The Rise of Renewable Gas: Hydrogen and Biomethane

Introduction

The gas industry is undergoing a profound transformation as renewable and low-carbon gas sources gain momentum in the global energy mix. Hydrogen and biomethane, in particular, are emerging as critical components of a more sustainable gas sector, offering pathways to leverage existing infrastructure while significantly reducing greenhouse gas emissions. This article explores the technological developments, market dynamics, and policy frameworks shaping the growth of these renewable gas sources.

The Growing Importance of Renewable Gas

As countries worldwide pursue ambitious decarbonization targets, the role of renewable gases has become increasingly prominent. Traditional natural gas infrastructure—including transmission and distribution networks, storage facilities, and end-use applications—represents trillions of dollars in global investment. Rather than abandoning these assets in the energy transition, stakeholders are increasingly focused on repurposing them to accommodate renewable gas alternatives.

Hydrogen: The Versatile Energy Carrier

Hydrogen has emerged as a versatile energy carrier with applications across multiple sectors, from power generation and industrial processes to transportation and building heating. The hydrogen spectrum is typically categorized by production methods and associated carbon intensity:

Production Technologies and Economics

The economics of hydrogen production are evolving rapidly. While green hydrogen has historically been more expensive than blue or gray alternatives, costs are declining due to falling renewable electricity prices and electrolyzer technology improvements. Bloomberg New Energy Finance projects that green hydrogen costs could fall to $1-1.50/kg in many regions by 2030, approaching cost parity with blue hydrogen.

Key technological developments include:

• Scale-up of electrolyzer manufacturing, with individual system capacities now reaching multiple megawatts
• Improvements in electrolyzer efficiency and durability across all technologies (alkaline, PEM, and solid oxide)
• Advanced approaches to carbon capture for blue hydrogen, with capture rates exceeding 95%
• Innovations in methane pyrolysis to produce hydrogen with solid carbon co-products

Infrastructure Adaptation

The integration of hydrogen into existing gas infrastructure presents both opportunities and challenges. Studies suggest that many natural gas pipelines can accommodate hydrogen blends of 5-20% by volume without significant modifications, though higher concentrations may require material upgrades to address hydrogen embrittlement and permeation issues.

Several demonstration projects are underway to test hydrogen blending in real-world conditions:

• HyDeploy (UK): Testing up to 20% hydrogen blending in a local distribution network
• GRHYD (France): Injecting hydrogen blends into the natural gas grid for residential use
• H21 (UK): Planning for conversion of entire city gas networks to 100% hydrogen
• European Hydrogen Backbone: Initiative to develop dedicated hydrogen infrastructure across Europe

End-Use Applications

Hydrogen's versatility extends across multiple sectors:

Industrial Applications: Hydrogen can replace fossil fuels in high-temperature industrial processes, including steel manufacturing, chemical production, and cement making. Companies like ArcelorMittal, SSAB, and ThyssenKrupp are developing hydrogen-based direct reduced iron (DRI) processes to decarbonize steel production.

Power Generation: Hydrogen can be used in gas turbines and fuel cells for electricity generation. Major OEMs including GE, Siemens Energy, and Mitsubishi Power are developing turbines capable of burning high hydrogen blends or pure hydrogen.

Transportation: Fuel cell electric vehicles (FCEVs) use hydrogen to generate electricity for propulsion. While passenger vehicle deployment has been limited, hydrogen shows promise for heavy-duty transportation, including trucks, buses, trains, and maritime applications.

Heating: Hydrogen can be used in modified boilers and cooking appliances for residential and commercial heating. The UK's Hy4Heat program has developed prototype hydrogen-ready appliances, and manufacturers like Worcester Bosch and Baxi are offering hydrogen-ready boilers.

Biomethane: The Natural Gas Substitute

Biomethane (also known as renewable natural gas or RNG) is a purified form of biogas that meets natural gas quality specifications and can be directly injected into the gas grid as a direct substitute for conventional natural gas. Unlike hydrogen, biomethane is chemically identical to fossil methane (CH₄), requiring no modifications to infrastructure or end-use equipment.

Production Pathways

Biomethane is typically produced through two main pathways:

Anaerobic Digestion: Organic matter (such as agricultural waste, food waste, sewage sludge, or energy crops) is broken down by microorganisms in the absence of oxygen, producing biogas that is then upgraded by removing CO₂ and other impurities.

Thermal Gasification: Solid biomass is converted into synthetic gas (syngas) through high-temperature processes, followed by methanation to produce biomethane. This pathway can utilize a wider range of feedstocks, including woody biomass and agricultural residues.

Market Growth and Potential

Biomethane production is growing rapidly, particularly in Europe and North America. According to the International Energy Agency, global biomethane production reached approximately 35 TWh in 2022, with substantial growth potential. The European Biogas Association estimates that Europe alone could produce up to 1,000 TWh of biomethane by 2050, equivalent to roughly 25% of current EU natural gas consumption.

