VGGP Presentation Biomethane in the Netherlands

– current state and future outlook -  Conference of European Biogas Association

Egmond aan Zee, Oktober 1st 2014 Michael Sanders VGGP, president

VGGP, who we are: Dutch Renewable Gas Producers Association •  The Dutch national organisation representing

biomethane producers and associated members

•  Mission: To stimulate good conditions and markets for biomethane production and to represent the interests of biomethane producers at government, policy and regulatory level

•  VGGP represents Dutch national branche interests via European Biogas Assocation (EBA)

VGGP, our producers

Projects starting 1989 up to 2014

VGGP, our members

•  Produce bio-methane from biogas at product specifications to directly substitute fossil natural gas

•  Some members make their own biogas from biomass •  Some members upgrade biogas from waste water

treatment or landfill gas (also 100% biomass) •  All producers feed “Green Gas” (bio-methane) into

the national Natural Gas grids at NG specifications •  Production started of liquid bio-methane (Bio-LNG) •  Some members are producing Bio-CO2 (gas+liquid)

VGGP, Technologies

•  Digestion and biomethane upgrading –  Large scale (industrial up to 2200cm/h) –  Medium scale (agriculture waste 500cm/h) –  Small scale (rural / agriculture 40cm/h) –  Biogas grids with central upgrading unit

•  CO2 recovery plus liquefraction •  Liquid biomethane (BioLNG)

–  Medium scale operational (semi industrial) •  Power to gas (P2G)

–  2 demonstration projects in planning at medium scale (semi industrial)

•  Biomass gasifcation (syngas) to CH4 –  Research & demonstration (small scale) –  Technology needs further development

VGGP, facts and numbers Also see: EBA NL country profile

•  Production started 1989, in 2014 approx. 21 public grid connections feed-in at natural gas specifications

•  There are currently 5-10 companies involved •  All Green Gas made from ‘soft’ biomass feedstock

–  Landfilled biomass (no new landfilling since 1990’s) –  Biomass recovered from municipal waste water streams –  Digesting solid/wet biomass (mostly from biowaste streams)

•  Output 2013 remained below 100Mcm/a •  Subsidies (granted) could boost up to 300Mcm/a •  National ambitions 2020(downgraded!): 0,75BcmGG

VGGP, 200Mcm NL in plans…… IEA view on fossil investments

Other issues, Same problem !

Same issues !

Total costs renewables may get to expensive

Same issue for base-load renewables

Consequence of grid imbalance is socially

unacceptable

Biomass market issues

Same issues !

How about renewables?

•  “we have enough fossil fuels” •  “there is no climate change” •  “wind and solar will fix all needs” •  “hydrogen will fix the problem” •  “there is not enough biomass” •  “all biomass is needed for food” •  Etc. etc. etc.

•  Mixed signals, who can we trust?

VGGP, sustainable issues?

•  … about security of supply? One year of energy production – 1000 eff. hours solarPV – 2500 eff. hours wind – Still > 6000h fossil?

•  … about heat?

>> Can NL afford not-to-use biomass for energy? <<

VGGP, what do we know..?

8760 hours

1000h PV

2500h wind

VGGP, Biomass = carbon

Biomass is already cyclic at a rate 20 times fossil carbon emissions •  Biomethane substitutes bio-decomposition (and CH4 emissions) •  NL policy optimising biomass usage: key role for biomethane!

VGGP, Bio-methane ranking

•  European Commission Joint Research Centre 2014 report: JRC85326 EUR 26237 EN

Bio-methane and biogas CHP rank most favourable in benchmark

Code Description gCO2/MJ OWCG1 Upgraded biogas from municipal organic waste 15 OWEL1a Biogas ex municipal waste, local Electricity from biogas plant ex municipal waste, Gas engine 20 OWCG4 Upgraded biogas from maize (whole plant) 40 CRET2 Maize, NG GT+CHP, DDGS as AF Maize (average used in EU) to ethanol 50 ROFA1 RME: Meal as AF, glycerine as chem, Rapeseed to biodiesel (Rapeseed Methylester), Meal export (animal feed) 60 GMCG1 EU-mix CNG from EU-mix NG supply 70 GRSD1 Rem GTL, diesel pool Remote NG to Syndiesel (GTL): GTL plant near remote gas field, 75 GRLG1 LNG, road Remote LNG, use as LNG in vehicle 80 GPCG1a Pipeline 7000 km CNG from imported NG 7000 km (typically Russia) 85 EMEL2 EU-mix medium Electricity from average EU supply. Medium voltage 140 KOEL2 EU-mix Coal IGCC Electricity from (hard) coal (EU supply mix), IGCC 260

Social Acceptance of renewable energy projects: (Project: use biomass => produce energy => sell energy)

–  The energy product is socially accepted, there are markets –  Production facilities are socially accepted: IPPC permits –  The renewable feedstock’s are socially accepted: NTA 8080 –  Society accepts the costs for energy transition via SDE+

VGGP, Social Acceptance

….…., because we are still searching for more sustainable fossil fuels to keep our economies going!

VGGP, renewable issues?

VGGP, NL on renewable Technical circle waste management

•  Reduce •  Re-use •  Recycle •  Replace / Re-design •  Recover energy

Biological circle BBE • Pyramid cascading biomass:

Requires big volumes Large volumes remain unused Transit to technical circle

• Minerals and organic matter are essential for life on earth!

