Biogas sector seeks State subsidy in excess of €116m

Consumers could pay extra €5.70 monthly to fund farm-waste conversion into gas and cut emissions

Families could pay an extra €5.70 a month for energy if the Government accepts proposals to convert farm waste to gas, according to a group promoting the plan. That would translate into a subsidy of more than €116 million a year.

Industry-backed Renewable Gas Forum Ireland believes that converting slurry and silage to biomethane, a replacement for natural gas, could cut carbon emissions by 2.6 million tonnes a year and boost the rural economy.

However, the forum calculates that the cost of developing a biomethane industry could add a maximum of €5.70 a month, or €68.40 a year, to household energy bills by 2028 and €3.40 a month within six years.

Ian Kilgallon, business development and innovation manager with State company Gas Networks Ireland, argued on Tuesday that this would be lower than the €8.70 a month at which aid for wind farms and peat-fired electricity plants peaked earlier in the decade.


He explained that the Government could ringfence some of the cash it will raise from carbon tax to support biomethane development or impose a levy on energy bills to raise the money needed.

Mr Kilgallon stressed that should the Government impose a levy, or public service obligation, then it should cut consumers’ carbon tax by the same amount to compensate them.

The Renewable Gas Forum recommends building 227 anaerobic digesters, tanks that convert farm waste to gas, by 2030. The organisation estimates that this could cut the Republic’s use of fossil-fuel gas by 12 per cent, and by 20 per cent in the longer term. Beef, dairy and tillage farmers would benefit by providing material for processing.

The forum presented its proposals to Government this week and wants them included in the Republic’s National Energy and Climate Plan. This would make the group’s targets legally binding on the State.

Russell Smith, partner with accountants KPMG, which produced the report that the forum gave to Government, warned that the cost of not taking steps to cut carbon emissions would be far higher than the cost of developing biomethane. "They would be unsustainable," he said.

Price difference per kW/h

Biomethane requires support partly because it is more expensive than natural gas. Electricity generated from natural gas costs three cent a kilowatt hour (kW/h) – the basic unit in which electricity is measured – while biomethane costs eight cent per kW/h.

PJ McCarthy, chairman of the Renewable Gas Forum, said the organisation’s analysis showed that biogas was one of the most cost-effective ways of cutting carbon emissions. He said the forum used the public spending code when analysing the figures. “I do not know of any of the other technologies that have done that,” he added.

The industry group represents big energy users including food processors Danone and Dairygold, drinks companies Diageo and Pernod Ricard, pharma giants Johnson & Johnson and Wyeth Nutritional.

Donal Dennehy, director of Danone Ireland, which uses large quantities of gas to produce milk powder, said that it was the cheapest way for that company and those like it to become carbon neutral.

“When you are looking at protecting export markets, climate change is now front and centre,” he warned.

Biomethane is already used widely in France and Germany, which levied energy consumers to support the industry's development.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas