At an informal meeting in Prague yesterday, the majority of EU energy ministers agreed to further efforts to save energy and signaled increased solidarity in the event of a gas shortage. Joint gas purchasing is supposed to start as early as next year. Manuel Berkel has the details.
The EU Commission wants biomethane to play a more significant role in energy supply in the future to get away from Russian gas more quickly. In Germany, for example, just around 250 biogas plants feed gas into the grid, which corresponds to one percent of the German gas market. Timo Landenberger explains how the Commission intends to increase the share of biomethane across the EU.
Retirement is an alien concept to Rainer Hinrichs-Rahlwes. The 68-year-old is a board member of the German Renewable Energy Federation (BEE) and lives for green energy, as you can read in today’s Profile.
Following the ministerial meeting, Energy Commissioner Kadri Simson announced yesterday afternoon that the Commission would present four initiatives for further action on Oct. 18.
Two proposals are intended to ensure that EU states do not drive up each other’s prices again when refilling storage tanks from next spring. Commission President Ursula von der Leyen had already made this a priority. A 10-point plan from Germany and the Netherlands has also been circulating since Monday, in which they describe the accelerated filling of storage facilities this year as one of the main causes of the exorbitantly high gas prices in the summer.
The first thing Simson mentioned now is a legislative proposal to develop a new benchmark index by spring, which would be an alternative to the Dutch TTF. The latter has multiplied due to Russia’s war against Ukraine. When asked, Simson said the new index should also address the problem that existing long-term contracts are often linked to the TTF.
The non-paper from the Netherlands and Germany, on the other hand, reads much more cautiously. The two important players in the European gas market signal their approval of a new benchmark for new LNG supply contracts. With regard to existing supply contracts, however, the Commission should closely examine whether the new index should remain voluntary. The two governments urge the Commission to consider the impact on financial markets before making decisions and to involve financial regulators, market parties and gas exchange operators.
In parallel, the Commission negotiates adjusted prices with major gas exporters such as Norway. If these do not go fast enough, there needs to be a temporary mechanism to lower prices, Simson said. This is to be understood as a threat of a unilateral price cap on gas imports. Norway had once again explicitly advised against this yesterday. But next week, the Commission also wants to outline such a move’s risks.
Also, by spring, the EU states now want to implement joint gas procurement via the Energy Platform to prevent a renewed overbidding race. Germany had recently lobbied strongly for this after a long period of hesitation. In the 10-point plan, Germany and the Netherlands propose to start refilling earlier in 2023 (Europe.Table reported) and possibly stretch the storage period. They also propose a “more balanced refill path“, which could mean a plea for at least partially weaker storage obligations.
Simson supported the idea that the energy platform should focus primarily on coordinating and aggregating gas demand for refilling storage.
However, the Commission also secured majority support among member states for two key demands. Next week, it intends to present proposals for increased energy savings and greater solidarity among the member states. It had made both of these a condition for market intervention. The fact that the energy ministers now recognize this is a big surprise from yesterday’s meeting.
One option, according to Simson, would be to declare an emergency so that the gas savings target of minus 15 percent adopted in the summer becomes mandatory for member states. So far, EU countries have only reduced their gas consumption by ten percent, Simson said yesterday. But the Union is not yet at the point of declaring an emergency. However, this also requires a majority decision by the Council. As an alternative for the new proposal, Simson, therefore, mentioned new measures to ensure sufficient energy savings without being more specific.
The final part of the new energy package will be a proposal for more binding solidarity between member states. In principle, states are already obliged to supply gas to protected customers of other EU members in the event of a gas shortage. But to avoid a dispute over terms in an emergency, states should actually have concluded solidarity agreements – which few have done. Under the leadership of Italy, Greece, Belgium and Poland, several governments had proposed guidelines to the Commission. But the latter now wants more binding force. “We will propose a regulation that is directly applicable in the event of a case,” Simson announced.
However, some regions in the EU could be more affected by a gas shortage than others. For these cases, the Commission, therefore, wants to investigate whether even more far-reaching regulations are needed. Brussels, therefore, does not want to hesitate any further to prepare for real emergencies in winter.
