Why biogas is generating attention

These are challenging times. The world is struggling to reduce CO2 emissions at the pace required to limit global temperature increases to 1.5°C. The combination of the Ukraine war (stratospheric gas prices), searing summer heat and widespread droughts (higher energy demand for cooling, reduced hydro and nuclear power output) is resulting in more coal being burnt in the US, Europe and China. It has also driven European carbon prices to record levels. Ambitious national climate targets are taking a back seat as the cost-of-living crises bites. The recent signing into law of the US Inflation Reduction Act may represent a turning point, setting a precedent for other nations to follow, with US$369bn pledged towards climate investments over the next decade.

Biomethane benefits attracting attention

Russia’s invasion of Ukraine and the subsequent carnage caused to European and wider natural gas and power markets has pushed biogas up the political agenda. Biogas and biomethane currently account for less than 3% of total bioenergy demand, but are gaining traction due to a number of benefits they offer the energy transition. They provide the same system benefits as natural gas – storage, flexibility, and high-temperature heat – without the net carbon emissions. They reduce emissions by producing methane that would otherwise have been released to the atmosphere from the decomposition of organic by-products and waste. They deliver energy security benefits by displacing gas transported or imported over long distances. The structural shift in European gas prices following Russia’s invasion of Ukraine also means that biomethane is now cost competitive.

Biomethane production set for strong growth

Biomethane is produced in 20 European countries, and the number of biomethane plants has doubled in the past five years. Germany is by far the largest market, home to around two-thirds of Europe’s biogas plant capacity. Notable areas for growth include the UK, France, Denmark, the Netherlands and Italy. In Nordic countries, biomethane already accounts for 20-30% of the gas supply to the grid. Biomethane penetration within Europe is expected to reach 8% of the gas market by 2030, representing 35 bcm of green gas that can displace fossil gas versus current production of just 3 bcm. The oil majors have significant growth ambitions and infrastructure funds are highly actively in this space.