Sep 11, 2025 (MarketLine via COMTEX) --
Biogas and biomethane could be a better fit than natural gas in developing nations, but a change in mindset is required.
If natural gas was most often found naturally venting from the earth without capture, one might think there was something deeply wrong with an economy that failed to harness it.AWith a few complications, this is the situation for biogas and biomethane aEUR" sustainable fuels produced by agriculture.
Biomethane functions identically to natural gas, being as they are essentially the same thing but from different sources, and while potential production could only supplement a portion of modern gas demand, there are situations where biomethane could, in time, be more valuable than natural gas.A
The technology is relatively simple: decomposing agricultural waste naturally produces biogas, which is generally uncaptured and released as a potent greenhouse gas (GHG). Industrial biogas production places this agricultural waste aEUR" generally animal manure, wastewater and crop residues aEUR" inside an anaerobic digester, where emitted gases can be captured, processed and exported.A
When refined, biogas can become biomethane, a more energy-dense product equivalent to natural gas. As such, while biogas can have small-scale applications, biomethane upgrading is required for grid connection.A
These gases are the main product of anaerobic digesters, which also produce fertilisers and industrial products that can help make the case for biogas development, but the main financial driver is biogas. However, despite high natural gas prices, the current financial case remains poor.A
Biogas remains prohibitively costly for Western developmentAIn the International Energy AgencyaEUR(TM)s (IEA) recent Outlook for Biogas and Biomethane report, the average cost of biogas production was almost always found to be greater than average wholesale prices in every region, with some edge cases coming close. However, potential production costs were often below retail prices, encouraging producers to find small-scale, local applications.A
The IEA makes the case that, as this gas would otherwise be a GHG emission, the cost of emissions abatement should be factored in. While natural gas producers will be familiar with methane abatement efforts in the energy industry, agricultural emissions generally go without the same level of taxation and scrutiny, and given the small profit margins in modern agriculture, a aEUR(TM)true carbon taxaEUR~ remains a hard sell for politicians.A
As a result, while factoring in abatement costs makes a more compelling case for biogas on a societal level, it does not help balance the books of individual biogas producers. While developed economies offer funding for anaerobic digesters as part of decarbonisation efforts, biogas has an unfavourable balance sheet from a purely industrial perspective.A
BiogasaEUR(TM) greatest potential lies in the developing worldASo far, biogas development has followed climate funding. The EU leads the world in biogas utilisation, despite capturing only around 40% of possible energy. This offsets the use of around 5.5 million barrels of oil and two billion cubic metres (bcm) of gas per year, but compared to the more than 500bcm of gas consumed in Europe in 2022, biogas remains a small piece of the puzzle.
Map of global biogas and biomethane potential. Source: IEA.However, the greatest potential for biogas development lies outside of the West. Since biogas uses agricultural waste as a feedstock, its greatest potential lies in large agrarian economies with unindustrialised, low-intensity farming. This description covers much of the developing world, which is why 80% of potential biogas production lies there.A
This also means cheaper production costs. The IEA states: aEURoeIn Europe, the average cost of biomethane production is around $22/GJ [gigajoule], while in South East Asia, it is $13/GJ.aEUR BrazilaEUR(TM)s massive agricultural industry gives it the greatest potential for biogas capture.A
Similarly, India has some of the greatest biogas potential in the world, but uses only 5% of this, according to the IEA. Natural gas is itself only 5% of IndiaaEUR(TM)s overall energy consumption, and if biomethane were fully utilised, the country would produce more than enough to fulfil its needs.A
Biogas demand and production. Source: IEA.Harnessing biogas in India and across agricultural nations is less of a question of industry and more one of demand destruction. In order to tackle this massive potential, legislators and biogas companies must think small.A
Developing biogas and biomethane in IndiaAThe Indian Government says it has promoted the installation of small, domestic-scale biogas plants since 1981, accounting for most of the five million biogas appliances currently in the country. At an industrial level, approximately 1,000 biogas plants currently operate, with another 500 under development.A
The cost of biogas production is significantly below natural gas retail prices and is often more convenient. These smaller biogas plants, often the size of a large van, act more as a community resource than an industry, closer to a town pump than a waterworks. In this way, biogas does for gas distribution what microgrids have done for power, democratising access and allowing community buy-in for energy.A