However, there was no consensus on a general gas price cap at wholesale level. Prior to the meeting, Adam Guibourge-Czetwertyński, Poland’s State Secretary for the Environment, said that two more and now 17 countries supported this measure. To avert this, the Commission had shown itself willing to let the member states subsidize the price of gas for power generation. However, the Commission does not yet intend to present a proposal on this matter next week. It has concentrated on those measures for which there is broad support among the member states, Simson said. This could possibly change over the weekend.
Germany, in particular, is instead counting on siphoning off revenues from power producers above a maximum value. In the new non-paper, Berlin and The Hague again warn of rising gas demand if gas for power plants is artificially cheapened and bring up financial burden sharing.
There are only four lines in the European Commission’s RePowerEU plan, which is intended to drive forward the diversification of energy supplies and, thus, independence from Russian gas. Four lines that may have far-reaching consequences.
This is because the plan envisages increasing the production of biomethane, i.e., upgraded biogas, to 35 billion cubic meters by 2030. This corresponds to a doubling of the previous Green Deal target and a tenfold increase in the current production volume. This alone is expected to replace more than 20 percent of natural gas imports from Russia. And these, in turn, have so far accounted for around 45 percent of total gas consumption in the EU. Can this plan succeed?
In July, the Gas for Climate initiative published a report summarizing the biomethane potential for the EU in both the short and long term based on existing studies, national targets and strategies. According to the paper, there are enough feedstocks available to increase production volumes from about three currently to 41 billion cubic meters by 2030 and 151 billion cubic meters by 2050. That would be more than half of the EU’s future gas demand forecast by the Commission.
The process sounds simple: The raw materials for biomethane are mainly agricultural residues such as fertilizer, manure and crop residues, but also energy crops grown in-house. Organic waste from industry and municipalities is also used. These are fermented in special plants to produce biogas, which is already being used in many cases for the direct generation and local use of heat and electricity. “We are having roughly 20,000 biogas plants across Europe. When you put it all together we already produce more energy than the whole natural gas consumption of Belgium,” Harmen Dekker, CEO of the European Biogas Association, tells Europe.Table.
Another option, which has hardly been exploited to date, is the upgrading of biogas: If the gas is desulfurized and the CO2 it contains is split off, biomethane is produced. Since natural gas consists almost exclusively of methane, it can easily be replaced by upgraded biogas. Biomethane can, therefore, simply be fed into the existing natural gas network and used decentrally to generate heat or electricity and also as an energy source in industry or transport.
But why has biomethane so far only eked out a niche existence in the EU’s energy mix? One of the reasons is the small-scale structure of the biogas sector. “We are not a huge oil field with large quantity of energy for a whole country. But we are diversified, embedded in a circular economy,” Dekker says. “And this local aspect makes it sometimes a difficult message for the politicians to explain.”
In times of cheap natural gas imports, the costly refinement of biogas was not worthwhile for most farmers. Now, the EU Commission’s plan is to provide financial incentives via the second pillar of the Common Agricultural Policy (CAP). But there is resistance to this in the EU Parliament. The financing of a nationwide energy supply is not the purpose of the CAP, according to circles in the Agriculture Committee. There is too much concern that the money will be grabbed by energy companies.
Additionally, a number of further hurdles need to be removed to achieve the new biomethane target. At the end of September, the Commission, together with industry representatives, launched the Biomethane Industrial Partnership for this purpose: “We have to make sure that biomethane can flow freely through Europe. At the moment, this is not the case,” Dekker says. He adds that it is also important to significantly speed up the approval process for production plants. “Furthermore, we need to ensure that we have much faster permitting across Europe. The process should be one year maximum whilst now it can last up to nine years and we don’t have that time.”
Denmark sets a good example. There, most of the farmers’ biogas plants are already networked. This facilitates the production of biomethane, which already accounts for 25 percent of the Danish gas market and is expected to grow to 100 percent by 2033. Germany, on the other hand, is falling far short of its potential, Dekker said, speaking of the “sleeping giant”.
Around half of all biogas plants in the EU are located in Germany and produce around 95 terawatt hours of biogas annually. Most of this is converted directly into electricity and heat on site using cogeneration. Only about 250 plants produce biomethane and feed it into the gas grid, which accounts for one percent of the German gas market and three percent of German gas imports from Russia, according to the Federal Ministry of Food and Agriculture (BMEL).
