What will the future of biogas in Spain be like?

Biogas should be considered within the global energy system forecasts for the coming years, although as with all technologies, the future will be shaped by innovation, energy policies and market developments among other factors, so the next few years will be crucial.

Description

Biogas is a mixture of methane, CO2 and small amounts of other gases produced by the anaerobic digestion of organic matter in an oxygen-free environment. If the CO2 is removed and the amount of methane is greater than 96% it is referred to as biomethane.

The most common uses of biogas are:

• injection into the natural gas grid (biomethane)
• biofuel
• combustion in CHP engines

Renewable gases are one of the few renewable energy carriers that can be used both to generate electricity and to cover energy demand in high-temperature industrial processes and in transport.

Importance of biogas and biomethane

We already know the importance of gas in the energy transition, CCTG are considered the transition technology at the moment. But the importance of biogas and biomethane is less well known. These gases can help decarbonise low-carbon parts of the energy system and are key to meeting clean energy targets.

But due to the variable cost of biogas relative to conventional gas, the development of this industry ultimately depends on the policy framework of individual countries and regions, which in turn is driven by broader renewable energy goals and targets and ultimately the Paris agreement. According to the IEA, in Europe, most biogas plants have been built as a way to support renewable energy generation.

In the coming years they will have the opportunity to gain a stronger position in global energy consumption mainly due to both all the climate change policies and the energy independence it generates.

Biogas around the world

IEA reports reflect the implications of current energy and climate policies and distinguishes two scenarios that show the disparity between the direction the world seems to be heading in on the one hand (first graph) and what would be needed to achieve crucial energy-related sustainable development goals (second graph).

 

As we can see from the graphs above, biogas in the current scenario would grow by less than half of what it would in the sustainable development scenario. Biogas is seen as a solution in developing economies, especially for geographically dispersed populations located in rural areas far from cities or not connected to gas or electricity networks. While in developed economies it is seen as a solution to decarbonization.

The two main options for decarbonising gas supply are biomethane and low-carbon hydrogen. The problem with hydrogen is that at the moment it remains relatively expensive and although the gas transport network could support hydrogen blends of between 15-20%, current hydrogen blending regulations allow very low levels of blending.

Unlike hydrogen, biomethane, an almost pure source of methane, is indistinguishable from natural gas and can therefore be used without any changes to transmission and distribution infrastructure or end-user equipment.

Biogas in Europe

The new Gas for Climate policy paper requests a binding EU target of 11% renewable gas by 2030, to meet the EU’s climate ambition to reduce GHG emissions by 55% by 2030. This policy paper focuses on biomethane and green hydrogen, recognising that they require additional incentives.

To ensure an accelerated and consistent growth of the green hydrogen and biomethane market across the EU, the envisaged 11% target is supported by two binding sub-targets for green hydrogen and biomethane:

• At least 8% of the gas consumed in the EU in 2030 must be biomethane.
• At least 3% must be green hydrogen.

The sub-targets reflect that biomethane is commercially available today and can be scaled up sustainably.

The policy paper on renewable gas is the first in a series of policy papers to be launched in 2021. “Gas for Climate” is carrying out new activities, such as the creation of a European Biomethane Alliance and a new hydrogen demand analysis.

Do we start from a lower level?

In Germany, the “Renewable Energy Sources Act of 2000” provided fixed income for plant owners, and revisions of the Act in 2004 and 2009 offered further opportunities.

In France, the government made a firm commitment to its development with the 2015 “Energy Transition for Green Growth Act”, which set a target of 100% renewable gas consumption by 2050.

Germany has been the driving force in biogas development for many years and is still the leading country in Europe in terms of number of operational plants. The graph below shows the number of plants per country from highest to lowest, with a clear difference of Germany with 10,971 plants and Italy with 1,655 plants followed closely by France with 742 plants.

Compared to the biogas sector, biomethane is still in its infancy. Biomethane plants upgrade the production of raw biogas to an almost pure methane stream, which can be fed into the gas grid. In the transport sector, too, biomethane has enormous potential since gas engines, once adapted, allow its use.

At present, 18 countries in Europe produce biomethane. Germany has the most biomethane plants (232), followed by France (131) and the UK (80). Spain is at the bottom with two plants, one at the Valdemingómez municipal landfill site and the second at the Butarque wastewater treatment plant (WWTP), both in Madrid.

What are the needs and problems of investing in plants?

The uses of biogas plants in Spain are mainly cogeneration and the needs have been the processing of waste in different areas in this way:

• 50 process mixtures of livestock manure and waste from the agri-food industry.
• 80 process sewage sludge.
• 30 recover biogas from landfills.
• 44 treat other organic waste.

In other words, it arises from the need to transform sludge, manure, slurry and crop and food waste mainly.  Royal Decree 661/2007 established regulated tariffs for the sale of electricity that were intended to encourage the creation of this type of plant, but the moratorium on renewables, which ceased to reward this type of industry, reduced its income and therefore its profitability.

The biggest problem is the profitability of the plants: a cubic metre of fossil gas is much cheaper than the same amount of biomethane if we only take into account its energy value, which is why the opportunity cost of investing in a biogas plant is very high.

Biogas in Spain and its projection

National Energy and Climate Plan highlights the importance of biogas as a support to the industrial sector and highlights the potential to contribute to the decarbonisation of the industrial sector. To this end, it establishes a series of mechanisms for action.

However, the plan itself in the target scenario only foresees installed capacity increases of 30 MW for electricity generation over the next 30 years.

The plan also recognises that the feed-in measures applied so far have not had the expected effect and that the results are far behind those of our European neighbours.

However, the plan highlights the importance of biomethane as it has the same uses and users and uses the same infrastructure as natural gas.

The plan foresees promoting, through the approval of specific plans, the penetration of renewable gas, including biomethane, 100% renewable hydrogen and other fuels whose manufacture has used exclusively raw materials and energy, both of renewable origin, including R&D&I actions for biogas and hydrogen as well as for less mature technologies such as power to gas.

The potential that Spain has according to a report published in 2018 by the IDAE carried out by relevant companies and associations in the sector, estimated that up to 34 TWh could be obtained from accessible and available organic waste, which would be equivalent to 65% of domestic and commercial consumption of natural gas, or the consumption of 4 million heavy vehicles. But according to the Spanish biogas association, the cost of producing biomethane can be up to three times the cost of natural gas. At the same time, we must also take into account all the positive externalities such as avoided emissions, the creation of rural employment and reduction of waste treatment costs, as well as a reduction in energy dependence with the consequent positive effect on the balance of trade.

Biogas sector in Spain mainly demands three aspects:

• The creation of GoOs in gas, in the same way as for electricity, thus adding value to renewable gases by guaranteeing their green origin.
• Promote the production and consumption of biomethane, as well as cross-border trade.
• Support schemes: subsidies, tax exemptions, quotas, tariffs and premiums…

It seems that we are on the right track. The Council of Ministers sent to Parliament on 19 May 2020 the draft Law on Climate Change and Energy Transition in its article 10 establishes the “Promotion and objectives of renewable gases” by the government, which takes into account that specific plans will be established for the penetration of renewable gases, establishing annual objectives, a certification system and a regulation that favours the injection of these renewable gases into the natural gas network.

The truth is that we are starting from a much lower level than our European neighbours and also countries such as France, Italy, Holland and Denmark have already set targets for renewable gases within the overall consumption of gas in their network for 2030, therefore, although the trajectory is good, momentum is needed: set targets and aid, quantify and assess them, otherwise we will not reach the expected development and we will miss the biogas train in Europe.

Marta Serrano | Energy Consultant