Biomethane – green fuel of the future and key to energy independence for Ukraine
Biomethane has become more popular during the last years as it is a clean and renewable energy source. Ukraine has a tremendous potential in its production and can become one of the main exporters to the EU. What are the benefits of producing and using this gas for Ukraine? The answer to this question can be found in the recent report “The potential of Ukraine-EU biomethane cooperation”.
Biomethane is a gas which is produced from biomass (as natural organic renewable feedstock material). It is the same as natural gas with respect to physic-chemical characteristics (mix of 90%-95% methane and the rest is other gases). This is the purified version of biogas, one of the main renewable gases that can help decarbonize Ukrainian energy system. As biomethane is similar to natural gas, existing infrastructure can be used for biomethane as well to transport, produce energy and utilize for industrial purposes transformations. And high gasification level of Ukraine (more than 90%) enables the construction of biomethane plants with respect to availability of connection points in almost every zone all over Ukraine (including notably rural areas where feedstock is available).
Biomethane’s potential in Ukraine is largest among all EU countries and is equivalent to at least 50% of natural gas gross final energy consumption. Currently, 4 companies in Ukraine can already produce biomethane, 2 companies – already inject first batches of biomethane of local distribution grids. The producers of biomethane still don’t supply any biomethane to the Ukrainian trunk gas transportation system. Exports to the EU are currently also hardly possible due to several legislative barriers which are in the process to be removed in 2025.
The minimum reported production costs for biomethane are approximately €650/thousand cubic meters (tcm), which is 30-50% higher than average annual price of natural gas for industrial consumers in Ukraine (ca. €435/tcm in 2024). Though currently the biomethane production cost is high, it has great potential in the future as biomethane is produced locally, so the dependance on imported sources of energy will gradually decrease. Besides, money invested in biomethane stays in Ukraine boosting the country’s economy. Biomethane projects are to be implemented in rural areas of Ukraine where local population has limited infrastructure and no job access, creating new jobs, developing new sectors (engineering, logistics, local production of equipment), and improving local ecological situation. It will also allow waste from farms and processing plants to produce organic fertilizer (digestate) for agriculture as a by-product.
In the next 3-5 years, Ukraine is expected to introduce much higher prices for CO2 than it is now, either through the CBAM, or through the CO2 tax, or the Emissions Trading System (at least 20-30 Euro/tCO2-eq. In Ukraine (current EU ETS price for comparison is 80 EUR/tCO2)), biomethane in such conditions will already become cheaper than natural gas, plus the biomethane production technologies themselves are becoming cheaper.
Biomethane could contribute to decentralization of energy production and supply through enhancing energy security via both substitutions of imported natural gas and dispersion of generation points, so they are unlikely to be destroyed at once increasing energy security.
The price of biomethane is more stable, while the price of natural gas fluctuates because it is an international commodity with a general upward trend (over the past 10 years). Gas is fossil fuel which is not sustainable in long term usage and could be exhausted, while biomethane is renewable source, the feedstock for it is renewed every year and reduced CO2 emissions contributing to green recovery.
Biomethane production can also contribute to the decarbonization of the agricultural sector, which is not as easy to decarbonize as, for example, the energy sector. An important added value of biomethane plants is the ability to produce digestate, which is an organic fertilizer that can be used in agriculture.
Biomethane plants also could serve as universal base for complex renewable energy projects, using different feedstock – agroresidues, energy crops, manure, MSW, processing wastes, excess electricity from solar/wind, etc.,and producing variety of end products – electricity, heat, cooling, CO2, H2, synthesis gas, CNG/LNG, digestate, etc. for local utilization and export.
Due to high restoration demand in Ukraine during and after the war for upcoming years biomethane can serve as the universal technology as one of the components for restoration of destroyed energy infrastructure locally and on national level and thus could increase the level of energy security, making energy supply more autonomous locally.
And last but not least, Ukraine with high biomethane potential could become the main importer of biomethane to EU strengthening economic cooperation and helping to recover after the war – at least 35% of EU biomethane demand could be supplied by Ukraine till 2035.
Find out more details on biomethane potential for Ukraine in the in-depth analysis conducted jointly by the Ukrainian Climate Office within Capacities for Climate Action Project, Green Deal Ukraїna Project by Helmholz-Zentrum Berlin and Forum Energii.
The study was jointly prepared by Green Deal Ukraïna project (GDU) (Helmholtz- Zentrum Berlin für Materialien und Energie GmbH), the Forum Energii and the Project Capacities for Climate Action / Ukrainian Climate Office.
The Capacities for Climate Action (C4CA) project 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.