Biomethane can help companies reduce emissions, meet regulatory requirements and, in some cases, lower compliance costs. But sourcing it effectively is not as simple as buying any renewable gas on offer: different use cases require different certificates, sustainability criteria and delivery arrangements.
Drawing on three real-world examples, we look at how biomethane procurement works in practice and how companies can build a sourcing strategy that fits their environmental and business objectives.
Biomethane certificates are documents that attest to the production, ownership, and consumption of biomethane, along with its sustainability attributes.
In Europe, two main types of certificates are used. Guarantees of Origin (GOs) contain information on the source of a volume of biomethane produced and delivered to the grid. GOs are also commodities in themselves and can be traded independently.
Proofs of Sustainability (POS) are delivery notes detailing all the feedstocks used to produce a volume of biomethane, as well as the GHG savings—also known as carbon intensity (CI)—and other sustainability characteristics of that volume of gas. They certify the entire value chain of biomethane and cannot be traded separately from the physical gas.
Depending on their use case, biomethane consumers need different certificates. GOs are generally considered sufficient for purely voluntary procurement and to reduce Scope 1 emissions. Consumers covered by regulatory schemes may need GOs plus POS, along with detailed specifications on the CI expressed in the document.
Many companies assume that reducing Scope 1 emissions means replacing or upgrading equipment, with the accompanying capital expenditure. Biomethane certificates offer a much more cost-effective way to prove consumption of renewable gas and meet voluntary targets.
However, there is an important question that companies should address early on: what quality of biomethane should they buy, and what procurement framework should they follow to make robust environmental claims?
“The problem we currently face is that there is no harmonised standard for the voluntary use of biomethane certificates,” says Julius Kaden, Corporate Solutions Director at Ecohz. The Greenhouse Gas Protocol has yet to issue definitive guidance on the topic. And while the Science Based Targets initiative (SBTi) now explicitly includes biomethane certificates in its latest standard, there is no cohesive document corporates can refer to.
This generates many unanswered questions among organisations intending to use biomethane certificates in their decarbonisation plans.
“When helping clients, we eliminate this uncertainty by involving their auditors early in the sourcing process,” Kaden continues. “We show them what guidance is available, how we interpret it, and what is possible depending on availability in the market. Then, we co-develop a framework with quality criteria that also fit the buyer’s business and sustainability priorities.”
One of Ecohz’s clients in the food sector determined it was important that the biomethane they sourced was produced from feedstocks that do not compete with food or feed. In collaboration with their auditor, it was determined that Guarantees of Origin were sufficient, with no need to source volumes certified with Proofs of Sustainability. EU or UK certificates were both considered valid, as long as a grid connection to the facility in question could be proven.
Although this planning, procurement, and validation process is a detailed case-by-case job, it enables companies to operate with much more confidence in the market. Companies know they are spending money on the right solutions from the start while avoiding heavy investments in infrastructure.
National biomethane regulation is detailed and specific. This means complying with mandatory requirements is often more complex than voluntary procurement. It also opens doors for companies to reduce taxation, with clear criteria for biomethane quality.
In Germany, an industrial company with high gas consumption looked at biomethane to reduce its obligations under the EU ETS. According to German law, obtaining EU ETS exemptions requires biomethane volumes to be documented with both GOs and Proofs of Sustainability (POS), and to be delivered physically. Additionally, each individual POS must clear an established carbon intensity threshold.
“There are several ways in which biomethane can be physically delivered, such as paper swaps, nominations, and counter-nominations,” Kaden explains. Ecohz’s client chose a counter-nomination. Once the trade was carried out, the client received GOs—redeemed in the German registry DENA—and POS, delivered to the client’s account in the national sustainability registry.
All necessary documentation was then handed to DEHSt, Germany's national agency responsible for managing carbon pricing and emissions trading, which granted EU ETS exemptions equivalent to the GHG savings of the biomethane in question.
“This case is especially interesting because, even though the EU ETS is a mandatory mechanism, biomethane is a voluntary investment,” Kaden emphasises. “Purchasing biomethane with all the necessary specifications is still more expensive than paying for the equivalent carbon allowances. ETS exemptions were considered as a discount on the biomethane purchased and an addition to the green value that the company obtained.”
Ecohz’s client simultaneously reduced its carbon tax while achieving a Scope 1 emissions reduction. “When trying to reduce Scope 1 emissions, companies can use regulatory markets to offset added costs and unlock both environmental and business gains,” Kaden adds.
For companies in purely compliance markets, sourcing biomethane has one simple goal: to reduce spending.
Such was the case for a shipping company covered by the FuelEU Maritime scheme, which mandates companies to source a minimum volume of the renewable fuel BioLNG.
The specifications for this biomethane use case are similar to those for companies under the EU ETS: certified European biomethane documented with GOs and POS that is also physically delivered.
The sourcing process, however, involves an extra step: the conversion of biomethane into BioLNG. “In this case, the GOs, POS, and the physical gas must be delivered to a liquefaction plant, which produces physical BioLNG and issues a corresponding BioLNG certificate,” Kaden explains. “The physical product is then transported by bunkering vessels to the client’s port calls.”
Carbon intensity (CI) is also measured differently. While the EU ETS requires every POS to remain under a given threshold, FuelEU Maritime evaluates a weighted average, meaning that some volumes can exceed the CI score as long as the overall mix stays under the limit. “This gives customers some flexibility to source biomethane from different sources depending on the lowest cost,” Kaden says.
“Overall, we are talking about one product—biomethane—which can be applied to many use cases to obtain significant benefits,” says Nils Holta, Ecohz’s Sustainability Solutions Advisor. “The product stays the same. It is the sourcing and reporting strategies that should adapt to every client.”
Adapting strategies according to the use case is crucial. Not only does this ensure that companies stay compliant in their energy sourcing and credible in their claims, but it also unlocks possibilities for cutting expenses and obtaining more value. To operate with confidence in the biomethane market, considering all the variables before buying is key.