Is the sustainability of biogas a familiar topic or is it mandatory and additional workload in an already regulated industry?
Regardless of the answer, we want to share a few things about the sustainability of biogas and, through it, biomethane.

What is the basis for the sustainability of biomethane?

The sustainability of biomethane is based on the RED II directive, which is overseen in Finland by the Energy Authority. In short and simple terms, the producer must demonstrate that the calculated reference value of the emissions from their biomethane/biogas production chain is lower than the emission reduction of the fossil fuel used for comparison. It might not be as straightforward as it sounds, though. Let’s take an example: Biogas plant A produces biomethane for use in transportation. The plant was completed in 2020, but they haven’t calculated their sustainability yet, so they don’t know if the plant meets the requirements set by the Energy Authority. Since the plant was completed in 2020, its emission reduction must be at least 60% lower compared to fossil gasoline. The reference value for gasoline is 94 g CO2eq/MJ. To meet the RED II directive’s requirement, the production chain’s emissions should be at least 40% lower than those of gasoline, which means lower than 37,6 g CO2/MJ.

What significance does the sustainability of biomethane have for biogas producers?

So, what does this number actually mean? It has various implications. If you’re a biogas producer who wants to distribute biomethane to industry or use it as a fuel for transportation, it has tax implications if you don’t meet the Energy Authority’s requirement. If a facility wanted to sell its product for transportation and didn’t meet the requirement, in practice, the distributor would be delivering natural gas, and they would have to buy the percentage of renewable gas specified by the distribution obligation for that year to comply with the distribution obligation act. This has a significant impact on profitability because if the producer could distribute biomethane, they could sell the remaining quotas to another party after fulfilling their share of the distribution obligation and derive financial benefit from it. Now, if the emission reduction requirement isn’t met, the situation is reversed.

If the produced gas were sold to an operator subject to the emissions trading act, and the gas didn’t meet the requirements, the operator would essentially be buying natural gas, which would have financial implications due to different tax treatment. Additionally, the operator’s emissions would increase significantly, potentially requiring them to purchase additional emission allowances from the market to cover the rising emissions, creating cost pressures. When gas meets the requirements, the buyer’s overall emissions will likely decrease compared to the baseline, allowing them to potentially sell their emission allowances on the market and benefit financially. This is why sustainable biomethane has a strong market, and for this reason, gas buyers ask for and require at least an indicative calculation of the emission factor to price the product correctly.

If, on the other hand, the producer is, for example, a farm that generates electricity and heat from gas for their own needs, and their production exceeds the small-scale producer threshold of 1 GWh, they would have to pay a 10,33 € /MWh tax on the biogas used for heating purposes. If the sustainability of biogas can be demonstrated, the tax for heating would drop to the minimum level specified in the Energy Tax Directive, which is 1.2 €/MWh. Additionally, the carbon dioxide tax would drop from 12,94 €/MWh to zero, resulting in a total tax of 23,354 €/MWh for non-sustainable biogas and 1,284 €/MWh for sustainable biogas. I believe this has a significant impact.

How is the sustainability of biogas demonstrated?

In practice, the calculation can be done when you know a few basic facts: the inputs and their places of origin, the plant’s own energy consumption, and the end uses of the final products. The calculation can demonstrate the figure described above. To bring operations into compliance with the legislation, the producer must establish a sustainability system that shows that the operator is conducting their daily activities in a manner that truly meets the legal requirements for the produced gas. At Biovoima, we can assist with both the calculation and the construction of a sustainability system, whether you are a new operator or the owner of an existing plant.

Written by: Aki Heinonen

Quality, environment & project engineer, Suomen Biovoima Oy


Ask more about the sustainability of biogas and biomethane:

Aki Heinonen, Suomen Biovoima Oy

+358 50 308 7077