The combined role of policy and incentives in promoting cost efficient decarbonisation of energy: a case study for biomethane

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Rajendran, Karthik
Ó Gallachóir, Brian P.
Murphy, Jerry D.
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The levelized cost of energy of biomethane from food waste was assessed at 87 €/MWh, (87 c/L diesel equiv.). Allowing for gate fees the incentive required for financial viability was 0.13 €/m3 (13 €/MWh). For context, various successful renewable energy policies were analysed across the EU including photovoltaics and biogas in Germany and electric vehicles in Norway. The schemes were compared with an incentive applied (or required) per tCO2 avoided. For Ireland, this study predicts that biomethane needs a financial subsidy of less than 180 €/tCO2 avoided, while most successful EU systems offer incentivisation levels less than 260 €/tCO2 avoided. In terms of incentives per tCO2 avoided Electric Vehicles (EV) stand out. When including all incentives such as grants and avoided parking costs, EVs can receive a sixteen-fold higher incentive as compared to biomethane based on tCO2 emissions avoided. The rationale for this high incentive and supporting policy is based on the requirement to initiate a new infrastructure that would not otherwise happen without intervention of a government incentivising decarbonised transport and clean air. Biomethane as a transport fuel requires a very significant change in infrastructure, including the provision of compressed natural gas service stations and natural gas vehicles. Initially (as for other successful renewable energy systems) larger incentives would be required to allow initiation of the industry, but these subsidies can be reduced over time. Biomethane as a transport fuel offers similar rewards as for electric vehicles, decarbonised transport and clean air along with energy security, renewable energy, indigenous jobs and supporting greening of agriculture.
Energy policy , Renewable heat incentive , Bioenergy , Biomethane , CO emissions
Rajendran, K., O'Gallachoir, B. and Murphy, J. D. (2019) 'The combined role of policy and incentives in promoting cost efficient decarbonisation of energy: A case study for biomethane', Journal of Cleaner Production, 219, pp. 278-290. doi: 10.1016/j.jclepro.2019.01.298