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June 23, 2024

While renewable energy is usually though to come from sources like wind, water and the sun, a burgeoning source that is often overlooked is agriculture – not ethanol which may affect food supply – but biogas created through the anaerobic digestion of organic matter by microorganisms. Sources include agricultural waste, manure and food scraps. The gas captured in this process is predominantly methane and carbon dioxide, the main components of natural gas. Through a process called biogas upgrading, most of the carbon dioxide from regular biogas is removed resulting in a higher methane content. This biomethane can be used interchangeably with fossil fuel derived natural gas and can be used in applications where natural gas normally would be, including heating, cooking, fueling cars and producing electricity. It’s sustainability and usability means biogas is expected to grow steadily for the next several years (see chart below).


The benefits of biogas and biomethane production include:

  • Greenhouse Gas Reduction: Biogas captures methane, a potent greenhouse gas, that is produced from organic waste decomposition in landfills and manure management

  • Renewable Energy Source: Produced from organic materials such as agricultural residues, sewage and food waste, which will always be produced as biproducts of human life

  • Energy Independence and Security: Reduces dependence on fossil fuels and can be used in remote areas where energy may be unreliable

  • ​Nutrient Recycling: Digestate, the byproduct of anaerobic digestion, retains valuable nutrients like nitrogen, phosphorus and potassium that can be used as fertilizer.

Despite the enormous potential of biogas and biomethane, there are several barriers that impede the growth of the segment. Those include:

  • ​Large Investment Costs: Large biogas operations (ones that may be done by a municipality) require equipment for anaerobic digestion, biogas upgrading technology (for biomethane production), and infrastructure to utilize the gas

  • Complexity of Technology: The technology involved in biogas production, and particularly for biomethane, can be complex and require specialized knowledge

  • ​Market Conditions: As long as natural gas can be utilized cheaply, there is less incentive to invest in biogas production

  • ​Public Perception: The public may not be so keen on having their cooking gas be sourced from sewage (though methane is methane, regardless of where it came from)

From an investment perspective, the companies that are fueling (no pun intended) the biogas industry are energy companies, utilities and waste management organizations, many of which have other core businesses. While there is great potential for the biogas technology, high capital expenditures and difficulties in integrating with existing infrastructure mean profitability is likely to remain elusive for some time. But as Somar likes to find promising companies early, we will keep an eye on the sector to look for promising breakthroughs which will have both environmental and financial benefits.

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