Outlook for biogas and biomethane: Prospects for organic growth

World Energy Outlook special report

An introduction to biogas and biomethane

Biogas is a mixture of methane, CO2 and small quantities of other gases produced by anaerobic digestion of organic matter in an oxygen-free environment. The precise composition of biogas depends on the type of feedstock and the production pathway; these include the following main technologies:

  • Biodigesters: These are airtight systems (e.g. containers or tanks) in which organic material, diluted in water, is broken down by naturally occurring micro‑organisms. Contaminants and moisture are usually removed prior to use of the biogas.
  • Landfill gas recovery systems: The decomposition of municipal solid waste (MSW) under anaerobic conditions at landfill sites produces biogas. This can be captured using pipes and extraction wells along with compressors to induce flow to a central collection point.
  • Wastewater treatment plants: These plants can be equipped to recover organic matter, solids, and nutrients such as nitrogen and phosphorus from sewage sludge. With further treatment, the sewage sludge can be used as an input to produce biogas in an anaerobic digester.

The methane content of biogas typically ranges from 45% to 75% by volume, with most of the remainder being CO2. This variation means that the energy content of biogas can vary; the lower heating value (LHV) is between 16 megajoules per cubic metre (MJ/m3) and 28 MJ/m3. Biogas can be used directly to produce electricity and heat or as an energy source for cooking.

Biomethane (also known as “renewable natural gas”) is a near-pure source of methane produced either by “upgrading” biogas (a process that removes any CO2 and other contaminants present in the biogas) or through the gasification of solid biomass followed by methanation:

  • Upgrading biogas: This accounts for around 90% of total biomethane produced worldwide today. Upgrading technologies make use of the different properties of the various gases contained within biogas to separate them, with water scrubbing and membrane separation accounting for almost 60% of biomethane production globally today (Cedigaz, 2019).
  • Thermal gasification of solid biomass followed by methanation: Woody biomass is first broken down at high temperature (between 700-800°C) and high pressure in a low-oxygen environment. Under these conditions, the biomass is converted into a mixture of gases, mainly carbon monoxide, hydrogen and methane (sometimes collectively called syngas). To produce a pure stream of biomethane, this syngas is cleaned to remove any acidic and corrosive components. The methanation process then uses a catalyst to promote a reaction between the hydrogen and carbon monoxide or CO2 to produce methane. Any remaining CO2 or water is removed at the end of this process.

Biomethane has an LHV of around 36 MJ/m3. It is indistinguishable from natural gas and so can be used without the need for any changes in transmission and distribution infrastructure or end-user equipment, and is fully compatible for use in natural gas vehicles.

Pathways for biogas and biomethane

Note: Only biomethane is considered suitable for use in the transport sector.

A wide variety of feedstocks can be used to produce biogas. For this report, the different individual types of residue or waste were grouped into four broad feedstock categories: crop residues; animal manure; the organic fraction of MSW, including industrial waste; and wastewater sludge.

  • Crop residues: Residues from the harvest of wheat, maize, rice, other coarse grains, sugar beet, sugar cane, soybean and other oilseeds. This report included sequential crops, grown between two harvested crops as a soil management solution that helps to preserve the fertility of soil, retain soil carbon and avoid erosion; these do not compete for agricultural land with crops grown for food or feed.
  • Animal manure: From livestock including cattle, pigs, poultry and sheep.
  • Organic fraction of MSW: Food and green waste (e.g. leaves and grass), paper and cardboard and wood that is not otherwise utilised (e.g. for composting or recycling). MSW1 also includes some industrial waste from the food-processing industry.
  • Wastewater sludge: Semi-solid organic matter recovered in the form of sewage gas from municipal wastewater treatment plants.

Specific energy crops, i.e. low-cost and low-maintenance crops grown solely for energy production rather than food, have played an important part in the rise of biogas production in some parts of the world, notably in Germany. However, they have also generated a vigorous debate about potential land-use impacts, so they are not considered in this report’s assessment of the sustainable supply potential.

Using waste and residues as feedstocks avoids the land-use issues associated with energy crops. Energy crops also require fertiliser (typically produced from fossil fuels), which needs to be taken into account when assessing the life-cycle emissions from different biogas production pathways. Using waste and residues as feedstocks can capture methane that could otherwise escape to the atmosphere as they decompose.

Most biomethane production comes from upgrading biogas, so the feedstocks are the same as those described above. However, the gasification route to biomethane can use woody biomass (in addition to MSW and agricultural residues) as a feedstock, which consists of residues from forest management and wood processing.

The feedstocks described above were considered in this report’s assessment of the sustainable biogas and biomethane supply potential, and are further discussed in Section 3 below.


Biogas production by region and by feedstock type, 2018

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The development of biogas has been uneven across the world, as it depends not only on the availability of feedstocks but also on policies that encourage its production and use. Europe, the People’s Republic of China (hereafter, “China”) and the United States account for 90% of global production.

