High natural gas prices could also open up new opportunities for farmers — specifically, the profitability of domestic biomethane production. Georgii Geletukha, Head of the Board of the Bioenergy Association of Ukraine, discussed the prospects for implementing such technologies in an exclusive interview and outlined the current stage of biomethane market development in Ukraine.

–– Could you please tell us what the European experience in biogas and biomethane production looks like?

– Today, the combined production of biogas and biomethane already satisfies 4.6% of the EU's natural gas demand (around 18 billion m3 of CH4 per year). By 2030, it is projected that 11% of natural gas in the EU will be replaced by renewable gases. The majority (8%) will consist specifically of biomethane (up to 35 billion m3 of CH4 per year). By 2050, biomethane production could reach 120 billion m3 of CH4 per year, covering up to 35–40% of the EU's natural gas needs.

– Why is biomethane particularly promising for Ukraine?

– Currently, Ukraine can genuinely compete with any country in biomethane production. Ukraine can offer the cheapest feedstock for biomethane production; we have the largest agricultural land area in Europe and, accordingly, one of the best potentials in the world for agricultural feedstock for biomethane production.

Unlike hydrogen, biomethane is fully ready for injection into the gas grid right away. No investments are required to modernize gas networks (transmission and distribution systems) and gas equipment (gas burners, engines, turbines, etc.).

In addition, biomethane plants generate digestate, which can become a primary organic fertilizer necessary for the restoration of Ukrainian soils.

Today, it is the cheapest possible renewable gas.

– Is there enough feedstock in Ukraine for biogas and biomethane production?

– According to recent studies by the Bioenergy Association of Ukraine, the potential for biogas and biomethane production in Ukraine using anaerobic digestion technology is estimated at 9.7 billion cubic meters of methane per year. This accounts for about one-third of Ukraine's total natural gas consumption and is practically equal to the country's annual natural gas imports. This potential includes agricultural waste and crop residues, industrial and municipal wastewater, the organic fraction of municipal solid waste, and corn silage.

By 2050, the total potential for biomethane production could grow to 17 billion cubic meters per year. A significant increase in potential is projected due to the growth of industrial production, the expansion of the feedstock base for biomethane production, the consolidation of livestock enterprises, and the transition from the disposal of municipal solid waste to mechanical-biological treatment technologies.

Half of the potential volume of biomethane in Ukraine can be produced from crop residues—straw and corn stalks. Another third can come from corn silage grown specifically for this purpose. The remainder is distributed among livestock waste (cattle, pig, and poultry manure), organic wastewater from the food industry (dairies, breweries, etc.), and the organic fraction of municipal solid waste (subject to separate collection). In total, this will yield 10 billion cubic meters of biomethane.

– How profitable is biomethane production for agricultural producers?

– The feasibility study for biomethane production from agricultural waste, including corn stalks/wheat straw, at an output capacity of 10 million cubic meters of biomethane per year, demonstrates that the production cost of biomethane ranges from 630 to 660 euros per 1,000 cubic meters. Given a market price of 900 euros per 1,000 cubic meters for biomethane, the internal rate of return (IRR) of the projects will be in the range of 25–28%, making such projects attractive to investors.

Agricultural producers should also be motivated by the fact that the primary driver for biomethane production right now is the high price of natural gas. It has not always been this way; two summers ago, 1,000 cubic meters of natural gas cost approximately 100 euros. At that time, biomethane production projects were unprofitable. For them to be profitable, the selling price of biomethane would have to be 900 euros per 1,000 cubic meters, while the market value of natural gas was 100 euros per 1,000 cubic meters. Today, the picture is completely different: the cost of natural gas exceeds 1,000 euros, and we are ready to produce at 900 euros per 1,000 cubic meters.

– Please give a few successful examples of implementing such technologies on the basis of agricultural production.