In the short term, this volume can hardly be increased because the existing plants for processing are already working to capacity, according to a BMEL spokesperson. By 2030, the share of biomethane in the German gas market could be increased to about three percent. An EU-wide tenfold increase in production volume in the same period is “very ambitious,” she said.
The German Association of Energy and Water Industries (BDEW) calls for a much more significant increase in a position paper. “The potentially achievable volume of up to 100 terawatt hours of biomethane per year corresponds to around ten percent of Germany’s current natural gas consumption,” according to the document.
But a few things have to change for this to happen. Most biogas plants cannot produce biomethane and are so small that the expensive conversion is not worthwhile. Additionally, there is a lack of connections to the gas grid. Legislation, including support via the Renewable Energy Sources Act and restrictions on energy from biomass, would also have to be adapted.
Last week, the German government presented a key points paper for the national biomass strategy. This is to be drawn up in the coming weeks with the participation of experts and interest groups and will ensure sustainable use of the available biomass. The focus is to be on preserving biodiversity and ensuring food security.
Because even though BDEW and the industry association emphasize that an increase in biogas and biomethane production can be achieved solely through the untapped potential of organic waste, energy crops already occupy around one-fifth of Germany’s arable land. This is another reason why environmentalists view the expansion of biogas production as only a supposedly green solution and frequently criticize it. “Biogas is not an alternative to natural gas. Because the cultivation of energy crops displaces food production and any further pressure on natural ecosystems endangers biodiversity,” Greenpeace announced in a statement.
“Many arable areas in Germany are not so well suited to the cultivation of bread cereals, where fodder production is more profitable. With the decline in livestock farming, the only way to utilize the growth is in biogas plants,” counters Udo Hämmerling, deputy secretary general of the German Farmers’ Association (DBV). The plants are indispensable for agriculture, he says. Only by fermenting liquid manure and dung can the climate gases that would otherwise be produced be avoided. The residues left over after fermentation could be spread on the fields as fertilizer. This is a popular alternative to synthetic fertilizers, not least because of the rise in fertilizer prices, and it is also much more environmentally friendly.
Rainer Hinrichs-Rahlwes is not ready to rest. At the weekend, he is at the Green Party’s energy working group, and during the week he is on the road in Brussels – when it comes to renewable energies, Hinrichs-Rahlwes is always present. The 68-year-old is a board member of the German Renewable Energy Federation (BEE), where he is responsible for European and international policy. In Brussels, he represents the BEE in the European Renewable Energy Fund (EREF), and he advocates wind, solar and hydropower. The goal: 100 percent renewable energies in all sectors.
“I know a whole range of examples of how this can be implemented politically and where it is already being done in practice,” says Hinrichs-Rahlwes. Until 2005, he looked after renewable energies as a department head at the German Federal Ministry for the Environment. Since then, he has advised political parties, companies and governments and taken on posts in various associations. The 68-year-old is now retired and works on a voluntary or honorary basis. He has no plans to stop.
Hinrichs-Rahlwes is optimistic: “It’s no longer a question of whether it can be done, but how quickly it can be done.” With solar energy from Portugal, green hydrogen from Spain and offshore wind power from France and Scandinavia, he says, the EU could be completely self-sufficient in energy in the medium term. By 2050, he expects that not only the electricity market will have changed but also the energy supply for heat and mobility. Currently, the vast majority of German households still heat with oil or gas, and most cars are powered by combustion engines.
In the meantime, however, word has spread to the major utilities in the associations that investing in renewables pays off. “Wind and solar, in particular, are unbeatable in terms of cost,” says Hinrichs-Rahlwes.
He is particularly concerned about bureaucratic hurdles: “It can’t be right that it takes up to seven years to get approval for wind turbines in Germany.” Here, he says, the EU must speed up the procedures. Additionally, the EU could provide incentives for hesitant countries, particularly in Eastern Europe, which are currently still subsidizing fossil fuels.
In addition, the European market must grow even closer together with renewables, says Hinrichs-Rahlwes. “The wind is always blowing… somewhere” is a slogan of the European Wind Association. Offshore wind is only available on the coast. In order for it to reach the other regions, Europe must jointly regulate energy distribution. In any case, the companies have an interest in uniform European standards, says Hinrichs-Rahlwes: “Their planning has long since crossed national borders.” Jana Hemmersmeier
At an informal meeting in Prague yesterday, the majority of EU energy ministers agreed to further efforts to save energy and signaled increased solidarity in the event of a gas shortage. Joint gas purchasing is supposed to start as early as next year. Manuel Berkel has the details.
