The Brazilian Biomethane Industry: Challenges and Opportunities

Written by: Felipe Souza Marques, Technology Development Director at CIBIOGÁS and Nicolas Lazzaretti Berhorst, Market Intelligence Manager at CIBIOGÁS

Data from December 2022 (Brazilian Biogas Outlook 2022/2023) indicates that 22% of the 2.9 billion m³ of biogas produced annually is upgraded into biomethane. This represents 82% growth as compared to 2021.

Despite the immense opportunities that the market can bring to the country’s economy, one of the main challenges the industry is facing is regulation. Regulatory support is crucial to attract investments, boost research and development, and consequently, accelerate the adoption and expansion of biomethane as a sustainable energy source in Brazil.

Another important challenge is distribution, since natural gas consumers are far from biomethane producers. The difficulty in finding viable alternatives for distributing biomethane distances decision-makers from this technological route. However, there is enormous energy demand close to biomethane production sites that do not take into consideration this renewable energy as an alternative. Raising awareness among these consumers can generate important market openings close to sources of biogas and biomethane.

The biomethane market trends towards significant growth. ABIOGAS’ projects the production of 2.2 billion m3/day of biomethane in 2027, most of which will come from 27 new biogas plants planned by the company. Around 60% of this volume comes from biogas generated in landfills. The application of this biogas should be directed to transport and industry, and for the latter, the possibility of interstate sale is very relevant.

There are public policies such as Zero Methane and Fuel for the Future that will further boost the production chain for this biofuel.

Decentralized biofuel production presents a huge opportunity for agribusiness, in the interior of the country. The creation of clusters (whether by substrate or by biogas producers) tends to expand the scale of the project and consequently increase the financial viability of such projects. Such an approach is complex but brings high value to the decentralized biofuel production strategy.

The transport sector is the main market for biomethane, especially due to its impact on reducing greenhouse gas emissions. The use of biomethane in public transport values decentralized consumption and production since biofuel can be produced and consumed locally. For example, agribusiness could supply its own fuel generating it from its organic waste products. Another favorable point is the availability of decarbonization credits, known as of CBIOs, for biomethane used in the transport sector.

The main players in the market

The dynamism of the Brazilian biomethane market is driven by strategic players who play a crucial role in the socio-technical transition towards the consolidation of biomethane as a competitive energy commodity.

In a comprehensive analysis, 6 fundamental categories of market players were identified: regulators, producers, technology suppliers, transport and distribution, consumers, and development.

In the regulatory sphere, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the Regulatory Agency of the State of São Paulo (ARSESP) stand out as leaders in the formulation of public policies and regulations for biomethane. ARSESP, in particular, serves as a reference for state agencies across the country.

Biomethane producers play an upstream role, after obtaining the production authorization from the ANP, including COCAL, CRVR, ENGEP, GÁS VERDE, MARQUISE AMBIENTAL, MDC, ORIZON, RAÍZEN, RDP and ZEG.

In the technology suppliers segment, companies such as 3DI ENGENHARIA, AB ENERGY, MWM TUPY and UBE play a key role in the development and implementation of technological innovations in the sector.

The transportation and distribution of biomethane are essential elements to ensure its efficient dissemination throughout the country. Companies such as CEGÁS, COMPAGAS, GÁS BRASILEIRO, IGAS, SCGÁS and ULTRAGAZ play crucial roles in this process, contributing to the logistics and distribution of biomethane in the Brazilian market.

Several sectors can displace fossil fuels and become biomethane consumers. In that list, there are some big companies such as L’OREAL and MERCADO LIVRE, as well as CNG resellers, the steel company TERNIUM and users of the gas distribution pipeline.

The promotion of the sector is driven by organizations such as FOMENTO PARANÁ, ITAIPU BINACIONAL and the National Bank for Economic and Social Development (BNDES), playing a crucial role in financing and supporting initiatives related to biomethane.

All the aforementioned players play a vital role in consolidating the biomethane market in Brazil.

Current regulations in the Brazilian biomethane market

The following table lists the main resolutions that guide the biomethane market in Brazil. The presence and enforcement of these specific regulations are crucial to boost entrepreneurial activity and facilitate the socio-technical transition towards renewable energy.