The REPowerEU plan introduced by the European Commission last year sets an ambitious target to ramp up biomethane production to 35 bcm (billion cubic meters) by 2030 from the current production of over 3.5 bcm. Since then, a joint effort from the biomethane industry has been carried out to speed up investment in the sector. Almost EUR 18 billion from investors and project developers has been pledged to secure the biomethane capacity scale-up, according to a survey conducted by European Biogas Association (EBA). The strong commitment from industrial players would be a boon to the biomethane sector.
The first biomethane investment outlook, published by EBA, shows the amount of planned investment in scaling up biomethane production between now and 2030, by timeframe and country. About EUR 4 billion is planned for now and the next two years, while the biggest portion of investment, approximately 70%, will be post-2026. The budget of EUR 1 billion is set without a specific timeframe.
To reach the production capacity goal, the industry envisages the construction of at least 5 000 new biomethane plants, together with the more efficient mobilisation of sustainable feedstock such as waste and residues. As such, almost all planned investment (97%) from investors will go into the development of new facilities (greenfield plants), while the rest will be used to upgrade the existing facilities (brownfield plants), including the conversion of biogas-CHP units to biomethane production units.
As per the amount of planned investment per country, the EBA’s report reveals that the largest investment within the EU is planned in France (EUR 1.4 billion), followed by Italy (EUR 1.1 billion), and the Netherlands and Spain with budgets of both countries being close to EUR 950 million, respectively.
A combined amount of approximately EUR 7 billion will be invested in unspecified European countries, while non-EU countries like UK and Ukraine put combined investment at slightly over EUR 3 billion.
According to EBA and its industrial partners, EUR 83 billion investment in total is required to fulfil the target of 35 bcm. Of this amount, EUR 37 billion is eligible for co-financing by the Common Agricultural Policy, Connecting Europe Facility, Cohesion Policy and Recovery and Resilience Facility, as addressed in the REPowerEU.
Strong growth has been seen in biomethane production capacity in Europe during the past few years with the highest increase in the number of new biomethane plants being recorded at 23%. As of April 2023, there are 1 322 biomethane production plants in Europe, an increase of 255 units in slightly over a year.
The largest producers of biomethane in Europe (2021) were Germany with production at 12.8 TWh, followed by the UK (6.2 TWh) and Denmark (5.7 TWh). France, The Netherlands, and Italy are emerging players.
The investment commitment from the biomethane private sector will positively impact the biomethane industry as it will increase the supply of biomethane in Europe as well as boost confidence and create a vibrant atmosphere in the green gas sector. The availability of supply in the long term will also signal to potential demand sectors that biomethane is a viable pathway for decarbonisation. This is a boon to the biomethane and green gas industry.
It is noticeable that Germany, the current biggest producer of biomethane, has pledged to invest just over half a billion euros, an amount that is half of the French budget. Considering these investment levels, France may dominate the production of biomethane in Europe in the long term and become the most important player in this sector.
Nevertheless, to make the EU production target feasible, proper policies, a stable strategic framework and a clear direction and support for end-use applications for biomethane are critical for the success of the industry. We will closely monitor policy development.
Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