VGGP, Renewable feedstock Biomass for energy is an essential part of the chain: (Project: use biomass => produce energy => sell energy)

–  Avoid direct use of biomass, priority for food and cascading BBE –  Cascading shares the effect of iLUC, biodiversity, depletion –  P2G further increases digesting process carbon efficiency +60%

Biomass

Cascaded feedstock

Food & products

Consumption

Benzene Toluene Xylene

Hemicellulose

Lignine

Minerals and organic matter

Sunlight + Water + CO2

End use for energy

Loss of all minerals and organic matter

Chemicals

Energy & fuels CO2

P2G

Cement and chemical waste!

Cellulose

Bio- Based-

Economy

VGGP, Biomass feedstock

•  There is still al lot to be organised: Biomass sources >...production capacity, logistics and storage, technology for cascading biomass, solutions for by-products, biomass certification, matching supply and demand, spot markets, exchanges for long term contracts, market makers and brokers, clearing and financial services… > Physical delivery.

•  For Social Acceptance and Subsidies on energy we need a transparent and efficient biomass market.

•  An incomplete market may lead to unwanted market behaviour, free-riders and leakage of subsidies.

VGGP, Markets

For biomass projects there are three mayor “markets”:

Subsidies “leak” if there is an incomplete biomass market Subsidies “leak” into the energy “market” via costs and fees

Biomass market

Energy project

Energy market and subsidies

By-product market

“Your product may not be sold in my market, because I want you to fully comply with my standards!”

–  Open market: No barriers via “product safety issues” Biomass based end of waste products and biofuels contain

impurities and are very easy to discriminate via “fossil based standards” like NG based Feed-in specifications and REACH.

VGGP, Products & markets

Biomass

End of waste criteria

Bio methane specifications

REACH

Conventional fertilizer

Open market + Regulated

Gas grid access

Digestate use as compost & fertilizers

Natural Gas

NL regulation perceived as a grave financial risk (no project bank-loans) and causing severe financial losses for operational VGGP members: • Gas spec issue: EC standards Bio-methane (Dutch GasLAW changes as of today, Oct 1st, this will solve NL feed-in problems in time) • Transport tariffs charged to Bio-methane on NG gas grids, issue is disputed by VGGP members. GasLAW change will prohibit this at last. • Demand to exceed fossil gas HHV (Hs in MWh) without compensating Bio-methane producer for economic vallue. HHV rises in NG plus as a physical result from gas safety setpoints resulting from specifictions! • By-law’s (netcode) to be set by Regulator (ACM), current proposals are set for less efficiency and additional costs for Bio-methane feed-in. • Netting on CO2 for Bio-methane Certificate of Origin (ReC) now proposed (implies selective cut on SDE+ subsidies “after the fact”)

VGGP, Products & markets

VGGP, Netting ReC on CO2 Favours pathway’s electricity over bio-methane and favours farmed crops over bio-waste!

15gCO2/MJ -/- 3,9 (-25%)

20gCO2/MJ -/- 0,5 (-2,5%)

Remote pathways 25gCO2/MJ not netted in ReC

40gCO2/MJ -/- 3,9 (-10%)

45gCO2/MJ -/- 0,5 (-1,1%)

Local pathways on NL sites CO2/MJ may be netted in ReC by LAW (-% less income)

VGGP, ReC transparency

•  Renewable energy Certificates: Keep it transparent!

100%

VGGP, Level playing field!

•  Production and end-use may conflict. Level the playing field! Gas volume and CO2 balancing between countries

•  Physical energy exchange obligatory for gas. Country B corrects ReC for transmission losses. •  Country targets set for Production mix or residual mix? How about EC targets RE and RED? •  Customer C should compensate both ReC value + CER CO2 costs for Country A.

Country A

Renewable surplus

Customer A Customer B

Renewable deficit

Subsidies Taxes for RE

CO2 costs in power pricing Supply CER Cancel CER => CO2 emitted

Customer C no CO2 costs In power pricing but “no free rider”

Energy lost

Fossil gas

ReC value Trader A Trader B

VGGP, Transition costs Power price effect on SDE+ subsidies 8760 hours

1000h PV

2500h wind

There is no free lunch!

VGGP, Transition in general

>> Can NL afford not-to-use biomass for energy? << <“YES, we will use biomass for energy, but with care!”>

VGGP, The way forward!

•  If we have established a common ground to for a renewable energy production mix (including biomass)

•  And we have also found socially acceptable places to develop energy projects

•  Plus there is a common ground about using the project feedstock biomass for energy production

•  And if there are budgets to enable the transition Public Acceptance for renewable energy phase 2 : We have to re-assure stakeholders why they accepted! Example: Dutch Green Gas as renewable transport fuel.

VGGP, Biogas fuels 1.0

VGGP, Transport fuels 1.5 ”Why mobility using Bio-methane as a fuel?”

Well to Wheel CO2 emissions

Impa

ct o

n lo

cal a

ir qu

ality

Bio-methane

VGGP, Transport fuels 2.0 ”Mobility using bio-methane for fuel”

VGGP, Transport fuels 3.0 ”Mobility using your own biomass for fuel”

….. Collect your bio wastes for us and…..

VGGP, Transport fuels 3.1 ”Mobility using your own biomass for fuel”

….. We will digest your biowaste and inject bio methane into the national gas grid…..

VGGP, Transport fuels 3.2

… via our partners we deliver Green Gas to your local filling stations …….

CNGnet

VGGP, Transport fuels 4.0 Bio LNG

33

Biomethane +CO2 +P2G

+ BioLNG

Digestate

Green Gas

+ CO2

for

Sustainable feedstock

Regional gas grid National gas grid

Green Gas Biogas

Minerals

+ Organic matter RE

GIO

NA

AL

NAT

ION

AL

CHP/Heat

Agriculture

Waste water & Proces water

Green Gas

and BioLNG

Transport

fuels

Bio-waste &

energy recovery

BBE Cascaded

Products

VGGP, Q&A / comments?