Historic studies have indicated that more than 80% of rural Indian households burn biomass domestically, and the government is actively pushing a transition toward gas to reduce pollution and associated health conditions. To assist this, it provides poorer households with free liquefied petroleum gas cylinders and information on their use, hoping to create cleaner conditions for families.A
The programme has created a reliable containerised gas market in India, with penetration increasing from 66% to 99.8% within the past seven years. The use of containerised gas allows for more flexible distribution networks, giving more accessible and small-scale gas sources the advantage over more centralised industry, which struggles to reach communities off the gas grid.A
In a white paper published in July, the Indian Biogas Association (IBA) proposed a Rs10,000 ($115) subsidy for up to five million new biogas units, replacing the current subsidised natural gas deliveries with domestic gas production. From a national perspective, this scale of development would effectively nullify significant amounts of natural gas demand, changing the model for gas distribution in areas without extensive existing networks.A
Changing the mindset around gas distribution networksAThe IBA says the government would see a return on this investment within two years, assuming a better system of maintenance. IBA chairman Gaurav Kedia says that most breakdowns occur due to avoidable faults.A
aEURoeMost of these systems are underutilised or idle because of insufficient funding, maintenance and long-term incentives,aEUR he said. aEURoeWe are calling for a policy revolution to make biogas systems not only accessible but rewarding. If we get our investments right, India can become the world benchmark.aEURA
The atomised distribution model would also rely on efficiently collecting good-quality agricultural waste from IndiaaEUR(TM)s equally small-scale farmers and finding investment to further the money provided by government subsidies. Financing will be easier for industrial-scale plants, with the federal government targeting a 5% share of biomethane in piped gas blends by 2029.A
Given these federal schemes and IndiaaEUR(TM)s rapidly expanding economy, the value of the Indian biogas market is expected to grow by 10% per year to 2032, reaching $3.49bn.A
Brazil turns to biogasADespite being smaller in terms of economy and population than India, Brazil has the greatest biogas potential of any nation aEUR" greater than India, China, or the entirety of Africa. Its carbon profile is very different from all of the above, with more GHG emissions coming from agriculture than energy and transport combined.A
Like India, Brazil has incentivised the use of biogas for decades. However, according to industry body Biogas World: aEURoeThe lack of technology and technical knowledge culminated in the poor performance of equipment, low efficiency and high project costs. These led to a loss of confidence in biogas and the subsequent abandonment of the technology.aEURA
Today, almost all of BrazilaEUR(TM)s urban waste and sewage is used for biomethane production, but 90% of the countryaEUR(TM)s potential lies in its underutilised agricultural waste. The countryaEUR(TM)s sugar cane industry provides easy opportunities for plant symbiosis, with vinasse, a by-product of sugar production, able to be digested to form biomethane, which can then be fed back to sugar plants for the heat and energy they require.A
This may prove pivotal in future development, as BrazilaEUR(TM)s size puts its biogas feedstock much further away from existing biogas producers than in other territories. Less than 20% of BrazilaEUR(TM)s feedstock is within 50km of a digester, but this again encourages development of small-scale projects rather than centralised industry.A
The Brazilian GovernmentaEUR(TM)s current approach might confuse this, as its current biogas development targets focus on reducing the emissions of natural gas producers. Introduced in October 2024, the countryaEUR(TM)s Fuels of the Future law aims to increase the share of biomethane in piped gas to 1% by 2026, gradually increasing to 10%. This is one of few government biogas initiatives, but the return of interest to the sector is palpable, with the Brazilian biogas market expected to triple in size by 2035.A
In the minds of Western financiers, biogas remains synonymous with decarbonisation due to how the European and limited US industries have developed. However, this neglects the viable case for growing the industry in developing countries, forming a new industry with little similarity to the old. Here, governments are able to back smaller biogas projects as part of development funding, and there is a rich opportunity for investment if financiers are ready to back smaller projects, despite taking on more risk in the process.A
Alongside technical and logistical challenges, the mindset built up by traditional gas networks can obscure the potential benefits of an emergent, democratised gas infrastructure, ready to reshape energy distribution in the near future.A
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