Biogas production needs support to flourish
Calculations made in the framework of the W-Fuel project show that economically feasible production of biogas for transport fuel is possible in Southern Finland. In the early days, however, profitability will be low, as there are not enough gas-powered cars around yet. Esa Aro-Heinilä, Research Scientist at MTT, says that the transitional period, during which the promotion of biomethane as transport fuel requires public support, will last at least ten years.
Evolution of gas-powered vehicle population is slow. An example of this is Italy, the leading country in gas-powered cars in Europe, where a mere 1.5% of cars are gas-powered – a figure that has taken two decades to achieve. Locally, however, the number of gas-powered vehicles can be much higher.
– In the free market, gas-powered cars proliferate very slowly, maybe not at all. In order to speed up this trend, biogas plants would need an investment subsidy of about 30%, and production subsidies for biomethane sold as transport fuel as an additional incentive. The production subsidies could be linked to the price of fossil fuels, maybe amounting to 30 cents per diesel equivalent, Aro-Heinilä suggests.
In 2010, the annual replacement rate of the car population in Finland was 4.4%. The number of gas-powered vehicles in the country is currently about 900.
Target: keep consumer price down
For drivers, gas is about 20% cheaper at current prices than diesel, for example.
The fundamental idea behind the aid model is that aid would help in keeping the consumer market price of biomethane at about 30 euros/MWh lower than that of fossil fuel, which corresponds to about 30 cents/litre. Aro-Heinilä notes, however, that the risk in this model is overcompensation of biomethane in case that the price of oil rises significantly.
– For this reason, some kind of cut-off mechanism would be needed: if the price of oil was to rise very steeply, no more production aid would be paid to biomethane, he says.
Production costs depend on the raw material
Creation of an aid system is complicated by the fact that the production costs of biomethane are directly linked to the type of biomass to be used in digestion.
– Producing biomethane out of bio-waste and sludge costs almost nothing, as plants are allowed to charge waste treatment fees for these wastes. But field biomass that has the largest production potential involves at least the costs of cultivation, harvest and transport, Aro-Heinilä adds.
A few new biogas plants would suffice
In the target areas of the W-Fuel project, bio-waste and waste water sludge would suffice to support a 1.5% trade-off in the vehicle population, and the volume of gas would be enough for local transport and waste transport. The number of new plants processing local waste that need to be constructed could be just one.
– In the project target areas, the best conditions for biomethane use are in the Helsinki and Kymenlaakso regions, where it is possible to use the natural gas network to convey gas to filling stations, Aro-Heinilä says.
The Turku and Salo regions, on the contrary, so far lack infrastructure for natural gas. Political decisions would therefore be needed for the take-up of gas-powered vehicles in public transport, which would help the car population and the filling station network develop. With respect to private cars, the first gas-powered vehicles could be taxi cabs.