Emboldened industry-led AD sector drives on

The leaders and key players of the Irish biomethane industry gathered at Croke Park last week, for what was arguably the most significant conference of its kind to date.

The Renewable Gas Forum Ireland (RGFI) hosted the Ireland Biomethane Conference, marking the first time the industry had a substantial policy for discussion – the National Biomethane Strategy.

The atmosphere was noticeably different this year. There was a buzz in the room, an air of excitement and a collective sense of recognition and progress.

For many years, anaerobic digestion (AD) sector has been likened to where wind was 15 years ago, or where solar was five years ago, just before their respective booms.

For the first time, it felt like this was the case. With a significant number of large, centralised AD plants in the pipeline, and construction beginning on the first of these this year, the AD industry is here.

State backs biomethane

There is no doubt that the Irish State now backs biomethane. Both Minister Ryan and Minister McConalogue spoke at the conference and were clear that this industry must develop, and will be supported to do so by the State.

The drive to reduce emissions, improve water quality, provide new incomes for farmers and reduce the security risk posed by our existing gas supplies are all reasons for this.

Minister Ryan was undoubtedly the most positive he has been towards AD to date, outlining coherent rationale as to why the sector must proceed. He said it now feels like the launch of the industry, acknowledging that the last time he tried, this industry didn’t get off the ground, partly due to a low REFIT support tariff.

He said that the €40m capital grant scheme from RePowerEU to facilitate the development of the first plants, which must be built within the next 18 months, is only the start.

Investors will be given certainty that a portion of the Climate and Nature Fund will be allocated for AD capital funding from 2026 onwards, but he didn’t state how much. The RGFI has called for €1bn of this to be made available.

Industry support

Minister Ryan also noted that clarity on the Renewable Heat Obligation (RHO) would come in autumn. He said the RHO will be the main revenue mechanism for biomethane and will speed up project development.

Initially starting at 2%, the RHO aims to achieve a 10% renewable inclusion rate in fuels used in the heat sector by 2030.

However, he also pointed out that gas purchase agreements with industries that can afford the premium, such as data centres or pharmaceutical companies, will also play a role in developing the biomethane market.

Unintended consequences

The problems facing Northern Ireland from the over-application of nutrients were highlighted as a key concern and something to be avoided at all costs in the Republic.

Minister Ryan is acutely aware of this, and measures to protect water quality are expected to form part of the Biomethane Charter.

The current initiatives being undertaken by the Department of Agriculture, Environment and Rural Affairs around the smarter use of nutrients and nutrient recovery technologies were highlighted on the day.

While these could be deployed in the Republic as the industry is getting started, this will take funds to do so. This is highlighted as an area to be explored in the biomethane strategy.

EU rules

The importation of biomethane from the EU and UK was continually highlighted as a risk for Irish anaerobic digestion developers.

When asked if Irish biomethane will be prioritised, Minister Ryan said the RHO will ‘not be designed so we are opening up AD plants or in Holland or Essex’.

However, as a member of the EU, preventing international imports could be difficult. Equally, it was highlighted that non-compliance with the Biomethane Charter may be difficult to enforce, as withholding support may not be an option under EU rules.

Stay tuned to the Irish Farmers Journal for more coverage from the Ireland Biomethane Conference in the coming weeks.

It was reassuring to hear a vote of confidence in AD from the dairy sector’s ICMSA president, Denis Drennan, and to listen to a well-informed Noel Banville of the IFA discuss how the industry must be developed with farmers at the core.

Indeed, we have seen a series of strong policy statements on biomethane from these organisations in recent times, bringing them in line with the views of many renewable organisations, which have long championed farmer involvement.

Not long ago, the former president of the ICMSA dismissed AD as mere competition for dairy farmers, a sentiment also echoed by some senior members of the IFA, even as recently as during the Renewables Roadshow series.

While this turnaround is welcome, unfortunately it has come too late. This initial opposition, and delay in ensuring that farmers had a seat at the table when the AD industry was being designed from a blank canvas, will go down as one of the costliest actions by farm organisations for their members in a generation.

By opposing the industry at every turn and refusing to meaningfully engage, this lack of farm leadership has resulted in an industry-led approach to Irish AD development. Large AD plants, built by experienced developers, selling biomethane to any sector that can afford it or through an obligation scheme, is now the selected model for Ireland.

As a result, the multi-billion euro opportunity, which could have put sums on par with the value of current dairy exports directly into the hands of Irish farmers, is now largely gone. For years we, and a few lone voices at various levels from within the main farm organisations, have said that this industry is moving in the background, that the chess pieces are being put in place, that Ireland has signalled to the world that it backs biomethane and that we are open for business. While our farm leaders looked the other way, the AD industry mobilised.

This was apparent with the revelation that the €28bn Copenhagen CIP investment fund had been active in Ireland for two years before its announcement last week that it will build seven, 500,000t AD plants here. This was news to most of the industry and adds another commercial developer to the mix.

Arguably it is now too late to design this AD industry to be truly farmer-centric, one which facilitates farmers to build and own their own plants. The die is cast, the players are here and the international money is in place to back them. In most cases, it will be just too difficult for farmers to develop their own projects under the AD structure which has been designed. We may have a shot at smaller-scale plants if a substantial support package is put in place, but this would require a significant U-turn on the Government’s current position, which has taken five years to formulate.

It’s not too late, however, for the industry to be truly agri-centric, with farmers central to supplying the plants with feedstock and using digestate, as is the Government’s plan. This is still a significant opportunity for farmers and will help reduce costs, generate a new income stream, reduce risk and improve cashflow, all while reducing emissions and help improve water quality. Ironically, many of the dairy industry may well end up having to work with an AD plant for slurry management in the near future, if signals coming from Europe are to be believed.

So where real leadership is now needed is ensuring farmers receive the best deal possible for feedstock supply. This must be by developing a cooperative feedstock structure, which was also the view of Minister Ryan. This will be the best way to ensure that we don’t walk into a situation where farmers become powerless price-takers. Our existing co-ops, which have shown to have little interest in developing plants themselves, may instead be well placed to play a role in mobilising farmer feedstock.

If you’re only a passive reader and are new to AD, it may be hard to fully grasp the scale of the missed opportunity and just how big an own goal this is for Irish farmers. But all I will say is this: I hope those in the organisations who ensured we conceded this own goal now put their efforts into making the best of the situation for Irish farmers. It is time to step up.