Shifting direction in biogas growth
Rabobank believes that the biogas outlook is brightest for F&A companies that produce low value or wet residue streams.
Municipal organic waste and waste water treatment offer growth opportunities in regions where take-up is still limited. In the EU, using biogas as a next generation biofuel for heavy transport and shipping is looking increasingly attractive.
The direction of the long-term drivers and barriers behind biogas makes the technology less a renewable energy source and more a waste management solution for organic residues.
The reasons behind this are the decreasing costs of alternative technologies such as solar and onshore wind, rising commodity and feedstock costs, increasing sustainability demands and lagging efficiency improvements in biogas generation.
Some of the drivers for the technology, such as reclaiming the nutrients, lowering methane emissions, and continuous energy generation do not weigh up against the costs involved or are not valorised (yet).
Rabobank analyst, Clara van der Elst, said: "Two factors dictate success for a biogas business case: the available supply of suitable feedstock and the forecast range for feedstock costs and ensuing yields."
"This is more likely to be found in residues from F&A processing—where the feedstock is proprietary and digestion lowers waste and wastewater fees, or where renewable energy subsidies lower costs, or a combination is found—than from manure, where you need to source other feedstocks to raise the energy yield.
"We therefore expect growth to both moderate and to shift away from energy crops towards residue streams from F&A processing industries."
Within manure digestion, growth opportunities are seen for large-scale digestion, or for co-digestion in regions with a surplus of F&A waste streams and a fertiliser shortage.
Experience with manure digestion suggests that depending on the co-feedstock, a wide input price range and low band of yield forecasts should be used in business plans.
"Of the many output options for biogas, EU transport fuel stands out for two reasons," added van der Elst.
"Firstly, other next generation biofuels are lagging behind growth expectations as technological progress has been slow. Secondly, the EU has recently proposed to quadruple, instead of double, count the contribution of next generation biofuels to meeting the EU 20-20-20 target of 10 percent renewable transport fuel, following concerns on the sustainability impact of first generation biofuels".
The biogas production growth outlook for specific regions will vary around the world according to local circumstances, as the weight of the drivers and barriers and its effects on, for instance, current and future support policy will be determined locally.
More specifically, Germany and the Netherlands are expected to display slower growth the next five years, as these countries have a high share of manure-based biogas.
For the US, growth is expected to accelerate as the country is seeing a regulatory shift away from landfill, and livestock and dairy farms have a larger scale that facilitates manure-based biogas generation. In addition, we expect wastewater-based biogas to accelerate in the US.
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