The EU Commission wants biomethane to play a more significant role in energy supply in the future to get away from Russian gas more quickly. In Germany, for example, just around 250 biogas plants feed gas into the grid, which corresponds to one percent of the German gas market. Timo Landenberger explains how the Commission intends to increase the share of biomethane across the EU.
Retirement is an alien concept to Rainer Hinrichs-Rahlwes. The 68-year-old is a board member of the German Renewable Energy Federation (BEE) and lives for green energy, as you can read in today’s Profile.
Following the ministerial meeting, Energy Commissioner Kadri Simson announced yesterday afternoon that the Commission would present four initiatives for further action on Oct. 18.
Two proposals are intended to ensure that EU states do not drive up each other’s prices again when refilling storage tanks from next spring. Commission President Ursula von der Leyen had already made this a priority. A 10-point plan from Germany and the Netherlands has also been circulating since Monday, in which they describe the accelerated filling of storage facilities this year as one of the main causes of the exorbitantly high gas prices in the summer.
The first thing Simson mentioned now is a legislative proposal to develop a new benchmark index by spring, which would be an alternative to the Dutch TTF. The latter has multiplied due to Russia’s war against Ukraine. When asked, Simson said the new index should also address the problem that existing long-term contracts are often linked to the TTF.
The non-paper from the Netherlands and Germany, on the other hand, reads much more cautiously. The two important players in the European gas market signal their approval of a new benchmark for new LNG supply contracts. With regard to existing supply contracts, however, the Commission should closely examine whether the new index should remain voluntary. The two governments urge the Commission to consider the impact on financial markets before making decisions and to involve financial regulators, market parties and gas exchange operators.
In parallel, the Commission negotiates adjusted prices with major gas exporters such as Norway. If these do not go fast enough, there needs to be a temporary mechanism to lower prices, Simson said. This is to be understood as a threat of a unilateral price cap on gas imports. Norway had once again explicitly advised against this yesterday. But next week, the Commission also wants to outline such a move’s risks.
Also, by spring, the EU states now want to implement joint gas procurement via the Energy Platform to prevent a renewed overbidding race. Germany had recently lobbied strongly for this after a long period of hesitation. In the 10-point plan, Germany and the Netherlands propose to start refilling earlier in 2023 (Europe.Table reported) and possibly stretch the storage period. They also propose a “more balanced refill path“, which could mean a plea for at least partially weaker storage obligations.
Simson supported the idea that the energy platform should focus primarily on coordinating and aggregating gas demand for refilling storage.
However, the Commission also secured majority support among member states for two key demands. Next week, it intends to present proposals for increased energy savings and greater solidarity among the member states. It had made both of these a condition for market intervention. The fact that the energy ministers now recognize this is a big surprise from yesterday’s meeting.
One option, according to Simson, would be to declare an emergency so that the gas savings target of minus 15 percent adopted in the summer becomes mandatory for member states. So far, EU countries have only reduced their gas consumption by ten percent, Simson said yesterday. But the Union is not yet at the point of declaring an emergency. However, this also requires a majority decision by the Council. As an alternative for the new proposal, Simson, therefore, mentioned new measures to ensure sufficient energy savings without being more specific.
The final part of the new energy package will be a proposal for more binding solidarity between member states. In principle, states are already obliged to supply gas to protected customers of other EU members in the event of a gas shortage. But to avoid a dispute over terms in an emergency, states should actually have concluded solidarity agreements – which few have done. Under the leadership of Italy, Greece, Belgium and Poland, several governments had proposed guidelines to the Commission. But the latter now wants more binding force. “We will propose a regulation that is directly applicable in the event of a case,” Simson announced.
However, some regions in the EU could be more affected by a gas shortage than others. For these cases, the Commission, therefore, wants to investigate whether even more far-reaching regulations are needed. Brussels, therefore, does not want to hesitate any further to prepare for real emergencies in winter.
