What do the major biogas associations in Germany think about the current status of the biogas industry? What framework conditions and measures are necessary to promote this domestic and renewable energy source and to further increase its potential. This offers an interesting, very differentiated and hopeful insight Interview with Reinhard Schultz, Mr. Schultz is managing director of Biogasrat eV and former member of the Bundestag for the SPD.
8 questions to Reinhard Schultz about the status of biogas and biomethane
BiomassMuse: Hello Mr. Schultz Thank you for taking the time for this interview and talking to me about the development of gaseous bioenergy in Germany and Europe. You are the managing director of the Biogasrat eV, which is based in Berlin. I have 8 questions about biogas and biomethane prepared and looking forward to your answers.
Who is the biogas council and what does it stand for?
BiomassMuse: The Biogasrat was founded in 2009 and is therefore a comparatively young association in the field of bioenergy. The Biogas Association, the VDB or the Federal Association of Bioenergy have been around for over 10 years. Why was it time for a new large association in the bioenergy sector in 2009?
Reinhard Schultz: The biogas council was founded mainly because it has gained the insight of important market participants that a contribution to the renewable energy industry can not only be organized in very small, decentralized categories of self-sufficiency around the farm.
As far as biogas is concerned, you have to organize your production on an industrial scale. This is a slightly different approach than with the existing associations. Although we cooperate well with the existing associations in some areas, there are already differences in terms of efficiency, profitability and the question of how quickly we want to achieve marketability without subsidies. These were the main motives for founding a new association that did a good job.
What role does biogas play in renewable energy sources and the energy transition?
BiomassMuse: Germany is the world market leader in the field of biogas technology and has most biogas plants with an individual output greater than 50 kW. After the nuclear power plant catastrophe in Japan, Germany decided to phase out nuclear power and wants to accelerate the energy transition. What role does gaseous bioenergy play in renewable energies and the energy transition?
Reinhard Schultz: Biogas is the only renewable energy source, apart from hydropower and geothermal energy, which can be continuously produced and used as required and which is not dependent on the sunshine or the wind. Therefore, biogas can make a decisive contribution to stabilizing the energy system. This is especially true if you tend to tend to forego the use of fossil fuels in control and balancing energy. That's a big advantage.
The second big advantage is the great potential for the development of agriculture. This applies above all to the cultivation of energy crops, but also to the use in the residues area. There is great potential worldwide that is already being used by the countries of origin or is still available for future use. In places where there are surpluses, there can and will be trade relations. These trading relationships will basically correspond to those that are already taking place on the gas market today.
The third major advantage is that if you convert biogas into biomethane, there is no physical difference to natural gas and you can easily feed it into the existing natural gas infrastructure. This makes it possible for them to produce the biogas in the countryside and to extract the biomethane in the city. This advantage can be used without having to invest in new infrastructures. This means that the use of gas and the natural gas network will also change in the coming years and decades. The more biomethane they produce, the more natural gas they can displace, which means that the gas industry becomes greener. They can then use the extracted gas not only for electricity generation, but also for heat generation or the fuel market.
How do you rate the EEG amendment 2012?
BiomassMuse: The amendment to the Renewable Energy Sources Act came into force on January 1, 2012. The somewhat hasty amendment did not exactly make for a happy dance in the bioenergy industry. What do you think about that Amendment to the EEG 2012 and how should the biogas industry use them?
Reinhard Schultz: Unfortunately, some of the associations, especially in the field of bioenergy, realized very late that the ideas of the Ministry of the Environment do not correspond very much to the interests of the industry, but that the EEG amendment has a very restrictive effect. This applies increasingly to decentralized electricity generation from biogas.
In the area of biomethane feed-in, the general conditions have improved somewhat, but something improved does not mean that they are sufficient. As a result, we have a situation that will slow down growth in decentralized production in particular. Biomethane feed-in will pick up somewhat, but the existing feed-in targets of 6 billion m3 of biomethane by 2020 cannot be achieved with existing instruments. Now we have to reach for the ceiling. There is the primacy of politics and luckily the industry is also imaginative.
The biogas industry will invest where it sees the best opportunities. In the decentralized area, there will be more plants in the future that will use the specially promoted, needs-based feed-in. We will see the changeover from fixed remuneration to the market premium more frequently in the future, which means that these systems will also make ends meet.
