Enbridge Inc. (ENB Quick QuoteENB - Free Report) recently created a partnership with Vanguard Renewables to buy renewable natural gas (RNG). Per the deal, Enbridge will buy more than 2 billion cubic feet (bcf) of RNG per annum from Vanguard’s eight anaerobic digesters, which will be located in the Northeast, Southeast, and Midwest United States.

Enbridge is also joining forces with Royal Dutch Shell plc to produce green and blue hydrogen, per Reuters. Green hydrogen is produced from renewable sources and is later blended with natural gas.

Per the deal, Vanguard will invest $200 million to build the anaerobic digesters. Enbridge plans to invest around $100 million to upgrade the equipment for converting the RNG into transportable gas, which will be marketed to clients in the United States. Vanguard’s extensive reach in the market allows it to receive food, dairy, and other organic wastes and convert them into natural gas, which in turn helps it in reducing carbon footprint.

Vanguard’s strong supply chain will likely ensure a smooth distribution of RNG for Enbridge’s pipelines. It launched the Farm Powered Strategic Alliance with major industry players including Unilever PLC (UL Quick QuoteUL - Free Report) , coffee chain Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) and Dairy Farmers of America last December. The alliance provides feedstock for Vanguard’s RNG.

The partnership between Enbridge and Vanguard expects to displace 110,000 metric tons of carbon dioxide equivalent emissions per annum. The deal marks Enbridge’s drive toward advancing low-carbon energies through its system. The company itself intends to become a net-zero emitter by 2050.

Price Performance & Zacks Rank

Enbridge’s shares have gained 34.7% in the past year compared with 39.1% growth of the industry it belongs to. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research