Europe is the largest producer of biogas today. Germany is by far the largest market, and home to two-thirds of Europe’s biogas plant capacity. Energy crops were the primary choice of feedstock that underpinned the growth of Germany’s biogas industry, but policy has recently shifted more towards the use of crop residues, sequential crops, livestock waste and the capture of methane from landfill sites.  Other countries such as Denmark, France, Italy and the Netherlands have actively promoted biogas production.

In China, policies have supported the installation of household-scale digesters in rural areas with the aim of increasing access to modern energy and clean cooking fuels; these digesters account for around 70% of installed biogas capacity today. Different programmes have been announced to support the installation of larger-scale co‑generation plants (i.e. plants producing both heat and power). Moreover, the Chinese National Development and Reform Commission issued a guidance document in late 2019 specifically on biogas industrialisation and upgrading to biomethane, supporting also the use of biomethane in the transport sector.

In the United States, the primary pathway for biogas has been through landfill gas collection, which today accounts for nearly 90% of its biogas production. There is also growing interest in biogas production from agricultural waste, since domestic livestock markets are responsible for almost one-third of methane emissions in the United States (USDA, 2016). The United States is also leading the way globally in the use of biomethane in the transport sector, as a result of both state and federal support.

Around half of the remaining production comes from developing countries in Asia, notably Thailand and India. Remuneration via the Clean Development Mechanism (CDM) was a key factor underpinning this growth, particularly between 2007 and 2011. The development of new biogas projects fell sharply after 2011 as the value of emission reduction credits awarded under the CDM dropped. Thailand produces biogas from the waste streams of its cassava starch sector, biofuel industry and pig farms. India aims to develop around 5 000 new compressed biogas plants over the next five years (GMI, 2019). Argentina and Brazil have also supported biogas through auctions; Brazil has seen the majority of production come from landfills, but there is also potential from vinasse, a by‑product from the ethanol industry.

A clear picture of today’s consumption of biogas in Africa is made more difficult by a lack of data, but its use has been concentrated in countries with specific support programmes. Some governments, such as Benin, Burkina Faso and Ethiopia, provide subsidies that can cover from half to all of the investment, while numerous projects promoted by non‑governmental organisations provide practical know-how and subsidies to lower the net investment cost. In addition to these subsidies, credit facilities have made progress in a few countries, notably a recent lease-to-own arrangement in Kenya that financed almost half of the digester installations in 2018 (ter Heegde, 2019)

Biogas installed power generation capacity, 2010-2018

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Biogas consumption by end use, 2018

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Almost two-thirds of biogas production in 2018 was used to generate electricity and heat (with an approximately equal split between electricity-only facilities and co‑generation facilities). Around 30% was consumed in buildings, mainly in the residential sector for cooking and heating, with the remainder upgraded to biomethane and blended into the gas networks or used as a transport fuel.

Today there is around 18 GW of installed power generation capacity running on biogas around the world, most of which is in Germany, the United States and the United Kingdom. Capacity increased on average by 4% per year between 2010 and 2018. In recent years, deployment in the United States and some European countries has slowed, mainly because of changes in policy support, although growth has started to pick up in other markets such as China and Turkey.

The levelised cost of generating electricity from biogas varies according to the feedstocks used and the sophistication of the plant, and ranges from USD 50 per megawatt-hour (MWh) to USD 190/MWh. A substantial part of this range lies above the cost of generation from wind and utility-scale solar photovoltaic (PV), which have come down sharply in recent years.

The relatively high costs of biogas power generation mean that the transition from feed-in tariffs to technology-neutral renewable electricity auction frameworks (such as power purchase agreements) in many countries could limit the future prospects for electricity-only biogas plants. However, unlike wind and solar PV, biogas plants can operate in a flexible manner and so provide balancing and other ancillary services to the electricity network. Recognising the value of these services would help to spur future deployment prospects for biogas plants.

Where local heat off-take is available, the economic case for biogas co‑generation is stronger than for an electricity-only plant. This is because co‑generation can provide a higher level of energy efficiency, with around 35% of the energy from biogas used to generate electricity and an additional 40-50% of the waste heat put to productive use.

Certain industrial subsectors, such as the food and drink and chemicals, produce wet waste with a high organic content, which is a suitable feedstock for anaerobic digestion. In such industries, biogas production can also have the co‑benefit of providing treatment for waste while also supplying on-site heat and electricity.

For the moment, a relatively small but growing share of the biogas produced worldwide is upgraded to biomethane. This area has significant potential for further growth, although – as outlined in subsequent sections of this report – this is heavily contingent on the strength and design of policies aimed at decarbonising gas supply in different parts of the world.

Biomethane production and share of total biogas production that is upgraded in selected regions, 2018

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The biomethane industry is currently very small, although it is generating growing amounts of interest in several countries for its potential to deliver clean energy to a wide array of end users, especially when this can be done using existing infrastructure.