However, there was no consensus on a general gas price cap at wholesale level. Prior to the meeting, Adam Guibourge-Czetwertyński, Poland’s State Secretary for the Environment, said that two more and now 17 countries supported this measure. To avert this, the Commission had shown itself willing to let the member states subsidize the price of gas for power generation. However, the Commission does not yet intend to present a proposal on this matter next week. It has concentrated on those measures for which there is broad support among the member states, Simson said. This could possibly change over the weekend.
Germany, in particular, is instead counting on siphoning off revenues from power producers above a maximum value. In the new non-paper, Berlin and The Hague again warn of rising gas demand if gas for power plants is artificially cheapened and bring up financial burden sharing.
There are only four lines in the European Commission’s RePowerEU plan, which is intended to drive forward the diversification of energy supplies and, thus, independence from Russian gas. Four lines that may have far-reaching consequences.
This is because the plan envisages increasing the production of biomethane, i.e., upgraded biogas, to 35 billion cubic meters by 2030. This corresponds to a doubling of the previous Green Deal target and a tenfold increase in the current production volume. This alone is expected to replace more than 20 percent of natural gas imports from Russia. And these, in turn, have so far accounted for around 45 percent of total gas consumption in the EU. Can this plan succeed?
In July, the Gas for Climate initiative published a report summarizing the biomethane potential for the EU in both the short and long term based on existing studies, national targets and strategies. According to the paper, there are enough feedstocks available to increase production volumes from about three currently to 41 billion cubic meters by 2030 and 151 billion cubic meters by 2050. That would be more than half of the EU’s future gas demand forecast by the Commission.
The process sounds simple: The raw materials for biomethane are mainly agricultural residues such as fertilizer, manure and crop residues, but also energy crops grown in-house. Organic waste from industry and municipalities is also used. These are fermented in special plants to produce biogas, which is already being used in many cases for the direct generation and local use of heat and electricity. “We are having roughly 20,000 biogas plants across Europe. When you put it all together we already produce more energy than the whole natural gas consumption of Belgium,” Harmen Dekker, CEO of the European Biogas Association, tells Europe.Table.
Another option, which has hardly been exploited to date, is the upgrading of biogas: If the gas is desulfurized and the CO2 it contains is split off, biomethane is produced. Since natural gas consists almost exclusively of methane, it can easily be replaced by upgraded biogas. Biomethane can, therefore, simply be fed into the existing natural gas network and used decentrally to generate heat or electricity and also as an energy source in industry or transport.
But why has biomethane so far only eked out a niche existence in the EU’s energy mix? One of the reasons is the small-scale structure of the biogas sector. “We are not a huge oil field with large quantity of energy for a whole country. But we are diversified, embedded in a circular economy,” Dekker says. “And this local aspect makes it sometimes a difficult message for the politicians to explain.”
In times of cheap natural gas imports, the costly refinement of biogas was not worthwhile for most farmers. Now, the EU Commission’s plan is to provide financial incentives via the second pillar of the Common Agricultural Policy (CAP). But there is resistance to this in the EU Parliament. The financing of a nationwide energy supply is not the purpose of the CAP, according to circles in the Agriculture Committee. There is too much concern that the money will be grabbed by energy companies.
Additionally, a number of further hurdles need to be removed to achieve the new biomethane target. At the end of September, the Commission, together with industry representatives, launched the Biomethane Industrial Partnership for this purpose: “We have to make sure that biomethane can flow freely through Europe. At the moment, this is not the case,” Dekker says. He adds that it is also important to significantly speed up the approval process for production plants. “Furthermore, we need to ensure that we have much faster permitting across Europe. The process should be one year maximum whilst now it can last up to nine years and we don’t have that time.”
Denmark sets a good example. There, most of the farmers’ biogas plants are already networked. This facilitates the production of biomethane, which already accounts for 25 percent of the Danish gas market and is expected to grow to 100 percent by 2033. Germany, on the other hand, is falling far short of its potential, Dekker said, speaking of the “sleeping giant”.
Around half of all biogas plants in the EU are located in Germany and produce around 95 terawatt hours of biogas annually. Most of this is converted directly into electricity and heat on site using cogeneration. Only about 250 plants produce biomethane and feed it into the gas grid, which accounts for one percent of the German gas market and three percent of German gas imports from Russia, according to the Federal Ministry of Food and Agriculture (BMEL).
