Igniting Australia’s bioenergy industry could solve the country’s looming gas shortage

One form of bioenergy is biogas, which is generally produced from the organic portion of household waste, commercial food waste, agricultural residues, farming residues, and wastewater treatment by-products. It can be used to generate renewable energy and fuel as well as produce revenue through carbon offset credits.

Not only does biogas production help in reducing greenhouse gas emissions through the capture and utilisation of methane, but the process also yields digestate, a nutrient-rich byproduct that can be valorised as an organic fertiliser, creating another source of revenue. Additionally, the utilisation of biogenic CO₂ captured from the biogas upgrading process can be marketed for commercial use, or for sequestration, further enhancing the environmental and economic benefits of biogas systems.

Biogas is versatile with potential utilisation for heat, electricity or transportation fuel. Ramboll has been advising our clients in Europe, North and South America, and across the Asia Pacific on biogas projects for more than three decades but in Australia the industry is only emerging with significant potential.

There are more than 14,000 biogas production projects globally, with Denmark one of the leaders in this area. Since 2013, more than 50 biogas facilities have been connected to the gas system in Denmark. This growth is expected to continue so that biogas will be able to cover 75% of Danish gas consumption by 2030 and to fully meet annual Danish gas demand by 2034¹. This is a mature and proven technology ready for large scale deployment.

According to the cooperative research centre RACE for 2023, the opportunity of anaerobic digestion for electricity, transport and gas highlights the enormous potential of renewable gas, not only to help realise Australia’s climate ambitions but to provide an ongoing and affordable low-emission energy source for consumers².

According to the report, biogas could account for more than 50% of all gas consumption in Australia by 2050, with the nation boasting enough feedstock to generate 371 PJ of biogas per year – the equivalent of 6.2% of Australia’s total energy consumption.

Importantly, biogas could not only help to decarbonise Australia’s energy sector, but just as urgently, it could help to supplement the expected shortfall of gas supply Australia is facing within the next four years as production from historic fields in the Bass Strait falls away much quicker than demand for the fuel.

A report from the Australian Energy Market Operator (AEMO) has highlighted that from 2028, the closure of Victoria's biggest gas plant could leave a major hole in supplies³.

I recently discussed the insights from Denmark’s experience and evaluated their relevance to Australia, considering our unique regional, resource and socio-economic factors, during the Gippsland Bioenergy Forum in April 2024 organised by the Victorian Bioenergy Network.

Time for Australia to act

Having set the scene for this event and expressed the urgency for real action to promote Australia’s bioenergy industry, I can confidently say that delegates at the event really did sense that there is huge potential and willingness in Australia to create a bioenergy industry but that the policy is holding us back. Having a favourable policy framework and sustainable funding support is key to fast-tracking and scaling the development of biogas.

Denmark has successfully leveraged subsidy schemes and green certificates to enhance its biogas market, contributing significantly to its renewable energy sector. Since the early 2000s, the Danish government has implemented a variety of financial support mechanisms designed to stimulate the growth of biogas production. One of the pivotal moments came in 2012 when Denmark introduced a more comprehensive subsidy scheme under the Promotion of Renewable Energy Act. This act was aimed at supporting biogas directly through fixed feed-in tariffs and premium payments, which made the investment in biogas plants more viable and attractive. Additionally, green certificates, which serve as proof that energy has been generated from renewable sources, have played a crucial role. These certificates allow biogas producers to earn additional revenue by selling certificates along with the biogas, thereby making projects more financially feasible. Together, these strategies have not only boosted the production of biogas but also aided Denmark in moving towards its ambitious goal of becoming independent of fossil fuels by 2050.

Regulatory development has encouraged the use of bioenergy in Denmark and that is something that we need to address in Australia through strong policy frameworks. This requires not only certification schemes, biogas implementation targets, and simplification of the permitting and approval processes accompanied by substantive subsidies but also a dedicated effort to educate and collaborate with farmers, ensuring they become integral participants in and derive benefits from the expanding bioenergy industry. Without these clear policies at both the Federal and State level and concerted efforts, attracting investment in these projects will remain a significant challenge.

The availability of investment grants in Denmark has seen the biogas industry experience exponential growth since 2012. The resources are here in Australia, but we need that government mandate to light the flame.

Approximately 62 million tonnes of biomass feedstock is available for biogas production, mostly from agricultural crop residues⁴.

The Australian Renewable Energy Agency’s Bioenergy Roadmap reveals that by the start of the next decade, Australia’s bioenergy sector could contribute to about $10 billion in extra GDP per annum, create 26,200 new jobs, reduce emissions by about 9%, divert an extra 6% of waste from landfill, and enhance fuel security⁵.

Lighting the flame with the agricultural sector

Although biomass is a limited resource, it ensures reliable, fuel-flexible, and dispatchable power production that balances the increasing intermittent renewable energy entering the system.

Given Australia’s vast agricultural advantage, it is certainly possible that biogas could be supplied at a lower cost to consumers than electrifying gas services. Being able to incentivise and create an industry symbiosis where everyone can benefit will help ensure a reliable and sustainable source of feedstock and scalable and viable business cases.

The biogas model that is currently deployed in Denmark constructs biogas plants in agricultural regions, within an economically feasible distance to connect to an existing natural gas pipeline. These centralised biogas plants generally serve 100 to 250 farms. The agricultural sector was well represented at the Bioenergy Forum with the industry recognising that investing in biogas can improve the management of its animal waste while selling carbon neutral energy and consequentially reducing its environmental footprint.

During the Forum, I used one of the world’s largest biogas plants as an example of the potential in Australia. Commissioned by Nature Energy in Korskro, Denmark in August 2019, it is in Southwest Jutland, one of the most cattle-rich areas in Denmark, which provides a stable supply base and the best conditions for good, sustainable gas production. Korskro processes about 710,000 tonnes of biomass a year, which is fermented into biogas in seven reactor vessels, each with a capacity of around 9,500 cubic metres.​ Biomethane is injected in the distribution grid and pure biogenic CO 2 is used in soft drink manufacturing.

The Nature Energy plant relies on various organic residues, including cow and pig manure, for its green round fuel. Denmark, like Australia has a large agricultural sector being one of the largest pork producers in the world.

Treasure not trash

Australia is well positioned to take advantage of the emergence of bioenergy technologies and like other areas of the renewable energy sector such as wind energy, we can look to take knowledge from Danish examples. The opportunity is immense, and it takes the public sector, private sector and financiers to come together and collaborate to capitalise. Skillset is another key element to achieving success. As the industry begins to pick up momentum, learning from world-leading expertise, such as Denmark, can help fast track the development.

Ramboll is one of the most experienced bioenergy engineering consultancies in the world. Having worked on more than 60 bioenergy plants and specialising in delivering high efficiency rates, in some cases exceeding 100%.

What our experience in Denmark has shown is that with comprehensive policy measures, robust government support and collaboration between the public and private sectors, we can reduce greenhouse gas emissions and enhance energy security in Australia through the development of a biogas industry and the integration of biogas into the existing natural gas network.

¹ New record for biogas in the gas system in 2021 (energinet.dk)

² Onsite anaerobic digestion | RACE for 2030

³ AEMO | Gas market outlook signals need for new investment

⁴ Onsite anaerobic digestion | RACE for 2030

⁵ Australia's Bioenergy Roadmap Report - Australian Renewable Energy Agency (ARENA)