The government and the industry sign a letter of intent on the development of biogas and biomethane

The minister of climate Michał Kurtyka and representatives of the biogas industry, transport, transmission and science signed on 13 October 2020 a letter of intent on establishing a partnership for the development of the biogas and biomethane sector. It was the government's first formal step towards joint arrangements with the industry. The initiator was the Government Plenipotentiary for Renewable Energy Sources, Ireneusz Zyska.

What the letter contains

The document is declaratory in nature. The parties undertook to jointly work out, sign and implement a cooperation agreement that is to define actions for the development of the biogas and biomethane market in Poland. The objectives listed included:

• diversification of energy sources and improved energy security;
• achievement of EU energy and climate targets and improved air quality;
• development of new support mechanisms specific to biomethane;
• extension of the existing support systems for biogas.

The government estimated the national biogas potential, including agricultural, at almost 8 billion m³ per year. By comparison, gas consumption in Poland was then around 18–19 billion m³ per year.

Who signed

According to press reports, the signatories included the Polish Oil and Gas Company (PGNiG) and the Polish Development Fund (PFR). PFR then owned seven biogas installations. The President of PGNiG, Jerzy Kwieciński, argued that within about ten years the company could produce approx. 4 billion m³ of biomethane, which would correspond to one fifth of national demand and would require 1500–2000 biomethane plants. The first installation injecting gas into the distribution network was, according to declarations, to start at the turn of 2020 and 2021.

Regulatory announcements

The ministry confirmed plans to extend the support systems for energy producers using biogas: the auction system and the guaranteed tariffs and premiums (FIT/FIP). In parallel it was working on rules concerning biomethane itself. It was assumed that the agreement would become a platform for cooperation between the government, investors, network operators and science.

Significance for the market

For the industry the letter was a signal that biogas and biomethane are entering the government agenda, and not only sector discussion. The question remained, however, of the specific tools: without a statutory definition of biomethane, without a support system for production and without simplified connection procedures, investment remained hard to justify.

What next

According to the declaration, the parties were to work in working groups on the agreement. The real effects depended on the pace of legislative work in the Ministry of Climate and on the position of other ministries, including agriculture, finance and state assets.

Why a letter of intent and not a statute

Sector agreements in Poland are an instrument of industrial policy in which the government and the industry agree common goals, commitments and a division of tasks, without imposing legal obligations. They make it possible to quickly gather stakeholders' opinions, but their effectiveness depends on later legislative decisions. In the case of biogas the involvement of science is also important, which is to supply data on feedstock potential and technologies, as well as of network operators, without whom the injection of biomethane is not possible.