In the short term, this volume can hardly be increased because the existing plants for processing are already working to capacity, according to a BMEL spokesperson. By 2030, the share of biomethane in the German gas market could be increased to about three percent. An EU-wide tenfold increase in production volume in the same period is “very ambitious,” she said.
The German Association of Energy and Water Industries (BDEW) calls for a much more significant increase in a position paper. “The potentially achievable volume of up to 100 terawatt hours of biomethane per year corresponds to around ten percent of Germany’s current natural gas consumption,” according to the document.
But a few things have to change for this to happen. Most biogas plants cannot produce biomethane and are so small that the expensive conversion is not worthwhile. Additionally, there is a lack of connections to the gas grid. Legislation, including support via the Renewable Energy Sources Act and restrictions on energy from biomass, would also have to be adapted.
Last week, the German government presented a key points paper for the national biomass strategy. This is to be drawn up in the coming weeks with the participation of experts and interest groups and will ensure sustainable use of the available biomass. The focus is to be on preserving biodiversity and ensuring food security.
Because even though BDEW and the industry association emphasize that an increase in biogas and biomethane production can be achieved solely through the untapped potential of organic waste, energy crops already occupy around one-fifth of Germany’s arable land. This is another reason why environmentalists view the expansion of biogas production as only a supposedly green solution and frequently criticize it. “Biogas is not an alternative to natural gas. Because the cultivation of energy crops displaces food production and any further pressure on natural ecosystems endangers biodiversity,” Greenpeace announced in a statement.
“Many arable areas in Germany are not so well suited to the cultivation of bread cereals, where fodder production is more profitable. With the decline in livestock farming, the only way to utilize the growth is in biogas plants,” counters Udo Hämmerling, deputy secretary general of the German Farmers’ Association (DBV). The plants are indispensable for agriculture, he says. Only by fermenting liquid manure and dung can the climate gases that would otherwise be produced be avoided. The residues left over after fermentation could be spread on the fields as fertilizer. This is a popular alternative to synthetic fertilizers, not least because of the rise in fertilizer prices, and it is also much more environmentally friendly.
Rainer Hinrichs-Rahlwes is not ready to rest. At the weekend, he is at the Green Party’s energy working group, and during the week he is on the road in Brussels – when it comes to renewable energies, Hinrichs-Rahlwes is always present. The 68-year-old is a board member of the German Renewable Energy Federation (BEE), where he is responsible for European and international policy. In Brussels, he represents the BEE in the European Renewable Energy Fund (EREF), and he advocates wind, solar and hydropower. The goal: 100 percent renewable energies in all sectors.
“I know a whole range of examples of how this can be implemented politically and where it is already being done in practice,” says Hinrichs-Rahlwes. Until 2005, he looked after renewable energies as a department head at the German Federal Ministry for the Environment. Since then, he has advised political parties, companies and governments and taken on posts in various associations. The 68-year-old is now retired and works on a voluntary or honorary basis. He has no plans to stop.
Hinrichs-Rahlwes is optimistic: “It’s no longer a question of whether it can be done, but how quickly it can be done.” With solar energy from Portugal, green hydrogen from Spain and offshore wind power from France and Scandinavia, he says, the EU could be completely self-sufficient in energy in the medium term. By 2050, he expects that not only the electricity market will have changed but also the energy supply for heat and mobility. Currently, the vast majority of German households still heat with oil or gas, and most cars are powered by combustion engines.
In the meantime, however, word has spread to the major utilities in the associations that investing in renewables pays off. “Wind and solar, in particular, are unbeatable in terms of cost,” says Hinrichs-Rahlwes.
He is particularly concerned about bureaucratic hurdles: “It can’t be right that it takes up to seven years to get approval for wind turbines in Germany.” Here, he says, the EU must speed up the procedures. Additionally, the EU could provide incentives for hesitant countries, particularly in Eastern Europe, which are currently still subsidizing fossil fuels.
In addition, the European market must grow even closer together with renewables, says Hinrichs-Rahlwes. “The wind is always blowing… somewhere” is a slogan of the European Wind Association. Offshore wind is only available on the coast. In order for it to reach the other regions, Europe must jointly regulate energy distribution. In any case, the companies have an interest in uniform European standards, says Hinrichs-Rahlwes: “Their planning has long since crossed national borders.” Jana Hemmersmeier
