Since November 2021, natural gas has been selling considerably over EUR 70-80/MWh in Europe, putting biomethane in the spotlight as a cost-effective alternative to natural gas. Recently, the European Biogas Association (EBA) stated that the new deployment of new biomethane production could help alleviate Europe’s gas price crisis caused in part by the ongoing Russia-Ukraine crisis. Given the current numerous uncertainties surrounding EU gas supply, natural gas prices are expected to remain at high level next winter.
Since hydrogen and other renewable gases require time to scale up and remain considerably more expensive than biomethane, this latter has significant advantage, including being easily available and scalable in the coming years.
To work towards energy security and climate objectives, the European Commission in mid-March introduced the REPowerEU plan. It is targeting a 35 billion cubic meters of biomethane production within the EU. The volume shall phase out dependence from Russia and replace 20% of natural gas imports before the end of 2030.
The REPowerEU plan is focused on two pillars:
1) Diversifying gas supplies, through increased LNG and pipeline imports from non-Russian suppliers, and larger volumes of biomethane and renewable hydrogen production and imports
2) reducing faster the use of fossil fuels in homes, buildings, industry, and power system, by boosting energy efficiency, increasing renewables and electrification, and addressing infrastructure bottlenecks.
The Commission plans to present a legislative proposal this April requiring underground gas storage across the EU to be filled to at least 90% capacity by October each year.