The EU believes it can phase out dependence on fossil fuels from Russia well before 2030. To do so, the Commission has proposed a REPowerEU plan that will increase the resilience of the EU-wide energy system. A key aspect of this plan details the importance of diversifying gas supplies via higher levels of biomethane.
As fossil fuel and CO₂ prices continue to rise, biomethane is becoming more popular in industry. It is used, for example, in the chemical, steel, and food and beverages sector as feedstock to provide industrial heat or for cogeneration plants. In the transport sector, bio-liquified natural gas (LNG) and bio-compressed natural gas (CNG) are increasingly used for passenger cars and heavy-duty trucks. Bio-LNG is sought after by the maritime shipping sector as well. Captured CO₂ from biogas is becoming a valuable climate-neutral feedstock used to replace fossil-based CO₂ in industry.
Over the last ten years, the landscape of the European gas market has significantly changed. The market design together with the increased gas interconnection capacity (including reverse flow capabilities) has resulted in major infrastructure improvements including through the EU’s Projects of Common Interest.
To boost the EU production of biomethane, the REPowerEU plan aims for 35 bcm of biomethane production by 2030, doubling the current EU ambition, using sustainable biomass sources such as agricultural wastes and residues.
EU’s Biomethane sector: current scenario
Currently, over 60% of biogas production capacity lies in Europe and North America. As the leading biogas-producing region, Europe has around 20,000 biogas plants, with the majority situated in Germany.
The biomethane sector in Europe is growing. In 2020, the number of biomethane plants in Europe increased to 880 upgrading plants. These plants collectively produced 32 TWh of biomethane that year.
In 2020, 91 new plants were installed. In 2021, the number of biomethane plants grew by 13% to 992 plants and as of August 2021, 92 new biomethane plants started operating in Europe. France has seen the largest growth in biomethane plants in recent years, from 45 to 306 plants, representing an average annual growth rate of 60% from 2017 up to 2021. The country now has the most biomethane plants in Europe, surpassing Germany (306 facilities as of August 2021).
To transport the produced biomethane, some countries are about to upgrade their gas grid because the decentralised biomethane production does not match with the current top-down structure of most national natural gas grids.
Reverse flow facilities are being put in place to allow the bidirectional flow from the transmission to the distribution grid and vice versa. Today, 15 reverse flow facilities are in service in Denmark, France, Germany, and the Netherlands; 25 are under construction (Denmark, France, Belgium); and 16 feasibility studies have been announced (France, Italy).
Biomethane development across EU member states
The development of biomethane differs across member states due to different strategies and support schemes. Most countries have announced targets (binding and non-binding), and only Spain and Greece do not have support schemes.
The following support mechanisms are used:
- Quota system (Belgium and Italy)
- Feed-in premium (Denmark and the Netherlands)
- Feed-in tariffs (France and Germany)
- Fiscal incentives (Sweden)
Biomethane production in 2020 differs strongly by country. Germany produced the most biomethane (11 TWh). France, with the most biomethane plants in Europe in 2020, produced 2 TWh of biomethane. Denmark, which has fewer plants, produced 4 TWh, meaning the average plant size is different in these countries. Some plants came into operation late in the year in France. The share of produced biomethane compared to the total gas use also varies considerably by country. In most countries in 2020, the share is at 1% or lower, whereas it is 12% or greater in Denmark and Sweden.
Future trends & projected growth
According to the International Energy Agency (IEA), the overall production potential for biomethane in Europe is 1,350 TWh due to the high availability of biodegradable feedstock.
There is a trend towards small-scale biomethane plants mostly driven by France. In 2020, fewer large-scale plants (> 8.5 MW) and more small-scale (< 2.5 MW) upgrading plants were installed than in the previous year. This development shows that upgrading biogas to biomethane is becoming more economically feasible, even in small-scale projects.
The sustainable potential for biogas production in 2040 is 50% higher than today, based on increased availability of the various feedstocks in a larger global economy. The projected costs of production also fall modestly over time.
In 2040, over 260 Mtoe of biogas could be produced worldwide for less than prevailing regional natural gas prices, which average around USD 9/MBtu in importing regions such as Europe and most developing Asian economies. More than 700 Mtoe of biomethane could be produced sustainably today, equivalent to more than 20% of global natural gas demand. By 2040, this potential grows to more than 1,000 Mtoe with a global average production cost of less than USD 15/MBtu.
The projected production of biogas for direct consumption more than doubles, reaching around 75 Mtoe in 2040. Most of this growth comes from centralised plants that are fed by agricultural and municipal solid waste sources in order to meet local power and heating demand. The share of biogas used for power and heat rises from around 70% today to 85% by 2040.
Anaerobic Digestion (AD) combined with upgrading is still the most commonly deployed technology to produce biomethane. In 2018, 90% of the produced biomethane globally came from AD. However, Hydrothermal gasification is poised to scale up in the coming years. It is on the verge of commercialisation and, according to GRTgaz and ENTSO-G, industrial scale will be reached by 2023-2024.
Biomethane sees broad-based growth across all sectors, reflecting existing uses of natural gas, while also tapping into markets such as transport, where biomethane demand rises in line with the growing gas-fuelled fleet in some countries and regions.
In Europe, most biogas plants to date have been built to capture feed-in tariffs and other forms of support for renewable power generation. The development of a biogas industry ultimately depends on the policy framework in different countries and regions, which is itself informed by broader renewable energy goals and targets.