Green Gas Explained

With seminal Intergovernmental Panel on Climate Change (IPCC) report calling accelerating global warming a ‘code red’ for humanity; governments, private enterprises and individuals have never been more keenly aware of their own contributions to the climate crisis. With the UK aiming to be Net Zero by 2050 and COP26 finally underway, innovative solutions are required.

Nearly everyone will be familiar with the renewable structures in place for electricity – it is hard not to spot a windmill turbine on a drive through the countryside these days. Many suppliers now offer renewable electricity contracts as standard or on premiums as low as 0.1p/kWh. High demand and years of development helped lift renewable electricity generation to 43% of total UK generation in 2020, sourced primarily from wind. So, while that takes care of electricity contracts, what about gas?

The UK’s total CO2 emissions from gas was around 162 million tonnes in 2018 – nearly half of all CO2 emissions produced that year from the burning of fossil fuels. Gas is becoming increasingly relied on proportionate to demand, though demand is falling thanks to improvements in efficiency and insulation.

Most gas used is derived from non-renewable hydrocarbons formed from decomposed plant and animal matter that has been put under extreme heat and pressure for millions of years and is extracted from underground rock formations. ‘Green’ gas is a cleaner form of gas generation and can be generated from various sources:

Biomethane: ‘Upgraded’ biomethane gas is the cleanest form of biogas currently available. Biomethane is created by allowing organic material (usually food or farm waste, called feedstock) to be broken down by bacteria. This feedstock is crushed into small pieces and liquid is added to create a slurry, depriving the bacteria of oxygen and ensuring anaerobic digestion takes place. The slurry is then heated to ~37 °C and left to ferment. After around three weeks, the biogas should be ready. This gas is then purified to remove excess CO2, usually 95-98% of the CO2 will be removed at this stage, and Biomethane is the result – ready to be consumed as LNG or injected straight into the gas pipeline. Biomethane is carbon neutral: while it did release emissions when burned, it is made from organic materials that absorbed carbon dioxide while they were grown. So long as the substance used is replaced, there is an equilibrium wherein burning biomethane does not add more CO2 into the atmosphere than was already there.

Landfill Recovery: Landfills are one of the highest source of greenhouse gas emissions linked to human activity, ranking third as a methane source after agriculture and fossil fuel processing. Around 3.34 kilotones of methane are emitted in the EU alone. Gas from landfills can be captured using pipes and extraction wells to create biogas.

Wastewater Treatment Plants: Sewage can be used, with treatment, to create biogas from an anaerobic digester. The CO2 content can vary between 25-55% via Wastewater Treatment or Landfill Recovery methods of producing biogas.

How much does it cost?

As mentioned, renewable energy contracts are now so commonplace that premiums are near minimal or are simply priced in at standard. Most supplies on the market can offer 100% Green, REGO backed electricity contracts.

Green gas contracts, on the other hand, are a relatively new technology. Without the same historical levels of investment and development, supply sources lag behind renewable electricity. A limited pool of suppliers can be approached for green gas offers, and these are often further limited by how much supply the supplier has access to and the volume of your contract. We are finding that, on average, green gas contracts come with a 0.9p/kWh premium – adding over 25% to the average gas contract. Some supplies offer the choice of Biomethane sourced gas or landfill / wastewater sourced and each come with their own premium.

All the above sources will qualify for a Renewable Gas Guarantee of Origin (RGGO) which is essentially a certification that identifies the technology and feedstock from which it was produced, the month and year it was produced, where in the UK it was sourced, the registered producer and the kWhs of green gas that producer injected into the grid that month. Similarly, to electricity, there is no way of telling the exact fuel mix of the energy actually consumed by your business if it is powered by the grid. Wires and pipelines contain a mix of all physical fuels distributed within the UK. A RGGO matches energy taken from a Distribution Network to a unit of energy produced and placed into the network, effectively demonstrating that a user ‘sponsored’ the production of this gas and can be used in environmental reporting.

Carbon Offset

While Green Gas is in of itself a ‘carbon neutral’ product, carbon offset gas describes the use of standard, natural gas that is offset not in how it is sourced or produced but rather through other activities. Carbon offsetting typically involves planting trees or protecting them from deforestation. A single mature tree will absorb around 22kg of carbon per year. The cost of carbon offset gas is typically far cheaper than green gas, with suppliers offering it at an average premium of ~0.45p/kWh. Like Green Gas, however, only a limited pool of suppliers can offer this type of contract.

Future Developments

Green Hydrogen and Bio-SNG (Synthetic Natural Gas) are emerging technologies that are not currently recognised under the RGGO scheme. RGGOs are defined as a gas produced from a renewable source, that has lower GHG emissions from its production and consumption than an equivalent fossil fuel product,”’ these technologies will likely qualify, and the register updated to recognise them once they become more readily available on the market. Green Hydrogen is a particularly promising product that has had a significant amount of investment, though costs are still significant and prohibitive. The World Hydrogen Council predicts production costs to fall by 50% come 2030 and the Biogas market has been forecast by Grand View Research to be worth $81.37 billion by 2028. And if those weren’t enough figures for you, the Anaerobic Digestion and Bioresources Association Trade Body believes that biogas could reduce the UK’s greenhouse gas emissions by over 6% within the next decade.

The Government is providing targeted financial support to the bioenergy sector. 24 projects will receive funding of up to £200,000 to increase the UK production of biomass, the Rural Community Energy Fund is a £10 million programme run by BEIS which supports renewable energy projects, and a £10 million fund via the Anaerobic Digestion Loan Fund is available to back projects.

However, the true scale of investment that projects require to significantly shape the UK’s biofuel landscape is staggering. There are innovative proposals to capture and recycle feedstock on-farm to reduce the emissions caused via agriculture, with local AD farms potentially increasing from 375 to over 3000. An investment of ~£8.5 billion will be required to build all of these plants. If the UK maximised its biomethane production potential, a further 4,5000 plants could be built to service nearly 6 million homes. This would require a £20 billion investment.

Significant investment in biogas, both private and via Government incentives, will be required to truly take the industry forward, but with Net Zero obligations and the urgency of the climate crisis underpinning every one of our lives, green gas contracts are almost guaranteed to become the norm.