The Biomethane Action Plan addresses various measures that support the rapid ramp-up of sustainable biomethane production while following rigorous environmental criteria as addressed in the REDII. It focuses on sustainable biomethane production from waste and residue feedstocks and avoids certain crops and feedstocks that potentially lead to land-use change problems. The plan lays out financial incentives and tools to facilitate biomethane production and integration into the EU internal gas market. One of the important measures includes the proposal for a biomethane industrial partnership, aiming to stimulate an entire value chain of biomethane as well as create coordination between the green gas sector and policymakers at the EU, regional and national levels.

According to the plan, EUR 37 billion investment is estimated between now and 2027 in order to increase biomethane production up to 35 bcm by 2030. The investment need will be eligible for co-financing by the Recovery and Resilience Facility (RRF), Common Agricultural Policy, Connecting Europe Facility, and Cohesion Policy.

REPowerEU: Biomethane investment target

The Biomethane Action Plan proposes 17 measures under 5 action areas:

Biomethane Action plan

Each action area calls for the following measures:

Promoting sustainable biomethane production, usage, and injection into the gas grid

: Creating an Industrial Partnership by establishing a platform for strategic discussion among key stakeholders along the whole value chain.

: Developing national biogas and biomethane strategies or incorporating biogas and biomethane in the National Energy and Climate Plans (NECPs). The national strategies should emphasise the most sustainable paths, assess potential barriers to the production and injection of the biomethane into the grid in the national and regional context, and integrate actions for eliminating these barriers.

: Considering broadening the scope of the fuel supply obligation in the Renewable Energy Directive (Article 25).

: Promoting participatory multi-stakeholder engagement through events such as conferences, workshops, and training.

: Reducing red tape and speeding up permitting and all issues delaying the process.

: Promoting sustainable biogas and biomethane cooperation with neighbouring and enlargement countries, including through the EU-Ukraine renewable gases partnership.

Providing incentives for upgrading from biogas to biomethane

:Reducing the costs for economic operators, which currently prevent biogas upgrading into biomethane. The costs of upgrading, grid connection, and grid injection will be evaluated. In addition, the existing support schemes for electricity production from biogas shall be reviewed and more focus will likely be put on support for biogas upgrading into biomethane.

Promoting the adaptation and adjustment of existing and new infrastructure to support the transport of increased biomethane share through the EU gas grid

: Conducting a regional assessment of network development and matching it with potential locations for sustainable biomethane production. Regional maps with the highest potential for biogas and biomethane production will be created from a result of the assessment.

: Evaluating challenges, bottlenecks, and other possible measures from the infrastructure perspective for the cost-efficient deployment of biomethane. National (regulatory) authorities, TSOs, and DSOs shall evaluate potential challenges such as investments, grid capacity, and costs of biomethane injection.

: Addressing gas quality standardisation issues. Following the revised standard, the EC supports the new CEN gas quality standard to ensure the cross-border flow of biomethane while considering the protection of sensitive end-users.

Addressing gaps in R&D&I (Research, Development, and Innovation)

: Providing further support to the development of innovative technologies for the production of sustainable biogas and biomethane. Special focus shall be given to improving technological efficiency and the cost-effectiveness of small-scale solutions.

: Providing further support to innovative technologies for the upgrade of sustainable biogas to biomethane. Special focus shall be given to increasing the cost-effectiveness and efficiency of small-scale upgrading technology.

: Providing further support to innovative solutions and research on barriers and integration of sustainable biomethane to the gas grid.

: Further supporting the expansion of sustainable biomass feedstocks to ensure the availability of resources for reaching the biomethane production target.

: Providing access to grants and loans from existing EU funds and other national funding in line with State aid rules.

: Providing access to Innovation Fund for innovative production and use of biomethane and biogas projects.

: Providing access to other financial instruments

Potential benefits of Biomethane Action Plan to the biomethane certificate market

The ambition of massive scale-up of biomethane production capacity, set out by REPowerEU, will generally impact the supply of biomethane certificates and consequently affect biomethane certificate price. In the short-term (1-3 years), the impacts on supply and price might not clearly be seen, as it will take time before production capacity will significantly be increased. Once the Biomethane Action Plan is fully in effect and a great deal of new biogas/biomethane installations are operational, most likely from the medium-term onward, the impacts on biomethane supply, demand, and the price will be noticed.

If we take a closer look into measures from the Biomethane Action Plan, some key measures will potentially create positive impacts on or benefit the biomethane certificate market:

The REPowerEU, targeting 35 bcm of biomethane production, will considerably increase the supply of biomethane certificates in the market due to a significant increase in physical biomethane. In addition to the overarching policy, Measures 2,7,9 and 13 in the Biomethane Action Plan, which emphasise facilitating the connection and injection of biomethane into the gas grid, would boost the green gas distribution via the gas grid. Thus, this could lead to an increase in the supply of biomethane certificates, since a higher number of biomethane certificates/GOs issuances are expected in relation to the increased injection of biomethane into the gas grid.

In addition, Measure 10 focuses on solving barriers that prevent or hinder cross-border flows of biomethane, deriving from an uncoordinated application of existing CEN gas quality standards across borders e.g., accepted level of oxygen content. This measure will facilitate cross-border trading and flows of biomethane and its associated certificates and hence increase the liquidity of biomethane certificate supply in the European-wide market.

Measure 3, which considers broadening the scope of the fuel supply obligation to possibly cover all uses of biomethane, could generally be a positive signal for the demand for biomethane certificates. The larger coverage of supply obligation implies an increase in demand for biomethane certificates as a disclosure tool to comply with regulations.

However, when it comes to the promotion of end-use applications which directly impact the demand for biomethane certificates, the action plan hasn’t proposed clear measures or targets in this regard.

The increase in biomethane certificate supply would potentially have an impact on the certificate price. In the short-term perspective, prices of biomethane certificates are expected to continue to increase with certificates from waste feedstocks obtaining the highest premium. Looking forward when the market is supplemented with more biomethane and certificate supply, an increase in the prices of certificates is anticipated to be modest with a more limited span or perhaps become stagnant. Nevertheless, the overarching biomethane policy together with Measure 14, focusing on the use of sustainable biomass/wasted-based feedstocks, would imply the biomethane certificate price at a level of the EU certificate from waste.

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