May 24. 2024. 5:13

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Beyond energy – monetising biomethane’s whole-system benefits

A new report from the European Biogas Association shows that, in 2030, the whole system benefits of biomethane production in the EU27 + UK could range from 38-78€ billion per year, rising to 133-283€ billion by 2050.

Biomethane is a key renewable energy for Europe

The future energy mix will be dominated by renewable energy sources. Together with wind and solar, renewable gases such as biomethane and renewable hydrogen will play a pivotal role in delivering Europe’s long-term energy security and climate mitigation objectives.

Biomethane is currently the cheapest and most scalable form of renewable gas available. It can directly substitute natural gas and can be readily stored and deployed across the whole energy system, using existing gas infrastructure and end-use technologies. Moreover, biomethane is a dispatchable energy carrier and as such can be deployed to balance intermittent renewable energy generation. It is well placed to deliver significant, long-term economy-wide benefits beyond renewable energy provision, thereby supporting the European Green Deal and the transition to a more sustainable and circular economy.

Benefits of biomethane extend beyond renewable energy provision

Biomethane production can deliver numerous additional environmental, economic and social externalities (or benefits), many of which are unique compared to other renewable energy sources. A selection of which are summarised below.

  • Soil health: Biogas production from anaerobic digestion produces a nutrient rich material known as digestate. Application of digestate to agricultural soils has been shown to improve a range of soil health indicators and to sequester organic carbon in the soil.
  • Greenhouse gas emissions impact: Biomethane is a versatile renewable energy vector. It can be used in multiple end-use sectors, including transport (road, shipping), heating (for use in industry and buildings) and power production. Biomethane can directly replace the use of fossil fuels in these sectors, with the potential to deliver significant greenhouse gas emissions reduction. Furthermore, fugitive emissions in the agricultural sector can largely be avoided by using manure as a feedstock for biomethane production.
  • Energy security: Europe is heavily reliant on energy imports, including natural gas. Domestically produced biomethane can reduce the need to import gas and directly improve Europe’s energy independence and security. This can help cushion against volatile natural gas prices, protecting the competitiveness of Europe’s industries and reducing the risk of energy poverty.
  • Provision of biogenic carbon dioxide: Biomethane production by anaerobic digestion and thermal gasification can produce a pure biogenic carbon dioxide stream. Biogenic CO2 can be used as a feedstock in multiple industrial applications, largely displacing fossil CO2 sources, or in emerging applications such as renewable fuels, chemicals, and algae production. It can also be permanently stored within geological features to deliver Greenhouse Gas removals, which are essential to Net Zero, due to their ability to offset unavoidable emissions in other sectors.
  • Organic waste processing: Biomethane production from organic waste (such as food waste) provides waste processing services, as well as energy services. This can improve the overall economics of the operation and play a valuable role in contributing to the circular economy by recycling organic wastes and turning them into useful products.
  • Job creation: Biomethane production can contribute to the creation of between 1.1 and 1.8 million jobs across the value chain in Europe by 2050.

Today the benefits of biomethane production are largely not recognised

Currently, producers of biomethane are primarily rewarded for contributing to renewable energy targets via support or market-based mechanisms. The additional positive externalities that biomethane production delivers are not currently fully rewarded by policy makers or recognised by society at large.

A landmark study undertaken by Guidehouse for the European Biogas Association has quantified the value of these externalities for a selection of sustainable feedstocks relevant for anaerobic digestion and thermal gasification biomethane production technologies.

Monetary value of benefits is shown to be significant

The study shows that anaerobic digestion could deliver an additional benefit of 84-175 €/MWh of biomethane produced, while thermal gasification could deliver an additional 80-162 €/MWh. Importantly, these benefits outweigh the current cost of producing biomethane through these technologies (55-100 €/MWh and 85-110 €/MWh for anaerobic digestion and thermal gasification respectively), as shown in the figure below.

Figure 1: Low and high estimate of biomethane externalities categorised per externality and technology type (€/MWh)

In 2030, the estimated additional economy-wide benefits of biomethane production to the EU27 + UK range from €38-78 billion per year and almost entirely relate to anaerobic digestion. This increases to €133-283 billion per year in 2050. The share between the two technologies is then more balanced, as thermal gasification is expected to be fully commercially available after 2030 and hence make a significant 40% contribution by 2050.

The figure below shows the breakdown of the value per externality in 2030 and 2050 in a low and high biomethane scenario. Energy security and job creation are both key value drivers, with biogenic CO2 also playing an increasingly significant role over the next few decades.

Figure 2: Low and high estimate of total externality values per category per annum in 2030 and 2050 (billion €)

Action is needed to realise these benefits

To fully realise these benefits will require a concerted effort from the biomethane industry, policy makers and regulators alike. The study concludes by making five key recommendations to enable the full realisation of these benefits.

  1. The benefits of biomethane beyond renewable energy provision should be recognised by policy makers at both European and national levels.
  2. Organic waste and residue feedstocks should be prioritised as these offer the highest GHG saving benefit.
  3. Sustainable agricultural production should be better incentivised, particularly sequential cropping.
  4. The commercialisation of thermal gasification should be further supported.
  5. Finally, the valorisation of biomethane co-products (digestate and biogenic CO2) should be maximised.

For more information, download the study here.