Wednesday, 23 February 2022
Author: Proadpran B. Piccini
Current biomethane production cost in Europe are approximately 30% lower than the European benchmark natural gas price, without additional CO2 prices charged on top of fossil natural gas, according to a recent press release by European Biogas Association (EBA).
The natural gas price from Dutch TTF Gas, a leading European gas benchmark price, stands at 83 EUR/MWh, as of 23rd February 2022, whereas the current production cost of biomethane in Europe could be as low as 55 EUR/MWh (Greenfact’s article: Strong growth for biomethane as a transport fuel in Europe). It has also been suggested that the natural gas prices for next winter will remain high. The difference of 28 EUR/MWh (34%) together with CO2 tax for emissions from fossil fuel usage would make biomethane a very attractive replacement for fossil gas.
At present, Europe heavily relies on the import of natural gas, as the continent can produce less than 15% of its gas demand. Coupled with the current tension between Russia, the biggest gas supplier in Europe, and Ukraine, Europe needs an urgent solution to secure its gas supply as well as stabilise the gas price, while reducing reliance on imported natural gas.
Studies from reliable sources such as European Commission and Gas for Climate have revealed that production of biomethane could reach at least 34 bcm by 2030, if rapid scale up of biomethane production and supportive policies are enacted. This amount accounts for approximately 10% of the EU forecasted gas demand by 2030. EBA believes this green gas could contribute to 30-40% of the gas demand in the EU if current trends continue.
The EBA anticipates biomethane price to remain lower than that of natural gas in both the short and long terms. Biomethane is a practical solution as production is viable now and scalable within the next eight years, while other renewable gases such as hydrogen will need time to scale up and production costs of other green gases are still 2-4 times more expensive than biomethane. In addition, since biomethane is identical to natural gas, it can be transported through the existing gas networks without extra costs for infrastructure expansion or upgrading.
To accelerate biomethane production, the EBA put forward recommendations to amend the Renewable Energy Directive (REDII) to build a functioning internal market for biomethane to enable the sector to deliver on its full potential. The five recommendations are as follows:
To this end, clear support policies to attract investments in biomethane is crucial. As of now, the biomethane value chain in Europe is well qualified for ramping up production of this renewable gas. EBA, therefore, encourages a new public-private partnership to produce 40 bcm of biomethane by 2030, where the additional 6 bcm can be obtained via scaling up production in Ukraine.
“A strong sense of urgency is growing to secure investments and ensure the deployment of biomethane facilities across Europe. Additional partnerships, such as the recently launched Sustainable Biomethane Initiative, showcase the interest from industry users, producers and other major companies within the value chain, on the deployment of this renewable gas right now. Fostering the rapid scale up of biomethane means supporting climate change mitigation, reducing dependency on external gas supplies and dealing with an unprecedented natural gas price increase. A clear legislative framework will provide certainty for long-term investments on the roll out of sustainable biomethane.” Harmen Dekker, CEO of the EBA.
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