The disadvantage is that these systems are no longer required to sell heat. The coupling of electricity and heat production will only play a subordinate role in larger investments, because the legislature has provoked this misallocation in the amended legal text. Nevertheless, you can earn money with it.
In the area of gas feed-in, the situation has improved due to the fact that there is a special remuneration for the biogas upgrading, which is quite adequate even for medium-sized plants.
A very central problem, which has only just emerged and which still has to be solved, relates to the question of proof of origin for biomethane. There are a large number of criteria that must be met for the proof of origin and provided by the operator of the power plant. So, so to speak, "as sharp as a blade" it must be balanced which substrates (NawaRo, residues etc.) were used for the production of the biomethane. This is not a problem for decentralized plants because substrate producers and power plant operators are usually identical.
However, if the power plant operator falls back on biomethane from the natural gas network, the accounting for the proof of origin is much more difficult. This in turn presents a major obstacle to the market and the operator often does not know what compensation rate to expect. This process has to be simplified significantly.
Amendment to the EEWärmeG - What is the position of the Biogas Council?
BiomassMuse: This year there is another amendment to the Renewable Energies Heat Act (EEWärmeG). Great Britain has with the Renewable Heat Incentive (RHI) embarked on a very offensive path towards promoting renewable heat at the end of last year. What improvements does the biogas council hope for through the EEWärmeG amendment?
Reinhard Schultz: First of all, I think it's very good that in this case another country takes on the role of the trendsetter. Even if other instruments are used in the UK due to a different legal tradition, this is a very sensible and effective way that we can positively refer to.
Great Britain has found out practically overnight that it no longer has its own natural gas and is therefore naturally developing a completely different drive in order to increasingly use renewable energies here. One can see that the UK will very quickly become the second strongest country in Europe in the use of biogas.
In Germany we have a Renewable Energies Heat Act for new buildings. However, little is built in a shrinking society, which is why such a structured EEWärmeG is not of great economic and ecological importance. After all, this law already stipulated that a certain proportion of renewable energies must be used to generate heat. So far, it was impossible that biogas can also be used in modern condensing heating. We want to change that when it comes to building stock.
We already had a little respect last year when we were able to switch the heat supply of public buildings to the basis of renewable energies. If a public building is to be renovated in the future, it must also contain a fixed proportion of renewable heat, which can then also be met in the form of a 25 percent biomethane share. We want to achieve a 15 percent admixture for all other existing buildings, not as a competition for energy-efficient renovation, but as a supplement.
We know that the energy renovation is very slow and that we had the lowest renovation rate in 10 years. And this despite the fact that politics repeatedly emphasizes that most has to happen at this point. The renovation rate is currently below 1 percent of all buildings, which is scandalously low and sheds light on the general conditions.
This means that if you don't spend a lot of money in your hand, you will hardly be able to achieve the CO2 reduction goals that you have for the building stock through energy-efficient renovation alone. However, you can make a further contribution to achieving the goals by using renewable energies. The most economical solution is the use of biomethane in a modern heating system.
In our view, every homeowner should be able to decide for himself how (CHP, solar thermal) he fulfills his obligation to use renewable energies. Here too, however, attempts will be made to improve the carbon footprint with the lowest costs. And in a direct comparison, the costs for a 15 percent use of biomethane in the natural gas share are up to 70 percent lower than for the same reduction targets for all other alternatives.
This is also an important argument for tenants, because all costs for the renovation or use of renewable energies ultimately flow into the cold or warm rent. In the end, the budgets of private households will be burdened and I don't think that politics will persevere to provoke enormous rent increases. Politicians have to implement measures to protect the climate, but they also have to be socially compatible and here the approval of biomethane in the heating market would be the right way.
BiomasseMuse: Are these the results of the heat study that the biogas council carried out?
It takes a look at our study, which has not yet been completed, but is already in the final curve. The results of the study show what the renovation situation and the cost ratio of the various alternatives currently look like. Which instruments we will ultimately recommend to make biomethane common, for example with the help of a usage obligation, has not yet been decided. However, it can already be said that the use of biomethane is the best way to advance climate protection with as little warm rent as possible.
What is the state of gaseous bioenergy in Europe?
