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Biogas Market Snapshot 2014

1. Biogas Market Scope - Introduction and Definition

Biogas is a widely available renewable energy source that can produce uninterrupted baseload power. Biogas can be produced from a wide variety of available organic materials and wastes, including sewage sludge, animal manure, municipal/industrial organic waste, stillage from ethanol production, crop residues, and specially grown energy crops.

Anaerobic digestion is a natural biological process which converts organic materials into biogas and a useful fertilizer. The biogas is used to generate electricity, provide heat and cooling or, alternatively, it is cleaned to pipeline quality gas for use in vehicles or injection into the national gas grid.

Environmental XPRT defines the biogas market as the entire biogas industry supply chain, supporting the development of merchant, on-farm and community anaerobic digestion (AD), syngas from gasification, landfill gas and water treatment facilities, and the use of biogas for power, heat, transportation and injection to the grid.

2. Markets, Volume, Value and Outlook

Based on the data researched for this market snapshot, Environmental XPRT forecasts significant growth for the world biogas market. Technological leadership and favorable feed-in tariffs will maintain Europe in a leading position.

U.S. Biogas Market

In the U.S. there are over 160 anaerobic digesters on farms and about 1,500 more operating at wastewater treatment plants (WWTPs). Of the 1,500 biogas-producing WWTPs, about 250 use the biogas and the other 1,250 flare the biogas. The untapped potential for the U.S. biogas industry is significant. With 8,200 farms, 2,000 more wastewater plants and countless sources of urban organic waste, the U.S. could produce nearly 70 million megawatt-hours of renewable, baseload electricity.

European Biogas Market

Europe is the largest biogas market in the world, with over 13,800 biogas-producing digesters in operation in 2012 with over 7,400 megawatts (MW) of installed capacity. The top three countries by number of biogas plants are Germany (8,700), Italy (1,264 - double that of the previous year), and Switzerland (606). While in Germany the bulk output comes from agricultural digesters, in the UK landfills are the primary source. The European Biogas Association estimates that biogas production growth based on National Renewable Energy Action Plans of the EU-27 between 2010 and 2020 will be 101%, meaning biogas production will double in this ten-year period, reaching 24.2 billion m3 of methane (21.8 million ktoe) in 2020. Developments beyond 2020 depend on the 2030 European Union targets for renewable energy and on governments of the member states. Biogas production could double in the years 2020 - 2030 in a scenario where all countries follow the example of France and United Kingdom, which have both introduced biomethane feed-in-tariffs for grid injection.

German Biogas Market 

The number of biogas plants is expected to grow to 7,900 in 2014, up from 7,515 in 2012 and 4,984 in 2009. The total installed electric output is forecasted to grow to 3,750 MW in 2014, up from 2,291 in 2010. The sector is estimated to provide 42,000 jobs in 2014 and serve 4.42% of total national electricity use. The forecasted 2014 turnover for the sector is 7.5 billion €, up from 5.1 billion € in 2010.

U.K. Biogas Market

The U.K. produces over 100 million tons of organic material that is suitable for treatment by anaerobic digestion (AD). AD has been used for many years in this country by the water industry. It currently treats 66% of the U.K.'s sewage sludge in 261 AD plants. Beyond the water industry, AD in the U.K. is in its infancy, but growing rapidly. In March 2013 there were 114 AD plants, 41 agricultural, 46 community and 18 industrial. The sector is worth some £320 million, employs around 2,650 employees (some 210 direct and 2,440 indirect) across the biogas supply chain in 140 firms. AD could generate 10- 20 TWh of heat and power per year by 2020. AD could represent 3.8-7.5% of the renewable energy we estimate will be required in 2020.

3. Regulatory Framework and Key Drivers for the Biogas Market

The creation of legal conditions to support renewable energies is generating the increase of installed capacity of biogas plants around the globe. Overall, feed-in tariffs for biogas are the main drivers of this market. Over the last few years, more and more countries are adopting this legal bonus, as, for instance, Japan did in 2012, when it introduced the world’s highest feed-in tariffs for biogas.

U.S. Regulatory Framework

In the United States, biogas falls under the requirement of minimum standards for electric utilities to supply specific percentages of their electricity sales from qualified energy sources (The Clean Energy Standard Act). Compliance must be demonstrated via tradable credits. The brand new Farm Bill also plays its role by funding the Department of Agriculture’s support for rural renewable energy and biofuels programs. It will also fund the Rural Energy for America Program, which will guarantee the funding of up to 25% of the renewable energy system, and the Biorefinery Assistance Program would support young companies in getting their biofuel technologies off the ground. Other policies driving biogas markets are the Renewable Fuel Standards, which ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel; Renewable Energy Tax Credits, including the Production Tax Credit/Investment Tax Credit; and the various initiatives of the Department of Defense to purchase renewable fuel and power.

BY Maarten Van Donk, Marina Garcia de Mateo

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