimated 38,000 homes annually.  

The Shawnee facility is three-times the size of Archaea’s RNG plant in Medora, Indiana, which began operations in October 2023.