B I O M E T H A N E :T H E I T A L I A N C A S E

Domenico Maggi, Head of European Affairs | ifri - Brussels, 24 April 2019

Advantages of biomethane

2

Green gas

minimizes the overall

decarbonisation costs

Agricultural

supply chain

Create value for

local communities

Efficient, flexible

and programmable

100% renewable

and sustainable

1

2

3

4

5Biomethane can significantly

contribute to the achievement of

decarbonisation objectives in all

sectors: from transportation, to

heating and cooling, to electricity

generation up to industrial uses

Example of

circular economy

The unlocked potential of renewable gas in Europe

3

Biomethane

with CCS

Source: «Gas for Climate 2019»

Saving €217 billion annually

VISION: Net zero emissions EU energy system by 2050 with gas and electricity

Renewable gas Low-carbon gas

Biomethane

Green

Hydrogen

Synthetic

methane

Blue

HydrogenNatural gas

with CCS

H2H2

Potential of green gas by

2050: 270 bcmSolution for hard-to-

decarbonize sectors

Provides a case for

negative emissions

CH4

95 bcm 160 bcm 15 bcm

Biomethane Italian pathway - the regulatory framework

4

Certificates for consumption (CIC): the way to incentive injection of biomethane into the gas

network for transport uses to biomethane Producers

CIC

Ministerial Decree March 2, 2018 - key words

Biomethane Producer holder of the authorizations for the construction and operation of the biomethane plant

CNG/LNG relevantstation

CNG/LNG station built by the Producer at his own expense (at least 51% of the cost of

realization)

Directive 2009/28/CE Legislative Decree March 03, 2011

Specific incentive methods for

biomethane injection in the natural

gas network for transport uses

Ministerial Decree March 02, 2018

New incentive scheme for biomethane injection into the

natural gas network

with specific destination in transport (article 5)

Promotion measures are also foreseen

for biomethane injection into the natural gas network

without specific destination of use by issuing the

Guarantees of Origin (article 4)

for advanced biofuel (article 7)

Community Directive transposition

1st Ministerial Decree (December 5, 2013)

First incentive scheme for biomethane

Focus on Ministral Decree March 2, 2018 - Article 5

• Maximum annual incentive quantity : 1,1 bcmGSE

KEY POINTSB

iom

eth

an

e P

lan

t

• CIC +20% CIC up to 70% station construction costs (max € 0.6m)

• requirements to access incentives: >50% investment costs by ProducerCNG/LNG relevant station

Option 1

Option 2

• Biomethane Producer sells to GSE @ PSV_price - 5% sale (R 20 €/MWh)

• GSE Producer: CIC = 32€/MWh (64€/MWh for advanced biomethane)

Advanced biomethane is valued R 84€/MWh (64+20 €/MWh)

Biomethane Incentives for transport uses

• Biomethane Producer sells directly to the market

• GSE Producer: CIC = 32€/MWh (64€/MWh for advanced biomethane)

Advanced biomethane is valued R 84€/MWh (64+20 €/MWh)

Biomethane connection to the Italian gas grid

From 2016 until today

On Transport Network (Snam Rete gas)

• 182 formal requests for connection

• 34 contracts signed to connect biomethane plants into the

transport network, 350 mln cbm / year capacity

On Distribution Network

• 3 plants in operation (~16 mln cbm / year capacity)

http://www.snam.it/it/trasporto/Processi_Online/Allacciamenti/procedure-moduli/nuovi-punti-consegna-biometano/biometano.html

Offers alreadyaccepted

Plants already built1

1

2

1

5**

5

11

83*

2

2

1

1

1

(update March, 31 2019)

Biomethane (% for sector)

1***

2 +1 on Distribution Network4 +1 on Distribution Network1 on Distribution Network

(*) (**)

(***)

1

365 mln cbm

biomethane 8 connections ready to injection biomethane, ~ 90 mln Smc / year capacity)

3 plants in operation, 52 mln Smc / year capacity

26 connection under construction, ~ 260 mln Smc / year capacity

Potential Italian biomethane

9,5 bcm in the medium-long

term

(~10% Italian gas demand)

7

The Italian CNG market

ESTIMATED CNG STATIONS IN 2026

300

SNAM

stations

[# CNG stations]

+~1.000

Existing

Stations

Public

45%

Existing

Stations

50%

CNG vehicles 1 million 2,5 millions

CNG consumption 1,1 bcm 4 bcm

2017 2026

~1.200

CNG/LNG STATIONS IN ITALY

89

7

10

1

42

11

10

76

4

63

28

37

104121

210

84

186157

20

[# CNG/LNG stations]

% CNG stations / Total

CNG < 5%

CNG > 10%

5%<CNG<10%

First L-CNG station of S4M will open

in October in Pesaro

LNG stations

(of which) LNG

9

1

6

1

2

1

2

1

2

4

ACI, Snam, MiSE, Federmetano, Ecomotori.net

expected to reach ~2200 stations, ~2,5 mln vehicles and 4 bcm by 2026

What’s Next: Biomethane Policy Recomandations

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10% EU mandatory target (final consumption by 2030)

Define a role for TSOs to facilitate and scale up infrastructure investments

Regulatory framework: harmonization at EU level (e.g. reverse flow DSO-TSO)

Facilitate cross-border trade of renewable gas including a well-functioning guarantee of origin

scheme

Innovation (EU programs: e.g. Horizon Europe, PCI/CEF)

EU legislation on mobility: support the use of renewable gas in transport to help to decarbonise

of the transport sector (e.g. Bio-CNG&Bio-LNG)

EU legislation on efficiency: support the use of renewable gas in he heating sector

9

domenico.maggi@snam.it