The city of Napa and Napa Recycling and Waste Services are closing in on installing a new system that recovers natural gas from organic waste and uses it to power existing garbage trucks.

The anaerobic digestion system is expected to help the city meet climate goals and comply with a 2022 California law that required residents to separate organics, recycling and landfill trash into three streams. That law, Senate Bill 1383, seeks to reduce the amount of food scraps that end up in landfills — where they break down into methane — by 75% compared to 2014 levels, along with increasing recovery of edible food by 20%.

The City Council this month, on Feb. 3, unanimously approved signing a memorandum of understanding with Napa Recycling to add the anaerobic digestion system, setting the stage for a contract amendment that’s expected to come back to the council later this year as an update to the city’s 2026-27 budget.

Under the agreement, Napa Recycling and Waste Services would construct the system at its diversion facility at 820 Levitin Way and operate it for 20 years, with an optional five-year extension.

The total cost of the system — including the facility, a de-packager, two glass crushers and a 6,000-gallon tank — is expected to be around $30 million. But the city’s contribution comes from a $10 million state grant from CalRecycle, and the city will own the fueling infrastructure that money goes toward.

The remaining construction costs, for the actual digestion system built on top, will be privately financed by Lafayette-based subcontractor Zero Waste Energy, which will profit by selling the gas — along with the electricity it can be generated into — to the city and Napa Recycling, along with selling excess gas to PG&E and other external customers.

The anaerobic digestion system is expected to receive between 32,000 and 44,000 tons of organic waste per year, and produce 350,000 diesel gallon equivalent per year of gas that would supply 36 waste collection trucks, according to the agreement.

And the city would pay a fixed rate of $5.75 per gallon of diesel gas equivalent for the first three years of the agreement, then pay 90% of the local retail cost for compressed natural gas in the following years. Excess gas that isn’t needed can go into a combined heat and power system, and be processed into electricity.

The system would also produce a residual digestate byproduct that would be separated into a liquid that can be used as fertilizer and a solid that can be sold as compost.

A maximum of 20,000 tons per year of that material would be processed onsite, while Napa Recycling would haul any product beyond that to another permitted compost facility at no cost to the city.

The agreement also includes fixed annual payments from the city to Napa Recycling until 2030, ranging from $1.1 million this year to a maximum of $1.4 million in 2029 and 2030.

Those payments are to pay for increased labor costs, according to the staff report.

That’s because Napa Recycling informed the city in late 2025 that its collective bargaining agreement with unionized drivers and other workers — who are represented by Teamsters Local 315 — was expiring and that its labor costs were 17% to 23% under market compared to average wages in surrounding communities.

But no rate changes will be needed for the agreement to work. The city will instead receive a greater share of material sales revenue. With the current contract the city gets 70% of the revenue and Napa Recycling gets 30%.

A revised scale gives the city a greater share of revenue above $10.6 million, with the share reverting back for revenue above $17 million, adding up to a possible $2.8 million more for the city.

City materials diversion administrator Kevin Miller said at the Feb. 3 meeting that he’s expecting to see over $13 million in materials sales this year, in part because Napa Recycling is now receiving curbside recyclable materials from American Canyon and Vallejo.

“We’re going to keep growing,” Miller said. “We have done optical sorters and a lot of technology investments in the facility, so that translates to higher materials sales in the future.”

Erik Herbert, president of Bulk Handling Systems, the company that owns Zero Waste Energy, said at the Feb. 3 meeting that installation work on the system is set to start later in 2026 and roll into 2027. The company’s hope, he said, is that the system will be operating by about mid-2027. Herbert noted the company has previously built such systems in south San Francisco and San Jose.

Miller noted that the city can benefit financially from external use of the system, at least to offset the cost of repairs, given that the facility charges gate fees.

Some City Council members at the meeting asked what would happen should the waste trucks at some point be required to be electric-only, to comply with California’s ambitious climate goals.

Miller said the city will get at least one generation of trucks — which generally have a 10-year working life — that run on compressed natural gas, but the system will be able to pivot and make electricity if needed.

The entire system would operate similarly if there’s a need to pivot to producing electricity, Herbert said.

“At the end of the day we’re taking organic waste that’s going into a landfill otherwise, basically rotting and emitting methane gas which is obviously very impactful, bringing that in, capturing that and turning it into a fuel that’s offsetting a fossil fuel,” Herbert said.

“So that’s where the big impact is. And so whether it’s renewable natural gas or electricity, it’s pretty much the same impact.”

Council member Beth Painter said the city and Napa County have done much to reduce local reliance on fossil fuels and address climate change, but the anaerobic digestion system is a “monumental” step in that direction.

She highlighted that, according to Miller, the system is expected have an impact equivalent to getting about 21,000 passenger vehicles off the road over a 10-year period.

“This is really, truly, a game-changer, Painter said. “And it’s not just carbon neutral; it’s carbon negative. That’s huge.”

You can reach Staff Writer Edward Booth at 707-521-5281 or edward.booth@pressdemocrat.com.