Biomethane as solution for sustainable restoration of gas infrastructure

The destruc­tion of Ukraine’s gas infra­struc­ture facil­i­ties (equiv­a­lent 4…8 bil­lion m3/year of pro­duc­tion) in 2024–2025 pos­es direct threat to not pro­vide the basic needs of the pop­u­la­tion – gas, heat, elec­tric­i­ty, motor fuel (CNG/LPG). This cri­sis may cov­er not only elec­tric­i­ty gen­er­a­tion, as it was in 2022–2024, but also gas sup­ply, and, as a result, heat sup­ply in the heat­ing sea­son 2025–2026. Restora­tion of dam­aged gas pro­duc­tion facil­i­ties could be done not only via direct recov­ery of nat­ur­al gas pro­duc­tion, but also through the intro­duc­tion of new facil­i­ties that pro­duce renew­able nat­ur­al gas — bio­methane.

Bio­methane is a gas that is com­plete­ly sim­i­lar in prop­er­ties to nat­ur­al gas. It is pro­duced from bio­gas (which in turn is pro­duced from renew­able bio­mass), or through bio­mass ther­mo­chem­i­cal gasi­fi­ca­tion. Enriched bio­methane is no dif­fer­ent from nat­ur­al gas, so it can be trans­port­ed and used in the same instal­la­tions as nat­ur­al gas. Bio­methane pro­duc­tion facil­i­ties are a kind of ana­logues of gas pro­duc­tion plants: the dif­fer­ence is that for the first one, feed­stock is renew­able bio­mass, and for the sec­ond ones, feed­stock is a mix­ture of fos­sil gas­es in the bow­els of the earth.

Biomethane – advantages and peculiarities

The intro­duc­tion of bio­methane pro­duc­tion facil­i­ties in Ukraine has a num­ber of advan­tages in terms of the resis­tance of the entire sys­tem to shocks, they are more “sur­viv­able” than tra­di­tion­al gas pro­duc­tion facil­i­ties, espe­cial­ly due to the pos­si­bil­i­ty of decen­tral­iza­tion of infra­struc­ture, pro­duc­tion and sup­ply. It is much more dif­fi­cult to simul­ta­ne­ous­ly destroy sev­er­al dozen small dis­persed bio­methane pro­duc­tion facil­i­ties than one cen­tral­ized nat­ur­al gas pro­duc­tion facil­i­ty. In Ukraine, there are favor­able con­di­tions for bio­methane projects – large farms (with a sig­nif­i­cant con­cen­tra­tion of feed­stock), a sig­nif­i­cant per­cent­age of gasi­fi­ca­tion (con­nec­tion points), high capac­i­ty of gas net­works, link­ing to feed­stock gen­er­a­tion points (rur­al areas), the pos­si­bil­i­ty of con­sump­tion either at the pro­duc­tion site or trans­mis­sion through dis­tri­b­u­tion net­works. Bio­methane facil­i­ties also have all the advan­tages of a renew­able ener­gy source – removal of waste from farms (includ­ing haz­ardous waste), recy­cling, reduc­tion of CO2 emis­sions, facil­i­ta­tion of tran­si­tion to green ener­gy and the ful­fill­ment of Ukraine’s goals on renew­able ener­gy, ener­gy inte­gra­tion of Ukraine and the EU, as well as spe­cif­ic tech­no­log­i­cal advan­tages – pro­vi­sion of self-suf­fi­cien­cy of the agri­cul­tur­al sec­tor with its own ener­gy source, the pos­si­bil­i­ty of cre­at­ing com­plex projects based on bio­methane plants with the con­sump­tion of var­i­ous feed­stocks and the pro­duc­tion of sev­er­al prod­ucts at the same time (bio­methane, liq­uid bio­fu­els, renew­able CO2, hydro­gen, organ­ic fer­til­iz­ers, ener­gy in var­i­ous forms).

