Canadian pipeline operator Enbridge Inc. has bought a 10% stake in Divert Inc., a company that converts food waste into renewable natural gas (RNG), agreeing to invest $1 billion to expand its facilities.

The transaction, expected to close in March, is the latest move by Enbridge to bring RNG into the market as the world works to lower carbon emissions. The deal, plus an $80 million equity investment from Enbridge, came alongside a $20 million equity investment from private equity firm Ara Partners.

With the investments, Massachusetts-based Divert said it plans to expand its facilities to “every major geographic region in the U.S.” within the next eight years. With the deal, the company also said it considering adding new facilities in Canada to convert food waste to RNG, according to a press release.

“Enbridge’s agreement with Divert represents a historic commitment from the company in advancing technologies and solutions that achieve a cleaner energy future,” said Caitlin Tessin, vice president of strategy and market innovation for Enbridge. “Divert has emerged as a leader in creatively managing wasted food and our partnership aligns with Enbridge’s priorities in pioneering RNG as an effective solution to achieve net-zero greenhouse gas emissions.”

RNG, which is biogas that has been upgraded to pipeline quality, has been attracting investment as companies see opportunity in its lower carbon profile and its decarbonization abilities. Coupled with incentives in the Inflation Reduction Act, companies—including traditional oil and gas players—are targeting RNG assets that capture naturally occurring methane from landfills, dairy farms and other such sources.

Through a process called anaerobic digestion, Divert breaks down food waste and converts it into RNG. Working with food retailers, the company also utilizes technology to help curb waste by maximizing the freshness of food and recovering edible food to serve communities in need.

More than 50% of the more than 100 million tons of food wasted in the U.S. annually goes to landfills or incinerators, Divert said in the news release. The company added that the waste contributes up to 10% of global greenhouse gas emissions.

“The infrastructure development agreement with Enbridge marks a major turning point in the battle against the wasted food crisis,” Divert CEO Ryan Begin said. “For 16 years, Divert has been at the forefront of efforts to prevent wasted food nationwide, and this new funding will serve as a catalyst to address this pervasive problem at scale.”

The $1 billion in capital growth projects will be underpinned by long-term take-or-pay contracts, Enbridge said.

The midstream company has been strengthening its RNG portfolio, with eight RNG projects in service or under construction. Enbridge and Vanguard Renewables partnered in 2021 to design and build the projects that transform organic waste across near Farm Powered Strategic Alliance member processing facilities in Pennsylvania, Maryland, New Jersey, Illinois, Wisconsin and Minnesota.