European industry groups applaud EC plan on accelerated renewable gas build-out

The European Commission's plan to replace Russian gas imports in part with higher renewable gas production is a "decisive" step toward a more rapid development of the sector, European gas industry groups said March 8.

The EC on March 8 unveiled new energy security proposals under the REPowerEU initiative that seek to reduce European demand for Russian gas by two-thirds by the end of 2022.

It said it would seek to diversify gas supplies, speed up the roll-out of renewable gases and replace gas in heating and power generation.

On biomethane specifically, the EC said production in 2022 could deliver 3.5 Bcm to replace Russian gas, and reach 35 Bcm/year by 2030.

That is higher than the 17 Bcm the EC had flagged by 2030 under its "Fit for 55" proposals published last year.

"REPowerEU is a decisive step towards the rapid development of the biomethane industry in Europe," the European Biogas Association (EBA) said in a statement.

"The sector is ready to deliver the 35 Bcm by 2030 proposed by the EU and calls for the inclusion of this target in the recast of the Renewable Energy Directive, currently under development," it said.

"Close cooperation between the European Commission, member states and the biomethane value chain will be required to ensure immediate action."

'Key steps forward'

As well as the more ambitious biomethane target, the EC said some 20 million mt/year of hydrogen supplies would replace 50 Bcm of Russian gas by 2030.

Twelve gas industry groups said March 8 these developments in particular were "key steps forward".

The groups -- including Eurogas, the EBA, Gas Infrastructure Europe, Gas Naturally, and the NGVA -- already last year launched a joint call for binding EU targets to reduce the greenhouse gas intensity of gas consumed and increase demand for renewable gas.

"Such targets would send clear signals to investors in terms of decarbonizing gas and scaling up renewable gases," they said. "At the time of the original call, binding 2030 targets were deemed urgent."

The EBA said there was also more potential for a wider build-out of biomethane production capacity.

"By 2050, this potential can triple, growing well over 100 Bcm and covering 30-50% of the future EU gas demand," EBA CEO Harmen Dekker said.

"Some countries are already active in the development of biomethane production in Europe. Many others are starting to unlock this potential now. Concerted actions across member states will be critical to increase energy security with a scalable green gas in the coming months and years," Dekker said.

Cost competitiveness

Last month, the EBA also said biomethane produced in Europe was 30% cheaper than natural gas.

"Biomethane can be produced starting from Eur55/MWh," it said, pointing to natural gas prices of around Eur80/MWh at the time.

Gas prices have soared since then, with the TTF month-ahead priced at Eur212.15/MWh on March 8, according to Platts assessments by S&P Global Commodity Insights.

The EBA said that scaling up the production of sustainable biomethane would offer a solution to EU governments currently struggling to reduce the impact of soaring energy prices.

Biomethane production in Europe totaled 32 TWh (3 Bcm) in 2020, the EBA said in November, with the number of biomethane plants having surged to 1,023 by October last year.

The EBA said 34 Bcm of biomethane would account for some 10% of expected EU gas demand by the end of this decade.

Biomethane is produced by purifying biogas -- itself largely produced through anaerobic digestion of organic matter -- to allow it to be injected into the gas grid and used in other natural gas-based processes.