Flávia Pierry, Argus Media
EnergiesNet.com 01 26 2023
Brazil’s biogas and biomethane industry is expanding and producers and consumers are still learning how to price products and invest in the field, Leidiane Ferronato Mariani, founder of biogas think tank Amplum, told Argus. Edited highlights follow.
What are the prospects for biomethane and biogas in 2023-2024?
The biogas and biomethane sector developed notably last year. Millions in investments are being announced for 2023 and 2024 and everything indicates that the sector will maintain its exponential growth.
The main investments are directed to the production sector — especially sugar-based energy — and to the urban waste sector. These are sectors that have a large amount of concentrated waste and effluents, enabling larger-scale projects and without additional transport costs.
Investment returns on biomethane are greater than those from electricity generation with biogas, as it replaces fuels such as diesel, gasoline and natural gas, according to investors and producers. Companies that are looking to reduce their carbon emissions and that have substituted renewable energy sources are now looking to buy biomethane for their production processes.
Meanwhile, the livestock biogas industry has also been heading towards generating electricity from biogas, which is usually a more profitable option, considering project sizes in this sector. Sanitation companies have been announcing some studies and investments to use biogas produced in sewage treatment stations to generate thermal or electrical energy.
Why are buyers and sellers struggling to settle on a biomethane price and how can they overcome this hurdle?
Biogas and biomethane projects may have different technological arrangements and business models, resulting in different production costs. In addition, as supply and demand levels are not yet defined and stabilized, closed prices in negotiations end up not being disclosed. This all makes it even more difficult for buyers and sellers to set a price.
In electric energy projects based on biogas, considering that there is a large offer of renewable energy in the market, biogas prices are defined by the chosen market’s electricity costs. As for biomethane, the challenge is even greater, because it is not clear how much the environmental attribute of this gas is worth, as biomethane is a renewable fuel that replaces fossils.
One way to ease this negotiation is to analyze the renewable attribute’s value separately from the energy one. Therefore, natural gas or diesel would be used to estimate the value of energy and Gas-REC [a renewable energy certificate on biogas] or CBios [Brazilian decarbonization credits] to estimate the renewable attribute’s value. But at the end of the day, what counts is the ability to negotiate and the law of supply and demand, always considering that demand for renewable gas is likely to increase in the coming years.
What obstacles do biogas and biomethane face today?
There have been advances, but there are still regulatory issues that could value the fuel’s attributes more, such as the ability to be dispatchable and its negative carbon footprint, as it can use waste that would generate greenhouse effect emissions.
There are also infrastructure issues, such as pipelines for transporting and distributing gas that are far from potential biomethane sources. Investors, producers, regulators, environmental licensing bodies, financiers and others also struggle to access knowledge and safer information about the chain. Another example of an obstacle is the lack of qualified professionals with an interdisciplinary vision to plan, implement and operate biogas projects.
What should the sector focus on to mitigate these obstacles?
It would be very important to have a national program that would connect all areas related to biogas and biomethane, such as sanitation, agriculture, industry and energy. Such a plan should encourage innovation and entrepreneurship. Many biogas producers complain about the faulty technical assistance available and the lack of integrators who deliver and connect the various components of the necessary technological arrangement, like biodigesters, biogas filters, motor generators, upgrades, connections etc.
So, I believe that the sector should encourage the training of professionals and entrepreneurship, as was the case with the solar energy sector, which was supported by Brazil’s micro and small business support service Sebrae. That would be essential to develop the sector in all its potential, that is, from small to large scale of production.
argusmedia.com 01 20 2023