An opportunity not to be wasted
The sheer speed and scale of Europe’s transition to renewable gas presents a compelling glimpse into the future of Australia’s own journey on the path to net-zero by 2050.
While Australian governments have done some great work to drive the renewable electricity system, the country is now beginning to realise the enormity of the complex energy transition task. So there is no better time to determine the nature and role of renewable gas on the path to a new cleaner energy economy.
Europe has not only defined the path, it is walking the journey.
All by thinking outside the square - or perhaps more pertinently, thinking inside the dome - in the formidable race to decarbonise its energy-intensive economy.
The current state-of-play, in what is emerging as an emissions reduction revolution in gas, is already profound.
Renewable gases like biomethane, are being made sustainably, using organic and agricultural waste, landfill and sewerage waste. A 2022 report by Sia Partners of France shows that more than 1200 biomethane facilities now dot the European continent. In the UK, by the beginning of 2022, close to 100 projects were extracting biomethane from organic waste and landfill through the process of anaerobic digestion, and injecting it into the nation’s gas networks.
Across the Channel in France, 149 biomethane plants were opened in 2021 alone with more on the way, providing renewable gas directly through the nationwide gas network, or to power and provide gas for whole communities or industrial precincts.
In Denmark, where the need to wean itself off Russian natural gas is more pronounced than most, the transition to renewable gas has been a remarkable feat. Energinet, the network operator in Denmark, has replaced almost 30 per cent of its natural gas with biomethane, extracted primarily from animal waste and swamps, and estimates to be at 100 per cent biomethane by 2034.
While these examples act as an enticing lesson for nations of similar gas-dependency as Europe, it is the next chapter that looms as the game-changer, where investment will be dramatically scaled up to meet not only emerging demand for zero-emission energy sources, but ambitious targets.
Through its Biomethane Industrial Partnership, the European Commission has committed to increasing Europe’s annual production and use of biomethane to well over 1200 PJs by 2030 - a staggering 10-fold increase on the supply generated at the end of 2021. That target is equivalent to Australia’s total domestic gas use, excluding LNG exports, and more than seven times the current annual residential gas use.
To meet that challenge will require private investment worth €83 billion (over AU$136 billion) by 2030 to build 5000 new biomethane plants or upgrade existing biogas plants to allow them to convert captured biogas to biomethane, according to the European Biomethane Association.
The race is on.
This incentivised push to have renewable gas central in Europe’s energy transformation story represents not only a valuable lesson for Australia - arguably two decades behind on this journey - but a challenge to move swiftly to put the building blocks and policy framework in place, and seize the emerging opportunity.
This year, Jemena – a leading energy infrastructure company, and the owner and operator of the New South Wales gas distribution network – began injecting biomethane into its New South Wales gas network from its Malabar Biomethane Facility, and all made using wastewater from Sydney Water’s treatment plant in South-East Sydney. With a view of scaling up to produce around 200 terajoules of the renewable gas over the next few years, which is the equivalent amount of gas to meet the average needs of 13,300 homes, if used in the residential network.
According to Jemena’s Executive General Manager for Networks, Shaun Reardon, Malabar will be the first of many biomethane projects in Australia, with the company(and many others like them) exploring a pipeline of possibilities in and around the Sydney basin.
“Australia may have been slow off the mark on renewable gas compared to Europe and North America, but with the right policy settings, we have the potential to come home very strong, given the reliance on gas across many industry sectors, business and residential communities, as well as the extensive feedstock availability that we have analysed to be in close proximity to our network,’’ Mr Reardon said.
Pictured: Shaun Reardon, Executive General Manager, Networks, Jemena
Managing Director at Optimal Renewable Gas, Mike Davis, said countless investors that they have spoken to are watching and waiting for the enabling policy framework to be in position, before going all in, buoyed by the extraordinary growth in Europe and North America and domestic opportunities.
Optimal itself has identified 10 bio-hub projects it wants to bring onto market by 2030, requiring investment of around $1 billion.
Mr Davis said the opportunity is immense for investors, given Australia is blessed with an abundance of under utilised feedstocks, from agricultural residues and organic waste, to landfill and household food scraps.
“We see, with the right policy mechanisms, a very rapid acceleration of the market,’’ Mr Davis said.
“We speak to a lot of international investors and they are looking at the Australian market from the sidelines. They are waiting for the right policy and support - then they won’t be cautious about bringing in that low-cost capital.
“By 2030, we estimate there could easily be 10 per cent of the domestic gas market provided by renewable gas. And then we see a significant scale up from there as technology continues to improve, efficiencies improve, and we have better aggregation of feedstocks.”
All from a standing start.