Brazil's biogas producers are asking for higher prices and fighting for specific regulation and incentives, as the gas' renewable feature and tight supplies of fossil gas are increasing its marketability.
"Biomethane does not lack demand and the current market is demanding biomethane," said Alessandro Gardemann, president of Brazil's biogas association Abiogas, which estimates a $7.7bn market potential for biogas investments through 2030.
Brazilian biomethane can replace 70pc of Brazil's diesel consumption and help the country decarbonize its energy matrix, market participants said during the ninth Biogas Forum, an event hosted by Abiogas.
Event attendees said the size and scale of this year's forum shows how the sector has evolved since 2013 and gained momentum in 2022, when the association added 90 new members to reach 140 companies.
Large international oil producers sent representatives to the event to learn more about Brazilian biogas and create new projects for their Brazilian branches or even for the European headquarters. It was the first time international machinery companies — such as manufacturers of motors, biodigestors, compressors and trucks — were a part of the event. German, Italian, English and Spanish were some of the languages that could be heard in the fair corridors.
"We are not at the starting point of the biogas industry anymore," said Tamar Roitman, Abiogas' executive-manager.
But biomethane trade is still far from being widespread in Brazil, as producers and consumers are still struggling to find common ground on how to price the gas. Producers are leaning towards requesting biomethane supply agreements indexed on inflation rates plus a premium. Natural gas prices have fallen, pressing producers to index contracts in a way that keeps biomethane competitive with fossil gas when international prices fall.
"We are looking for ways to make biomethane worth it for both producers and offtakers, as natural gas and biomethane prices will widen their gap in coming years," said Claudio Lindemeyer, gas trading director at Voqen, Braskem's energy and natural gas subsidiary.
Producers fear that the need for investments in the nascent biomethane industry will not be met if prices drop with crude benchmarks. They argue that biomethane being priced on Brazilian inflation rates offers a cost reduction and means less volatility than natural gas, which is priced under Brent crude indexes or US Henry Hub prices. "[Inflation] predictability has its price," said Gardemann.
The sector is also calling for economic stimulus for biomethane because of its lower carbon footpring, such as lower taxes, lower financing rates and subsidies. It would also help to have clearer access to public power auctions, tenders, and a definition for a green attributes certificate or carbon credits market. Market participants also request a coordination with state laws, which can differ from one region to another. During the event, Abiogas announced a R30mn fund from public bank BNDES to help reach R300mn in investments in new biogas plants. The funds can be allocated to fiduciary guarantees for small and medium projects.
