Brazil RNG supply still seeks demand

The mismatch between growing Brazil biomethane supply and consumers willing to pay its higher prices still looms over projects expected to go on line in the next few months.

There are three projects pending final approval from hydrocarbons regulator ANP to begin operating: Adecoagro's 14,400 m³/d plant in Mato Grosso do Sul, H2A Soluções Ambientais's approximately 4,300 m³/d plant in Goias and Raizen-Geo Biogas' 130,400 m³/d plant in São Paulo. The regulator has no timetable for final approvals.

Another 10 biomethane plants, adding up to more than 502,400 m³/d, are scheduled to finish construction this year.

Still, most of the upcoming projects lack customers for the additional supply, according to market sources. Finding buyers for this more-expensive natural gas substitute can be difficult, as relatively few companieshave specific budgets for decarbonization.

Brazil has six plants with ANP authorization to produce and sell about 417,100 m³/d of biomethane. Another 139,000 m³/d of capacity is scheduled to become operational in 2025, bringing total certified biomethane supply to at least 1.2mn m³/d in the next two years.

First movers in the biomethane consumer market have been paying a premium to the parity price against natural gas. This premium represents the value of the lower carbon levels in biomethane, which does not always carry tradable certification.

Brazil's lack of a market for biomethane guarantees of origin, such as biomethane renewable energy certificates (Gas-RECs), is also inhibited by doubts about the main emissions reporting platform, the GHG Protocol. In 2015, the GHG Protocol allowed the use of biomethane certificates to offset emissions, only to remove them from their documents in 2020, citing the need for more studies.

Countries that created regulatory mechanisms before the GHG Protocol changed course have a competitive advantage over Brazil, according to Fernando Giachini Lopes, director of Instituto Totum, which certifies biomethane renewable energy certificates (Gas-RECs) and I-RECs in Brazil.

By Rebecca Gompertz