RED II and biogas plants: sustainability and emission-reduction criteria (Article 29)

Article 29 of the RED II directive determines when biogas from a given biogas plant can be counted as renewable and covered by support or a national target. For electricity and heat from gaseous biomass fuels the criteria cover installations with a total thermal capacity of at least 2 MW, and for transport fuels – all installations. The entry describes the position as at December 2020, when the directive was being implemented into national law.

Three groups of requirements

Article 29 consists of several blocks, which combine depending on the type of raw material:

In addition, paragraph 2 requires that biofuels and biomass fuels from agricultural residues be counted only if operators or national authorities have monitoring and management plans protecting soil quality and soil carbon.

Which areas are excluded

For biomass from crops the reference point is the status of the land in January 2008. The raw material must not come from: primary forests and other wooded areas of high biodiversity, areas designated for nature protection (unless it is shown that cultivation does not interfere with the protection aims), highly biodiverse grassland of more than a hectare, wetlands and continuously forested areas (carbon-rich) and peatlands – unless harvesting does not require drainage. For the owner of a biogas plant this means the need to establish exactly where silage and other crops come from, and to obtain declarations from suppliers.

The emission-reduction criterion: what changes depending on the substrate

The reduction is calculated according to Annexes V and VI (we describe the details in a separate guide on GHG thresholds and calculations). An important distinction concerns the raw materials:

• Crops (for example maize silage) – must meet both the land criteria and the emission-reduction criterion.
• Agricultural residues (for example slurry, manure, straw) – soil protection plans and the GHG threshold.
• Waste and residues outside agriculture, aquaculture, fisheries and forestry (for example food industry waste) – only the GHG threshold.

For the incineration of solid municipal waste in energy the GHG threshold does not apply.

Verification: mass balance, audit, certificate

Article 30 requires Member States to ensure that operators demonstrate compliance with the criteria through a mass balance system. It allows consignments with different properties to be mixed (for example in transmission infrastructure), provided that the sustainability information "travels" with the consignment and the sum of withdrawals does not exceed the sum of additions within a reasonable period. Compliance is confirmed by an independent audit, and operators may use voluntary schemes recognised by the Commission or national schemes. This is why biogas plants interested in selling biomethane to markets requiring certification usually choose one of the recognised schemes, for example ISCC or REDcert.

The directive also imposes restrictions that do not apply directly to all biogas plants but affect the market: a cap on the share of biofuels from food and feed crops in transport (Article 26) and preferences for feedstocks from Annex IX, which include animal excreta and sewage sludge, among others.

State of implementation in Poland (at the date of the entry)

The transposition deadline expires on 30 June 2021. In December 2020 national provisions on sustainability criteria concerned mainly biocomponents and liquid biofuels, and work was under way for biogas burned in power generation and heating. An investor who plans to sell biomethane or to commission a larger installation after 2020 should already assume that compliance with Article 29 will have to be demonstrated.

Practical conclusion

1. Plan the substrate structure so that residues and waste dominate.
2. Collect declarations from suppliers on the origin of the land.
3. Plan the digestate store so as to limit methane emissions.
4. Commission a GHG analysis before the financial project and take into account a margin against the 70–80% threshold.

Below 2 MW: can the criteria be ignored

The directive itself does not impose criteria for electricity and heat on installations smaller than 2 MW of thermal capacity, but a Member State may extend them in national law. A small agricultural biogas plant should therefore not assume that the problem does not concern it: its situation will be decided by the way the directive is implemented, the conditions of support programmes and the requirements of buyers. It is different when it produces biogas or biomethane intended for transport – there the capacity threshold does not exist, and the criteria apply to every installation.

How the criteria affect contracts and financing

Banks and biomethane buyers increasingly ask about the certificate even before signing a contract. In a biomethane sale contract there appear clauses on maintaining a valid certificate, on passing on sustainability documents and on liability for their absence. Loss of the certificate in practice means loss of the ability to sell the gas as renewable and, if irregularities are detected, corrections of settlements. That is why the financial model should include the costs of certification, internal record-keeping and periodic audits, and, when choosing substrates, the effect on the margin against the emission-reduction threshold.

Double counting and public support

The mass balance system is also meant to prevent the same delivery from being counted towards national targets more than once, and to provide information on whether support was granted for its production. Information on support is part of the documentation of the consignment. This is the first step towards creating an EU database tracking renewable fuels, which we write about in a separate entry.

This text is for information only and does not constitute legal advice; before an investment or formal decision, check the current wording of the legislation and consult a lawyer or the relevant authority.