February 24, 2022

Bio-LNG in Long-Haul Transport to be Important Driver of European Biomethane Growth

Stratas Advisors

The European Green Deal underlines the EU's commitment to accelerate the shift to sustainable and smart mobility, achieving climate neutrality by 2050. Part of the Green Deal’s goal is for biomethane to gain market share in sectors otherwise difficult to decarbonize. Since 2010, EU biogas consumption has registered a Year-over-Year (YoY) average growth rate of 9%, accounting for 4.5% of the total EU-27 gas consumption in 2020.

Biomethane obtained by upgrading biogas can reach high methane content (>96%), meeting NG quality standards. Biomethane can displace fossil Liquified Natural Gas (LNG) and Compressed Natural gas (CNG) by bio-LNG and bio-CNG (also known as RNG), which can then be used as a fuel for transport or in the gas grid without any retrofitting. Under the EU Renewable Energy Directive (RED II), fuel suppliers must ensure a 13% greenhouse gas (GHG) intensity reduction objective by 2030. Although there is no mandatory biomethane target at the EU level, biomethane can count towards the 13% GHG reduction target and the specific sub target of 2.2% on advanced biofuels and biogas in the transport sector by 2030.

While biogas supply is starting to stagnate, biomethane production is growing, as biogas upgrading is becoming more economically feasible even in small-scale projects. As a result, most newly built biogas plants are combined with an upgrading technology to produce biomethane. Between 2010-2021, the number of biomethane plants in EU-27 have increased exponentially at a YoY average growth rate of 22%, up to almost 900 upgrading plants. However, this development differs significantly between countries, depending on national decarbonization strategies and financial support. France had the highest relative share of EU biomethane plants (41%), followed by Germany (25%) and Sweden (9%). In Germany, biomethane plant growth is moderate (less than 3% YoY), while France and Italy registered the highest average growth rate of the last five years at 66% and 62%, respectively. Denmark and the Netherlands — with 6% of the total biomethane plant network each— have also shown a significant increase in plants with 54 and 55 biomethane facilities by 2021 and an average YoY growth rate of 31% and 13%, respectively.

The increasing number of biomethane upgrading facilities and reduced associated cost is also driven by the expansion of the CNG and LNG filling network in the EU-27. Since 2015, biomethane demand for transport has been increasing at an average YoY growth rate of 9% to 222 Million Cubic Meters (MCM) in 2019 (latest available aggregated data). Around 3,700 CNG and 479 LNG filling stations are distributed across the EU-27 with an average YoY growth rate of 4% and 38%, respectively. Among them, more than 25% of gas suppliers were already delivering biomethane. 

In the transport sector, BioCNG is mostly used in passenger cars and BioLNG in Heavy-Duty Vehicles and maritime transportation. LNG is preferred for heavy long-haul transport, as it has a higher energy density than CNG. However, passenger cars and light-duty vehicles are also relatively easy to decarbonize through electrification, emerging as a serious contender to CNG-fueled vehicles. Conversely, the decarbonization of the freight sector is expected to utilize a combination of technologies with LNG playing a crucial role in the medium term, as battery-electric trucks remain relatively expensive with low operational range—Volvo electric trucks operating range goes up to 300-450 km, while gas-powered versions can cover a total distance of up to 1,000 km per tank. As a result, 99% of all sold alternatively powered trucks run on NG, with CNG and LNG truck sales increasing 6.3% YoY to 5,089 trucks in 2020.

For sea-going vessels, LNG is the most used pathway of decarbonization. LNG ships generate no Nitrogen Oxides (NOx) or Sulfur Oxides (Sox) emissions. They are commercially available using dual-fuel LNG engines powered by LNG, Marine Gasoil, or Very Low Sulphur Fuel Oil. In addition, LNG-fueled ships have the potential to be a transition fuel, with gas engines and LNG infrastructure being used for Bio-LNG. By 2020, one-third of the European ports had made LNG bunkering services available, with more than 33 operational ports with LNG bunkering infrastructure. Between 2010-2020, the number of newbuilt LNG fueled vessels has grown consistently at around 34% per annum. In 2020, the global LNG-fueled maritime fleet accounted for more than 225 vessels, up 41% from the 2019 total fleet—excluding the 600 LNG carrier fleet, most of which are LNG-fueled.


Although the electrification of passenger vehicles is gaining ground over CNG-fueled cars, Stratas Advisors foresees a significant increase in biomethane consumption in the coming years. Price reductions through larger-scale biomethane upgrading, strong legislative incentives, and an increase in demand in the heavy transport sector are expected to drive most of the Bio-LNG growth through 2030.

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