Cleantech Market Intelligence
Biogas and the Natural Gas Bonanza
It is the odorless and invisible 500-pound gorilla in the room. Currently hailed as the antidote to U.S. energy insecurity and a bridge fuel for the 21st century, natural gas is every bit as fossil as its coal and petroleum cousins. But for clean energy, which is coming off a stimulus-fueled high and $100-dollar-plus oil run, could it be a death knell? My colleague Kerry-Ann Adamson has looked at this question from the point of view of Smart Energy overall. In my world of bioenergy, the accelerating development and availability of biogas, a renewable form of natural gas, indicates that natural gas surge could actually hasten the transition to clean energy, not impede it.
In 2009, the U.S. passed Russia to become the world’s largest producer of natural gas. Estimates suggest that at 2010 consumption rates, the U.S. has enough recoverable natural gas resources to supply over a century of use. Meanwhile, the Nymex price has dipped below $3 per million British thermal units (MMBtu), down from nearly $14 four years ago. The glut has analysts in the U.S. scrambling to recalibrate energy forecasts and renewable energy project developers searching for new off-take partners to make project economics pencil out.
The boom in shale gas has stripped renewable energy of two of its key arguments: that a heavy reliance on fossil fuels is 1) contributing to irreversible climate weirdness; and, since these fossil fuels tend to come from nefarious nations, 2) making the United States increasingly energy insecure. With respect to mitigating climate change, studies point to natural gas being less carbon intensive than coal and potentially oil as well. As for energy security, the sudden bounty of domestic carbon is fuelling what could be a huge shift in U.S. transportation fuel, away from petroleum-based fuels to compressed and liquid natural gas, and potentially hydrogen and fuel cells, longer term.
Crossing the Biogas Bridge
Many believe the natural gas bonanza may be a transition fuel for the larger clean energy transformation. John Podesta, former chief of staff to ex-President Bill Clinton and now head of the Center for American Progress in Washington writes that natural gas can serve “as a bridge fuel to a 21st-century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels.”
No renewable is in a better position to cross this bridge first than biogas. Vastly underutilized, biogas is essentially natural gas that is produced in a matter of millions of seconds rather than millions of years. The result of anaerobic digestion – a naturally occurring process in which bacteria feed on organic matter in the absence of oxygen – biogas is commercially produced in anaerobic digesters (AD) and landfill gas recovery facilities designed to treat biowastes such as manure, sewage, energy crops, and organic matter. Currently, in the U.S., the economics for generating electricity from biogas are dismal. But with emerging technologies, raw biogas can be stripped of carbon dioxide and other trace gases, bringing it up to the quality level of natural gas.
This renewable natural gas, essentially purified methane, is virtually identical to natural gas, but without the fracking. It’s a fully fungible alternative, avoiding many of the blending constraints you see with an alternative like ethanol. Leveraging natural gas infrastructure, it can be distributed as CNG, LNG, or in pipelines via gas-to-grid injection. Although upgrading biogas to pipeline quality results in a fuel considerably more expensive than natural gas, biomethaneis starting to gain momentum in the U.S., particularly as a potential renewable fuel that can satisfy advanced biofuels mandates under the Renewable Fuel Standard (RFS2) and emerging Low Carbon Fuel Standards (LCFS).
The challenge for the biogas industry will be scaling up in economical ways. As Pike Research’s analysis in our upcoming biogas report shows, one model that can reduce costs and concentrate supply is the development of community biogas hubs. Using gathering infrastructure that is shared across several smaller-scale biogas producers linked via a pipeline network to an upgrading facility, upgrading costs can be defrayed among all producers.
Longer term, by leveraging shale gas infrastructure, biogas is poised to capitalize on a free ride to widespread scale up, a notion unheard of in many clean energy technology circles. Should a massive natural gas infrastructure build-out take place to move shale resources to market, with significant untapped feedstock potential, biogas could emerge as a clean energy Cinderella story over the next decade.