– There are 73 biogas plants operating in Ukraine, of which 31 are biogas plants utilizing landfill gas from municipal solid waste, and 42 are plants operating on feedstocks of agricultural origin. The vast majority generate electricity. 60 biogas plants have received the feed-in ("green") tariff for generated electricity. Total capacity: 124.1 MW of electricity. Practically all of them are interested in retrofitting for biomethane production. The profitability of biomethane production is almost twice as high as that of generating electricity from biogas. The limiting factor is the availability and capacity of gas distribution networks (GDNs) to which connection is possible.

Biomethane is not yet produced in Ukraine. However, a number of biomethane plants are scheduled to begin operating in Ukraine in 2023.

Plants being reconstructed through the modernization of existing biogas plants into biomethane facilities:

Gals-Agro Company, Chernihiv Oblast — 3 million cubic meters/year of biomethane; Gals-Agro Company, Kyiv Oblast — 10 million cubic meters/year of biomethane; Yuzefo-Mykolaivka Biogas Company, Vinnytsia Oblast — 10 million cubic meters/year of biomethane; Teofipol Energy Company, Khmelnytskyi Oblast — up to 20 million cubic meters/year of biomethane in the form of bio-LNG.

New plants:

Vit-Agro Company, Khmelnytskyi Oblast — 3 million cubic meters/year of biomethane.

– What could the export prospects to Europe be?

– The Bioenergy Association of Ukraine's Bioenergy Development Roadmap for Ukraine up to 2050 projects biomethane production in Ukraine reaching up to 1 billion cubic meters/year by 2030 and up to 4.5 billion cubic meters/year by 2050. The growth rate of biomethane production in Ukraine could be significantly higher under long-term high prices for natural gas and greenhouse gas emissions, for which all prerequisites exist.

At the initial stages of the biomethane industry's development in Ukraine, the most likely development scenario is the export of the bulk of the produced biomethane to EU countries, where stable demand and a premium price have already formed.

Biomethane holds the status of a renewable energy source, which is why Europe is very interested specifically in this gas. According to the EU Green Deal, Europe must almost completely abandon all types of fossil fuels by 2050. Of all types of renewable energy sources, biomethane is the option closest to the market. Theoretically, if Europe needs 35 billion cubic meters in 2030, Ukraine could cover 2 to 3 billion. If we sold at least 1,000 euros per thousand cubic meters, we would earn 2 to 3 billion euros a year solely from the sale of biomethane. This is a substantial additional source of revenue for our agriculture.

Europe has already adopted an economic decarbonization program. Ukraine will most likely follow this path as well. At the very least, if Ukraine strives for full EU membership, it will simply be necessary for us to do so. This will become yet another factor stimulating the transition from natural gas to biomethane.

– What obstacles currently exist in the development of the biomethane market in Ukraine?

– Developing biomethane production projects actually requires two things: feedstock from which biomethane can be produced, and a gas pipeline into which it can be injected. But in reality, it is not that simple.

Gas pipelines exist throughout all of Ukraine, but gas consumption is uneven, particularly due to seasonality. More gas is consumed during the heating season, so biomethane will be easy to sell in winter, but the station must operate evenly throughout the year. It is problematic to find locations where summer gas consumption is sufficiently high. There is a greater chance of finding an acceptable connection point when the pipeline you are tapping into serves industrial enterprises as well as the population.

Furthermore, not all operating biogas plants will be able to convert to biomethane production. When they were designed, the primary goal was the generation and sale of electricity. To convert to biomethane, one must first ensure that there is a guaranteed market for its sale during the summer. If you are fortunate enough to find such a pipeline, the biogas plant can be retrofitted.

Overall, the main deterrents to the development of biomethane production at present are:
– Active combat operations and the associated investment risks;
– Limited capacity for accepting biomethane into gas distribution networks, especially during the summer;
– The closed nature of the markets in some EU countries regarding exports of biomethane from Ukraine.

– What legislative regulations does the industry need?

– It is necessary to launch the biomethane registry and the mechanism for issuing guarantees of origin for biomethane. According to Cabinet of Ministers Resolution No. 823 dated July 22, 2022, "On Approval of the Procedure for the Functioning of the Biomethane Registry," the biomethane registry was to be created by the State Agency on Energy Efficiency within 6 months after the adoption of the resolution (February 2023).