Financial resources for recovery through biomethane projects

Since the end of 2024, new pack­ages of macro-finan­cial assis­tance to Ukraine’s ener­gy sec­tor until 2030 have been dis­cussed and par­tial­ly approved – USD 54 bil­lion from the Ukraine Facil­i­ty and USD 50 bil­lion loan pack­age from Rus­si­a’s frozen assets. If Ukraine con­sid­ers the pos­si­bil­i­ty of start­ing con­sul­ta­tions with inter­na­tion­al part­ners on the use of up to 10% of this amount for the imple­men­ta­tion of bio­methane projects (which is ful­ly in line with the financ­ing goals of men­tioned recov­ery pro­grams), this will make pos­si­ble, in terms of pro­duc­tion, to estab­lish a net­work of 500‑1000 bio­methane facil­i­ties till 2030–2035, with a capac­i­ty of 8 bil­lion cubic meters/year. This ful­ly fits into the exist­ing poten­tial of bio­methane in Ukraine (9.7 bil­lion m3/year only from agri­cul­tur­al waste) and net­work capac­i­ty (at least 10 bil­lion m3/year). Such  a sys­tem of decen­tral­ized gen­er­a­tion of clean renew­able ener­gy resources will be less sen­si­tive to future strikes pro­vid­ing long-term ener­gy secu­ri­ty and sta­bil­i­ty of the ener­gy sys­tem, will ensure the load­ing of dis­tri­b­u­tion gas net­works and GTS.

Problems of the sector and possible ways to overcome

Cur­rent­ly, the bio­methane mar­ket in Ukraine is func­tion­ing (there are first projects with a total pro­duc­tion of up to 50 mil­lion m3/year), but there are a num­ber of bar­ri­ers to fur­ther devel­op­ment: dif­fi­cul­ties and high cost of con­nect­ing to net­works, dif­fi­cul­ties in QA/QC of bio­methane in coor­di­na­tion with the region­al gas company/GTS oper­a­tor, dif­fi­cul­ties in cus­toms clear­ance dur­ing export, lack of bio­methane reg­is­ter in Ukraine, lack of link­ing with the Euro­pean Bio­methane Reg­is­ter (with­in the frame­work of UDB, which is also in the process of estab­lish­ment and approval), the con­tin­u­a­tion of the pay­ment of the CO2 tax on bio­methane as a renew­able prod­uct, the lack of coor­di­na­tion at the state lev­el and a strate­gic vision for the devel­op­ment of the sec­tor to attract invest­ments.

To scale the bio­methane sec­tor to the spec­i­fied lev­el of pro­duc­tion of 8 bil­lion m3/year by 2035, it is nec­es­sary to car­ry out at least the fol­low­ing mea­sures in 2025:

— Imple­men­ta­tion of the bio­methane reg­is­ter and its link­ing with the Euro­pean reg­is­ters through the UDB;

— Abo­li­tion of PSO and cross-sub­si­diza­tion of domes­tic gas prices between coun­ter­par­ties, intro­duc­tion of gas prices for all cat­e­gories of con­sump­tion (includ­ing the pop­u­la­tion) at the mar­ket lev­el. This is no longer a ques­tion of price, but a ques­tion of sur­vival and avail­abil­i­ty of the resource as such.

— Abo­li­tion of the CO2 tax on bio­methane as a renew­able gas.

— Elab­o­ra­tion of a strat­e­gy for the devel­op­ment of the bio­methane sec­tor until 2030 and fur­ther until 2050.

— Estab­lish­ing a coor­di­nat­ing body that will be respon­si­ble for the tech­ni­cal aspects of the sec­tor;

— Stim­u­la­tion of domes­tic con­sump­tion through the intro­duc­tion of a num­ber of incen­tive mech­a­nisms: pre­mi­ums on the price of bio­methane with­in Ukraine, grant financ­ing of pilot projects with spe­cif­ic con­fig­u­ra­tions in accor­dance with the best prac­tices of the EU, co-financ­ing of cap­i­tal expen­di­tures or loans for projects (includ­ing through the Decar­boniza­tion Fund), pref­er­en­tial lend­ing, issuance of green bonds for projects, attrac­tion of buy­ers of CO2 emis­sion reduc­tions (vol­un­tary sys­tems or with­in the frame­work of the EU ETS).

Among the con­stant threats to ener­gy, the devel­op­ment of the bio­methane sec­tor pro­vides a dou­ble ben­e­fit. This is a direct restora­tion of capac­i­ties dam­aged by mis­sile strikes, and at the same time the cre­ation of a new decen­tral­ized ener­gy sys­tem of Ukraine based on renew­able ener­gy sources, which is less sen­si­tive to mis­sile strikes in the future.

The arti­cle was devel­oped by Olek­sii Epik with­in Capac­i­ties for Cli­mate Action (C4CA) project, which is imple­ment­ed by GIZ on behalf of the Ger­man Min­istry for Eco­nom­ic Affairs and Cli­mate Action (BMWK) with­in the frame­work of the Inter­na­tion­al Cli­mate Ini­tia­tive (IKI) and co-financed by the Euro­pean Union.