According to CEDIGAZ’s Annual Report on Global Biomethane, the global biomethane or renewable natural gas (RNG) industry grew by 23% in 2022, with production increasing from 6 billion cubic meters (bcm) in 2021 to 7.4 bcm in 2022. The market is expected to expand significantly over the coming decade and beyond, and it has the potential to surpass 100 bcm by 2030 if appropriate policies and regulations are implemented.
Biomethane has become a crucial component of global energy and climate policies in 2022. Three major drivers have converged to propel the sector to new heights: energy security concerns due to Russia’s war against Ukraine and the global energy crisis, the urgency to address climate change which is accelerating decarbonization policies, and a focus on methane emissions reduction. These drivers have led to new incentivizing policies such as the REPowerEU plan in Europe, the Inflation Reduction Act in the US, the Metano Zero plan in Brazil, or the recently announced GOBAR-Dhan scheme in India, stimulating investment the RNG sector.
Evolution of global biomethane production (2010-2022)
Market drivers are expanding biomethane demand across sectors worldwide. Biomethane is being adopted by cities, corporations, industrial users, and fleet owners to decarbonize hard-to-electrify sectors, move towards a circular economy, and respond to ESG concerns. European and North American energy utilities are investing heavily in biomethane to support decarbonization policies and clean energy supplies. New applications, such as the use of biomethane to produce clean hydrogen, are emerging.
The transportation sector represented half of the global demand growth in 2021. In this sector, biomethane can make a real difference in terms of environmental impact and even lead to carbon-neutral emissions when used to replace diesel, as demonstrated in California. The European transportation sector has also seen a strong increase in demand (+31% in 2021) supported by the numerous bio-LNG plants in operation and under construction. To continue this momentum and achieve rapid decarbonization policy makers in Europe will need to adopt a neutral-technology approach.
The biomethane sector has seen unprecedented investment, with deals in the billions of dollars. European energy majors led the way with BP, Shell, and TotalEnergies acquiring US Archaea ($4.1 billion), Danish Nature Energy ($2 billion), and Poland’s Polska Grupa Biogazowa, respectively. Financial investors, such as US funds and asset managers, were also active, creating dedicated biomethane business units. Goldman Sachs launched Verdalia Bioenergy to invest $1 billion in European biomethane projects. Macquarie Capital launched Aerogy, and BlackRock acquired Vanguard Renewables for $700 million. These investments highlight the recognition of biomethane’s attributes, exponential growth, and status as a key decarbonization method for the future.
Major developments in the biomethane industry have been observed across different regions:
- Europe leads the global biomethane production with 3.4 bcm produced in 2021, and the REPowerEU plan aims to increase production to 35 bcm by 2030. National biomethane strategies are being developed, and the market for Guarantees of Origin certificates is maturing.
- The US is set for explosive growth in the RNG sector, with the Inflation Reduction Act providing fiscal support to biogas for all end-uses. RNG production in the US accounted for over a quarter of the global production, reaching 1.7 bcm in 2021, and an estimated 2 bcm in 2022. In Canada, the small biomethane sector is entering an exponential growth era.
- China aims to reach 20 bcm/y of RNG production by 2030 as part of its 14th Five-Year-Plan, which includes high targets for renewables.
- India aims to build 5,000 bio-CNG plants by 2023-24, representing 21 bcm/y of RNG production, and has launched a new support scheme for the sector.
- Brazil’s Metano Zero program aims to boost biogas/biomethane production, and the carbon market that also includes methane credits was launched in 2022. RNG production is still in the maturation phase but is poised for exponential growth.
Sylvie Cornot-Gandolphe for CEDIGAZ
April 2023 – 71 pages PDF format
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Cedigaz (International Center for Natural Gas Information) is an international association with members all over the world, created in 1961 by a group of international gas companies and IFP Energies nouvelles (IFPEN). Dedicated to natural and renewable gas information, CEDIGAZ collects and analyses worldwide economic information on natural gas, LNG, low-carbon gases and unconventional gas in an exhaustive and critical way.