{"id":24302,"date":"2023-10-11T10:04:15","date_gmt":"2023-10-11T10:04:15","guid":{"rendered":"https:\/\/agriportance.com\/?p=24302"},"modified":"2024-11-21T12:23:10","modified_gmt":"2024-11-21T12:23:10","slug":"why-the-german-biomethane-market-is-so-interesting-an-in-depth-look","status":"publish","type":"post","link":"https:\/\/agriportance.com\/en\/blog\/why-the-german-biomethane-market-is-so-interesting-an-in-depth-look\/","title":{"rendered":"Why the German biomethane market is so interesting: an in-depth look"},"content":{"rendered":"
The biomethane market has caused quite a stir in recent months. With rapid price jumps, intense discussions around the greenhouse gas (GHG) quota under the Renewable Energy Directive (RED) III, and a general upswing in the industry due to the energy crisis, it is clear that the German biomethane market is more exciting than ever. But what makes it so attractive? And what circumstances characterize the German market in particular?<\/p>\n\n\n\n
According to dena's \"Biomethane 2023 Industry Barometer\" analysis, total biomethane sales exceeded the 11-TWh mark for the first time in 2022. A main driver of this development is the growing demand for biomethane in the fuel sector. Here, one also sees increased import and export activities. A particular incentive for EU member states is that biomethane produced in other EU countries can count towards the German greenhouse gas quota (GHG quota).<\/p>\n\n\n\n
The greenhouse gas quota (GHG quota) in Germany characterizes the legally prescribed reduction of greenhouse gas emissions. Quota obligated parties - usually mineral oil companies - must meet this by introducing sustainable biofuels to the market. The reference base for the reduction is diesel's reference value of 94.1 g CO2 equivalent per megajoule. Instead of focusing solely on the energetic quantity of biofuels provided, as was previously the case with the biofuel quota, the focus is now on the actual reduction of greenhouse gas emissions.<\/p>\n\n\n\n
This reorientation arose from the need to steer the use of biofuels more strongly in the direction of reducing greenhouse gas emissions. In 2015, the GHG quota thus replaced the biofuel quota. With this innovation, the German Bundestag limits emissions from the petroleum industry. In addition to the direct blending of biofuels, the trading of quotas based on the production of biomethane gives mineral oil companies another option for reducing their CO2 emissions.<\/p>\n\n\n\n
Biomethane producers play a key role here. They produce the gas, which serves as a fuel and thus indirectly saves CO2 emissions. The resulting GHG quota is either sold directly to the obligated companies if the producers also act as distributors of the biomethane, or they sell the biomethane to other distributors. The placing on the market or refueling of the biomethane generates the said quota. The revenue generated is based on the sale of these quotas to the obligated companies.<\/p>\n\n\n\n
This switch from biofuel quota to GHG quota is based on the European Renewable Energy Directive (RED II). The original 2009 Renewable Energy Directive (RED) and its 2018 revision (RED II) set renewable energy targets for the transport sector. These define criteria for sustainability and greenhouse gas savings. In parallel, the Fuel Quality Directive (FQD) was established, which aims to reduce life-cycle emissions from fuels. EU member states are required to transpose these directives into national law. In Germany, this resulted in their integration into the Federal Immission Control Act (BImSchG) and the Biofuel Sustainability Ordinance (Biokraft-NachV).<\/p>\n\n\n\n
The GHG quota in Germany was introduced to create an incentive for the market, especially for biofuels with high GHG reductions. While fossil natural gas cannot contribute to meeting this quota, biomethane does. Interestingly, the eligibility of biomethane for this quota depends on the substrate used. A prominent candidate in this area is biomethane produced from farm manure, such as slurry. This is classified as an advanced biofuel.<\/p>\n\n\n\n
In fact, companies that exceed their quota obligation benefit twice, as surpluses of advanced biofuels can be counted twice toward the overall GHG quota. In contrast, companies that fail to meet or miss their quota face financial penalties. These penalties were set at 0.47 euros per kg CO2eq until the 2021 commitment year and were increased to 0.60 euros per kg CO2eq from 2022.<\/p>\n\n\n\n
These regulations have led to an increased demand for biomethane, which in turn has influenced the prices and revenue potentials for biomethane in Germany. However, the requirements and thus the revenue potentials for biomethane vary depending on the substrate group used. The EU has recognized that the production of conventional biofuels can have negative impacts, for example by affecting areas with high biodiversity. Therefore, EU member states have been given guidelines that promote the use of biofuels, but under strict sustainability criteria.<\/p>\n\n\n\n
Particular attention is paid to biomethane from manure, whereby the \"manure bonus\" must be taken into account. This bonus results in a GHG emission reduction of an impressive standard value of -100 g CO2 eq\/MJ, as stipulated in RED II. In fact, if calculated individually, this value can even be exceeded. The prices and revenue opportunities for biomethane in Germany are therefore closely linked to the substrate used and the associated GHG quota.<\/p>\n\n\n\n