Key market drivers include:

• Carbon reduction policies and renewable energy targets
• Waste management regulations that limit landfilling of organic waste
• Economic incentives, including feed-in tariffs, tax credits, and renewable fuel standards
• Corporate sustainability commitments driving demand for renewable thermal energy

Environmental Considerations

Biomethane offers substantial environmental benefits, including:

Greenhouse Gas Reduction: Depending on the feedstock and production process, biomethane can achieve carbon-negative lifecycle emissions by capturing methane that would otherwise be released from organic waste decomposition.

Waste Management: Biomethane production provides an economically viable pathway for managing organic waste streams, reducing landfill disposal and associated environmental impacts.

Circular Economy: The digestate by-product from anaerobic digestion can be used as a nutrient-rich fertilizer, returning valuable nutrients to agricultural soils and reducing dependence on synthetic fertilizers.

Policy Frameworks and Support Mechanisms

The development of renewable gas markets is heavily influenced by policy frameworks at national and regional levels:

Hydrogen Strategies

Over 30 countries have published hydrogen strategies or roadmaps, outlining targets, funding commitments, and policy measures to accelerate hydrogen deployment:

European Union: The EU Hydrogen Strategy targets 40 GW of electrolyzer capacity by 2030, supported by the €750 billion Next Generation EU recovery plan and the Innovation Fund.

United States: The Inflation Reduction Act includes production tax credits of up to $3/kg for clean hydrogen, depending on lifecycle carbon intensity, potentially transforming the global hydrogen market.

Japan: The Green Growth Strategy aims to reduce hydrogen costs to ¥30/Nm³ ($3/kg) by 2030 and ¥20/Nm³ ($2/kg) by 2050, with substantial support for technology development and demonstration projects.

Biomethane Support Mechanisms

Biomethane development is supported through various policy instruments:

Feed-in Tariffs and Premiums: Several European countries, including Germany, Italy, and France, offer guaranteed payments for biomethane injected into the gas grid.

Renewable Fuel Standards: In the United States, the Renewable Fuel Standard (RFS) and state-level Low Carbon Fuel Standards (LCFS) provide valuable credits for biomethane used in transportation.

Carbon Pricing: Emissions trading schemes and carbon taxes enhance the competitiveness of renewable gases relative to fossil alternatives.

Gas Grid Access: Guaranteed grid access and priority dispatch provisions reduce market barriers for biomethane producers.

Industry Collaboration and Innovation

The transition to renewable gases is driving new forms of collaboration across traditionally separate industries:

Cross-Sector Integration: Projects are increasingly linking electricity, gas, industrial, and waste management sectors through integrated approaches to renewable gas production and utilization.

Value Chain Partnerships: Collaborations spanning feedstock suppliers, technology providers, infrastructure operators, and end-users are addressing technical and commercial challenges across the renewable gas value chain.

Industry Consortia: Initiatives like the Hydrogen Council, the European Clean Hydrogen Alliance, and the Renewable Gas Forum are fostering knowledge sharing and coordinated action to accelerate market development.

Challenges and Future Outlook

Despite promising developments, renewable gases face several challenges on the path to widespread adoption:

Cost Competitiveness: While costs are declining, renewable gases generally remain more expensive than fossil alternatives in the absence of carbon pricing or other policy support.

Infrastructure Development: Significant investment in production, transportation, and storage infrastructure is needed to scale renewable gas deployment to meaningful levels.

Technical Standards: Harmonized standards for gas quality, safety, and certification are essential for market development, particularly for cross-border trade.

Public Acceptance: Public perceptions regarding safety (particularly for hydrogen) and land use for biomethane feedstock production can impact project development.

Looking ahead, the outlook for renewable gases appears increasingly positive. Declining production costs, strengthening policy support, and growing corporate commitments to net-zero emissions are creating a favorable environment for market growth. By 2030, renewable gases could represent a significant portion of the global gas supply, particularly in regions with ambitious climate targets.

Conclusion

Hydrogen and biomethane are transforming the traditional gas industry, creating pathways to leverage existing infrastructure while dramatically reducing environmental impact. As technological innovation continues and policy frameworks evolve, these renewable gases will play an increasingly important role in the global energy transition, offering flexible, storable energy carriers that complement variable renewable electricity sources.

For industry stakeholders, the rise of renewable gases presents both challenges and opportunities. Companies that can navigate the evolving technological, regulatory, and market landscape will be well-positioned to thrive in a decarbonizing energy system. The gas industry's future may look very different from its fossil-dominated past, but renewable gases ensure that gaseous energy carriers will remain a crucial part of the global energy mix for decades to come.