Currently around 3.5 Mtoe of biomethane are produced worldwide. The vast majority of production lies in European and North American markets, with some countries such as Denmark and Sweden boasting more than 10% shares of biogas/biomethane in total gas sales. Countries outside Europe and North America are catching up quickly, with the number of upgrading facilities in Brazil, China and India tripling since 2015.

Biomethane represents about 0.1% of natural gas demand today; however, an increasing number of government policies are supporting its injection into natural gas grids and for decarbonising transport. For example, Germany, Italy, the Netherlands and the United Kingdom have all introduced support for biomethane in transport. Brazil’s RenovaBio programme has a target of reducing the carbon intensity of fuels in the transport sector by 10% by 2028. Subnational schemes are also emerging, such as low-carbon fuel standards in the US state of California and in British Columbia, Canada.

The percentage of biogas produced that is upgraded varies widely between regions: in North America it is around 15% while in South America it is over 35%; in Europe, the region that produces the most biogas and biomethane, around 10% of biogas production is upgraded (although in countries such as Denmark and Sweden the percentages are much higher); in Asia, the figure is 2%.

The main co‑product of biogas upgrading is CO2, which is produced in a relatively concentrated form and therefore could be used for industrial or agricultural purposes or combined with hydrogen to yield an additional stream of methane. Another option would be to store it underground, in which case the biomethane would be a CO2-negative source of energy.

As noted above, the alternative method to produce biomethane is through thermal gasification of biomass. There are several biomass gasification plants currently in operation, but these are mostly at demonstration scale producing relatively small volumes. Some of these plants have struggled to achieve stable operation, as a result of the variable quality and quantity of feedstock. Since this is a less mature technology than anaerobic digestion, thermal gasification arguably offers greater potential for technological innovation and cost reductions. Prospects would be enhanced if incumbent gas producers were to commit resources to its development, as it would appear a better fit with their knowledge and technical expertise.

The rising interest in biomethane means that the number of operating plants worldwide (both biogas upgrading and biomass gasification facilities) is expected to exceed 1 000 in the course of 2020. Around 60% of plants currently online and in development inject biomethane into the gas distribution network, with a further 20% providing vehicle fuel. The remainder provides methane for a variety of local end uses.

Global bioenergy consumption by type of source and sector, 2018

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Bioenergy accounts for around 10% of the world’s primary energy demand today. It can be consumed either in solid, liquid or gaseous form, and by far the most prevalent use of bioenergy today is solid biomass (around 90%).

The use of solid biomass is typically categorised as either “traditional” or “modern”, and currently demand is split roughly equally between the two. Modern biomass relies on more advanced technologies, mainly in electricity generation and industrial applications, which use upgraded fuels such as woodchips and pellets. Traditional use refers to the burning of solid biomass, such as wood, charcoal, agricultural residues and animal dung, for cooking or heating using basic technologies such as three-stone fires. With low conversion efficiencies and significant negative health impacts from indoor air pollution, many developing economies are trying to shift consumption away from traditional use.

The differentiation between traditional and modern does not apply for liquid and gaseous bioenergy, since both are produced using advanced technologies. Liquid biofuels make up around 7% of total bioenergy demand today. Biofuels are the main renewable energy source used directly in the transport sector, with around 90 Mtoe or almost 2 million barrels of oil equivalent per day consumed in 2018. About 70% of biofuels consumed today is bioethanol, which is usually blended with gasoline; most of the remainder is biodiesel.

Biogas and biomethane today account for less than 3% of total bioenergy demand, and represent an even smaller 0.3% share of total primary energy. But there are reasons to believe that these low-carbon gases could gain a firmer foothold in the future.

  • They can provide the system benefits of natural gas (storage, flexibility, high-temperature heat) without the net carbon emissions. As economies decarbonise, this becomes a crucial attribute.
  • Biogas provides a sustainable supply of heat and power that can serve communities seeking local, decentralised sources of energy, as well as a valuable cooking fuel for developing countries.
  • The GHG reduction benefit is amplified by the processing and use of methane (a potent GHG) that could otherwise be released to the atmosphere from the decomposition of organic by‑products and waste.
  • Biogas and biomethane can also play an important part in waste management, improving overall resource efficiency.
  • Where it displaces gas transported or imported over long distances, biogas and biomethane also yield energy security benefits.
  • There are also broader non‑energy considerations, such as nutrient recycling, rural job creation or reductions in the time spent in low-income communities collecting firewood. Both biogas and biomethane can also be developed at scale through partnerships between the energy and agricultural industries. By transforming a range of organic wastes into higher-value products, biogas and biomethane fit well into the concept of the circular economy.

Policies can help to unlock these benefits, but much will depend on how much biogas and biomethane is available and at what cost. These are the questions addressed in the next section.

References
  1. MSW can either feed a biodigester or be disposed in landfill to produce landfill gas.