BiomassMuse: Let us broaden our perspective on biogas and biomethane and take a look at the situation in Europe. The biogas council held the in November last year Conference "Biogas and Biomethane in the European Single Market" organized. What did you take with you from this event and what potential do you see for gaseous bioenergy in Europe?
Reinhard Schultz: The situation of gaseous bioenergy in Europe is very different and regardless of the theoretical potential to produce biogas, they are used very differently. Great Britain is on a big leap and the Netherlands is also very interested and is massively importing biomethane from other countries. Poland and Italy are also on the move in terms of electricity generation, with Italy providing the best rates. In other countries you are still in the early stages, but you can see the chance of gaseous bioenergy.
The question arises as to how the market participants can better coordinate the biogas policies of the various EU member states in order to arrive at comparable remuneration rates, standards and fields of application.
We have a European market segment that is already Europeanized and is not exclusively subject to national legislation. That is the fuel sector. We have a fuel directive with a biofuel quota in which biogas or biomethane is basically permitted. This market is exclusively subject to the European Union and is one in which cross-border traffic is already taking place to a large extent.
In the field of electricity generation, national legislators will develop their own criteria that will not be fully compatible. As in Germany, some of the national laws will even state that the generation of renewable energies must take place within the country's own borders if you want to receive the appropriate remuneration and subsidies. This is not the case in the fuel sector and the biofuel can be produced where it fits best, which means that there is an invitation from the outset to Europeanize things.
I believe that in the long run we have to define the renewable energy sector at European level, with common criteria in terms of sustainability, but also with similar remuneration rates. In this way, production takes place in the medium term where the best framework conditions can be found, which means that renewable energies can reach marketability as quickly as possible. The chances are very good in the biogas sector & #8211; especially in the field of biomethane. We already have a European natural gas network and thus a functioning sales channel for biomethane, which can be transported from any country to any other country. At this point, the only thing that really needs to be set is that the interfaces between the countries harmonize.
Here we have launched a project based on experiences from last year. For this project, we brought 7 or 8 countries together around a table in order to develop rules of the game together with the market participants on how the different national criteria can be made comparable. This should enable the sale of biomethane from Germany to Holland or from France to Sweden. This project will be completed by the middle of the year and is a real trend project that has never existed anywhere else in this form. We link the project very closely to the European Union's Green Gas Grid Initiative, in which the energy agencies of the various countries work together. We are on board here and contribute our project.
What position does the Biogas Council have in the debate about a future EEGasG?
BiomassMuse: There is currently an increasing amount of discussion about a Renewable Energy Gas Feed-In Act (EEGasG). The new law is intended to support the achievement of the politically prescribed feed-in targets of 6 billion m3 of biomethane annually by 2020 and a general revival of the biomethane market in Germany. The two large biogas associations in Germany have very different views on the upcoming EEGasG. What is the opinion of the Biogas Council?
Reinhard Schultz: Our competition association of the Biogas Association has for years been of the opinion that we need a gas feed-in law, although at the same time it has taken the position that it is essential to pay attention to the efficiency of electricity generation. I see a big contradiction here.
If you pay for the feed as such, then you no longer have any influence on what happens to the gas and it leads to a mixture of gray and green gas that is difficult to distinguish, regardless of the later application. And this procedure also runs counter to the EEG and I don't know how to differentiate the balance between the Electricity Act (EEG) and the Gas Feed-In Act later. There will therefore be an addition of subsidies rather than being able to reduce them.
We are expressly against a gas feed-in law because we believe that we need to activate the market and promote the use of biogas, then the feed-in comes automatically. The gas grid should only be used for storage, without this also for subsequent use is not really helpful.
We could sit back and say that it will automatically end up in the condensing boiler, which we would think is wrong because we also want to combine the use of biogas with efficiency. He should be able to use biogas if he uses the most modern heating and does not use an ancient boiler. With a gas feed-in law, biogas would be used in every application, regardless of whether it is efficient or not. That is the big disadvantage and an EEGasG is a pure subsidy law. From an agricultural point of view, it was developed that everything is good, for which I receive guaranteed remuneration and what has nothing to do with the market.
We want to have market rules that offer incentives for the use of biogas, but otherwise enable competition between the different providers. The competition should also help to keep costs down and biogas or biomethane to be generated as efficiently as possible. That’s a big difference. Another difference between the two associations is whether you come from the EU agricultural subsidy school of thought or the market perspective.
