Funding biogas is critical in the battle against climate change

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Russia’s invasion of Ukraine in February 2022 and the subsequent international sanctions regime has been a game changer for global energy supplies. Whilst the price of oil and gas has soared, the effects of the conflict have also focused more attention on renewable energy sources.

The UK government has already laid out its goals in terms of its net zero ambitions for the country, but much of the investment required to achieve this will likely come from private investors backing impact funds that can make more of a difference than simply dropping fossil fuels from their portfolios.

The use of biomethane and biogas can help to reduce global greenhouse gas emissions by up to 13 percent, but it will require a lot more funding to deliver this.
Anaerobic Digestion – AD – is regarded as an excellent solution by the UNFCCC (United Nations Framework Convention on Climate Change), custodians of the Paris Agreement. It has the potential to reduce carbon emissions by six percent by 2030 and can contribute to putting the UK back on track to meet its overall climate commitments.

Private debt funds are already playing an active role in the successful funding of biogas plants up and down the UK. The roll out of a new source of energy for rural communities, that consumes both agricultural and food waste and provides fertiliser for fields, was already underway prior to the current boom in gas prices.

Farmers were already feeling the pain from higher electricity prices and were turning to new sources of power, of which biogas is one of the most consistent. The biogas/AD industry has enormous potential if viewed from a global perspective – the technology could reduce emissions by 10 percent by 2030 while also potentially creating millions of jobs.

Getting control of food waste in the UK is a major initiative for local councils who want to divert household and business food waste away from landfill. Landfill remains a major generator of CO2 in the atmosphere and local biogas facilities provide the opportunity to turn landfill waste into energy that can be pumped back into the National Grid.

This is a cleaner and sustainable energy which is more consistent than wind or even solar power.

Key benefits of Anaerobic Digestion (AD) plants which help support the environment:
• Production of biomethane gas which can be readily injected back into the UK gas grid and which is not a fossil fuel.
• Energy from waste – removes methane producing landfills from the cycle.
• Digestate produced can be used as a fertiliser, often on fields in the immediate locality (more carbon friendly).
• Sustainable sources of local energy: gas can be used to heat local communities, removing the need for diesel transport on roads.
• Circular economy - less reliance on international gas sources as feedstock can also be locally sourced.

There are currently over 140m tonnes of organic waste produced in the UK every year which remains untreated, 65 percent of which is slurry or manure. This emits high levels of methane which is especially damaging to the climate.

Methane is a more potent greenhouse gas (GHG) than CO2 by a factor of 86 (during its first 10 years in the atmosphere). Reduction in methane gas production is regarded as an easy win by the UN and others in the opening phases of the battle against climate change.

The UK government was among 100 countries that signed up to a global methane pledge at the COP 26 Conference, committing to reduce methane levels by 30 percent (measured by 2020 levels vs 2030 levels). The UK government is moving forward, slowly, with support schemes for farmers – e.g. Green Gas Support Scheme – but more needs to be done.

The next eight years will be critical for shaping the future of climate change and reversing the damage it is doing. Private finance, including private debt, will have an important role to play in that battle.