The supply of renewable and low-carbon gases comprises renewable gas production and conversion technologies as well as renewable and low-carbon feedstock. Two main renewable and low-carbon gases will play a key role in decarbonising the European energy system: biomethane and green or blue hydrogen. In the short term, biomethane is expected to further scale-up; green and blue hydrogen are expected to further develop to accelerate scale-up starting in the mid-2020s.
2. Supply of renewable and low carbon gases
This chapter identifies key trends regarding biomethane and green and blue hydrogen supply following the approach laid out in chapter 1. The following sections detail each key trend and indicate the status of each key trend towards achieving the required pathway developments in the early 2020s-2030.²
2.1 Biogas and biomethane
Almost all biomethane in Europe is produced using anaerobic digestion technology, with average digester sizes showing a growth trend of around 4% between 2017 and 2018. Membrane separation is increasingly being adopted—it is now the most common upgrading technique, with a market share of approximately 34% of cumulative installations in 2019. Other biomethane production techniques, such as thermal and hydrothermal gasification show high potential, but are only in an early commercial stage and industrial demonstration stage, respectively.
Biomethane feedstock in the EU is progressively shifting from dedicated energy crops to waste and residue feedstocks in new plants. Waste and residue feedstocks⁴ were used in almost 65% of biomethane plants in the EU in 2019, up from approximately 40% of plants in 2012.
An emerging trend is seen with biomethane cost reduction potential, with biomethane production costs for anaerobic digestion in Europe ranging between €50/MWh-€90/MWh (~€0.50/m³-€0.90/m³)—and mainly depending on feedstock and digester size. Costs are gradually coming down for larger anaerobic digestion plants with certain waste stream feedstocks. Production costs for thermal gasification are estimated to be around €90-€100/MWh (~€1.0/m³).
Biomethane production volumes are rapidly growing in Europe, with around 23 TWh
(~2 bcm natural gas equivalent) produced in 2018. The scale-up of biomethane production shows a positive trend-strong growth of around 15% in biomethane production volumes and a 17% increase of anaerobic digestion plants in 2018. This growth indicates a shift from biogas to biomethane production.
An emerging trend is seen with cross-border trade of biomethane certificates. Cross-border trade is limited in the EU at less than 10% of biomethane production levels, but it is gradually increasing. Denmark, Sweden, and Germany are key players and the European Renewable Gas Registry (ERGaR) Certificate of Origin (CoO) scheme is being developed.
A significant biogas sector exists in Europe, with production around 170 TWh/year in 2018 (16 bcm natural gas equivalent).², ⁵ Biomethane production is rapidly growing. In 2018, around 23 TWh (~2 bcm natural gas equivalent) of biomethane was produced in Europe.⁵
This section details the key trends regarding biomethane supply. In the early 2020s, developments will focus on scaling up biomethane production to increase supply in Europe from approximately 23 TWh in 2018 to 300-370 TWh in 2030.
This increase is achieved through the further development and scale-up of gasification and digestor technologies, developments in feedstock, increased production and deployment of installations, and emerging cost reductions. The required developments to supply biomethane are translated into key trends around technology, feedstock, production cost, deployment and production, and market and are supported by showcase projects (Figure 2.1). The following paragraphs detail each key trend and indicate the status of each key trend towards achieving the critical decarbonisation timeline in the early 2020s-2030.²
2.2 Green and blue hydrogen
Emerging trends are seen with hydrogen production technologies. Most green and blue hydrogen production routes are in an early commercial stage (<1% of EU hydrogen production), but plant and stack sizes are increasing, and hydrogen production and CO₂-capturing processes are becoming more efficient. Electrolyser capacities are growing, and PEM technology is closing the gap with ALK and SOEC efficiencies, by adding 4% system efficiency, on average, since 2017. Newly announced blue hydrogen projects mostly rely on ATR technology as deploying this in combination with CCS at large scales has various economic and operational benefits.
An increasing number of upcoming electrolyser projects intend to source renewable electricity as feedstock for green hydrogen production. Over 54% of announced electrolyser projects in the EU have disclosed their sourcing plans, with wind energy being the preferred renewable electricity source (39% of announced projects and equal to 77% of announced capacity).
Early developments are taking place around green and blue hydrogen production costs, but additional attention is required. Production costs for green hydrogen range from €70/MWh to €130/MWh— and mainly depend on electricity price and electrolyser parameters. Costs are expected to drop to the level of grey and blue in the coming decades. Blue hydrogen is currently more cost-competitive compared to green hydrogen. With costs estimated between €37/MWh and €41/MWh, depending on the technology and infrastructure requirements.
Electrolyser capacity and the number of feasibility projects show a rapid growth in the EU. Technological developments are on track, and decisions on pilot projects for 10 MW and larger are coming up. Electrolyser capacities grew—the average annual growth rate was approximately 20% between 2016 and 2019. Large-scale blue hydrogen projects are under development across industrial clusters around the North Sea. Based on current project announcements, a significant acceleration of hydrogen project developments is expected between 2020 and 2030. A further increase is expected, driven by the EU Hydrogen Strategy and national hydrogen strategies.
Early developments are taking place around cross-border trading, but additional attention is required. Cross-border trade of hydrogen certificates is limited in the EU, with the first CertifHy certificates launched in 2018. Trading of hydrogen certificates is expected to increase following national and EU developments.
This section details the key trends regarding green and blue hydrogen supply. In the early 2020s, developments will focus on kicking off developments in green and blue hydrogen supply to develop 85 TWh blue hydrogen and at least 100 TWh green hydrogen supply by 2030. This will be possible by further developing and scaling up production technologies and renewable electricity, and increasing production and deployment, thus enabling cost reductions.
The required developments to supply green and blue hydrogen are translated into key trends around technology, feedstock, production cost, deployment and production, and market, each supported by showcase projects (Figure 2.19). The following paragraphs detail each key trend and indicate the status of each trend towards achieving the critical decarbonisation timeline in the early 2020s-2030.