In which points are the biogas council and the biogas association more likely to be competitors and in which areas are they more partners?
BiomassMuse: One question I asked myself as a bioenergy enthusiast is whether two biogas associations are actually good or bad for the further development of gaseous bioenergy in Germany. The discussions in the course of the EEG amendment 2012 or the current disagreement about the EEGasG show that interests can sometimes be very different. What conflicts have you discovered in previous years? Do you already have areas in which you work directly with the trade association or coordinate with each other?
Reinhard Schultz: First of all, there are of course great similarities. Thus, both associations agree that biogas can make a very significant contribution to the greening of energy supply. Furthermore, we all agree that the discussions about the acceptance of bioenergy, for example the plate or tank debate, is a very strongly interest-oriented situation in which competition within the agro-industrial sphere is raging.
For example, the meat industry is not at all interested in the fact that farmers have the opportunity to play in two markets (feed market, energy market). Here the plate-tank debate takes on a completely different dimension, which has nothing to do with ethical considerations, but which is about tough economic interests.
The trade association for biogas and the biogas council see this together. If there are any questions about the development of acceptance and how we present ourselves externally, we coordinate or do it together in part. We also coordinate on many issues relating to the practical regulations of legislation, because things should ultimately work. There are commonalities here.
The main difference is the question of the market approach and the question of the industrial scale. We consider it completely impossible that an energy supply on an industrial scale is economically possible with a system segment of 50 to 200 kW. Decentralized not only means mickey-mouse-small, but decentralized also means finding an economic optimum.
In our view, this optimum is around 1200 kW for biogas plants and 2,000 kW for gas feed-in plants. This would of course force farmers to cooperate with each other. We want the farmers to continue to have a strong influence on the plant operator structure, but that should happen from an economic point of view. A plant does not have to be so small because your own yard does not allow a larger plant. This should not be a criterion when developing funding conditions. Here the associations differ significantly, whether we want to get away from subsidies or more subsidies.
The question of whether 2 or 3 associations are too much or too little naturally depends on whether there are competing interests and whether these predominate. I believe that we have to trim the EEG so that it is as close to the market as possible, so that in the end it cancels out as much as possible. I could make it easy for myself and say that 1 bandage is completely sufficient & #8211; namely our & #8211; but that will likely be met with little positive response from others.
We also have double memberships. The trade association has strengths in the area as a consultant association and is structurally similar to the farmers' association. We are more like an industrial company and our membership is clearly more industrial.
Where do you see the biogas industry in 5-10 years?
BiomassMuse: Certainly a difficult, but also nice final question, the answer of which requires courage to make a forecast. Can you give readers some encouraging thoughts for the biogas landscape of the future?
Reinhard Schultz: I see the future of the biogas industry, if you would like to put it that way, in principle quite rosy and with all the difficulties that we currently have. I believe that this steady and available energy will play a greater than a minor role.
There is no point in investing in renewable energies, of which only 9 percent of the installed capacity is actually converted into electrical work. You can burn the money in the trash right away, you have to say that. And this will also open up opportunities to invest freely in other sectors without increasing the EEG surcharge.
We will get closer to the market and plants will only get the specific additional costs, compared to standard plants, paid for through a surcharge. We would be able to do that now and that will become the norm. Incidentally, biogas will do very well here.
The second point is that we will have a much greater importance of the residues in the selection of the substrates than at the present time. We currently have the situation that biomethane from residues is the best seller that can boast the best CO2 balance in the biofuels sector. If you take note of this, you will see in the next step that this is not entirely uninteresting in the heating market either. Ultimately, this view will probably also be accepted in the electricity market. Of course, you will still use NawaRo's because the market potential is simply huge and residues will not be enough.
The third point will be that biogas & #8211; and biomass at all & #8211; will play a very important role in the area of balancing and balancing energy. This still requires reasonable framework conditions, but they will come faster than some people think.
We are currently going through a difficult phase of uncertainty in the entire industry, but I would say that this will largely calm down in the course of 2012. We will get a proper EEWärmeG. And we will have clearly positive effects in the fuel sector, where we do not need any major legal regulations, but where only the market participants have to behave reasonably. And the balancing energy sector is running towards us.
Mr. Schultz, thank you very much for the interview.
Recorded on February 1st, 2012