Biogas certification schemes are likely to expand as Brazil's production capacity increases to an eventual 120mn m³/d. Corrects relationship between ENC Energy and Urca.
With investments in biogas production increasing exponentially in Brazil, producers are looking to take advantage of additional revenue streams offered by renewable power certifications. Biogas producers association Abiogas is preparing its own biomethane certification programme.
Brazil's biogas sector ended 2021 with nearly 700 plants, up from 670 in 2020. The country has the potential to produce up to 120mn m³/d of biogas and is on track to reach 30mn m³/d by 2030, according to Abiogas.
Producers are targeting biomethane certification programmes as a way of further expanding their revenues. Agricultural conglomerate Adecoagro late last year was authorised by local certification agency Instituto Totum to issue the country's first Gas-RECs — renewable energy certificates for biogas. These certificates trace the production of biogas through a book-and-claim system, guaranteeing the sustainability of the fuel.
Adecoagro, which was also the first cane mill to issue CBio carbon credits in 2020, issued the Gas-RECs from its Ivinhema mill in Mato Grosso do Sul state. Adecoagro last year concluded an investment at the mill that allowed it to transform biogas produced from vinasse — a by-product of the cane-milling process — into biomethane, which is compressed and used to fuel a small vehicle fleet. The biomethane replaces diesel, reducing costs and lowering CO2 emissions.
Local renewable energy company Urca is also eyeing the Gas-REC market and plans to begin issuing the certificates from its biomethane plant at the Seropedica landfill site in Rio de Janeiro state in the future, Urca executive director Marcel Jorand tells Argus.
ENC Energy recently became the first biogas generation company to issue international RECs (I-RECs) in Brazil. It sold 254,000 I-RECs last year to Ecom Energy. ENC expects higher demand for biogas I-RECs in 2022.
Taking into custody
Abiogas expects the biomethane certificate market to expand as biogas production expands. "We see very strong demand for biomethane, but also for certificates that track the origin and an auditable chain-of-custody records," the agency's executive director Tamar Roitman tells Argus. She adds that the certificates have the potential to play a decisive role in expanding the market.
Abiogas is developing its own certificate, which will allow consumers that want to declare the use of biomethane in their emissions inventories. "This will drive supply by generating value for the renewable attributes of biomethane, rewarding producers for the production of a fuel with a negative carbon footprint," Roitman says. Roitman says the main obstacle for the growth of the biomethane certificate market in Brazil is limited biomethane supply.
To boost production, Brazil needs public policies, including the opening of the gas market. Roitman also cites tax issues, such as a higher rate on biomethane than natural gas for the ICMS duty levied by some states.
She adds that Abiogas recently launched a fund that will offer financial guarantees to biogas projects in the construction phase. The goal is to help finance new projects, which face challenges accessing traditional lines of credit. The fund is raising 300mn reals ($57mn), enough to finance around 16 new projects.
Furthermore, the limitations of the overall gas market, which create challenges for third-party suppliers to tap into the wholesale market, mean that the biomethane certificates become a way for companies to keep their current gas contracts, skirting difficulties with pipeline access and start-up regulations, while offsetting the environmental impact of the fossil fuel.
