Administrative procedures for the construction and operation of biomethane projects

Biomethane

The transition towards a greener and more sustainable economy is one of the main drivers in the current political landscape, both at national and European level. Renewable gases will play a key role in reducing carbon emissions into the atmosphere, and biomethane in particular, whose characteristics promise to become an element with great potential.
Biomethane (NH4 ) is a fuel gas obtained from biogas, which is a renewable gas consisting mainly of methane and carbon dioxide obtained from the anaerobic - without oxygen - degradation of organic waste. In general, to obtain biomethane, biogas is subjected to a treatment known as upgrading, which removes certain impurities from the biogas (e.g. CO2 ), bringing the gas to a methane content of around 95 %. This degree of purity allows it to be fed into the gas grid mixed with conventional natural gas, so that biomethane can be used as an alternative to natural gas, to generate electricity and heat, as well as a fuel for land, sea and even air transport. 

Infrastructures necessary for the production of biomethane

Biomethane plants mainly consist of the upgrading plant and the infrastructure for evacuating the gas produced to the connection point to the gas grid.

For logistical reasons, in most cases these upgrading facilities are located in the vicinity of biogas plants, both on rural and industrial land. Thus, it is very common for organic waste collection facilities, anaerobic digestion facilities (biogas plants) and methanation (upgrading) facilities for the production of biomethane to be injected into the gas grid to be located at the same point.

Although it is true that the main advantage of biomethane is its similarity to natural gas, biomethane can also be used for other purposes, such as the production of renewable hydrogen. 

Procedures for the construction and commissioning of a biomethane plant

In general, renewable gas production plants do not require administrative authorisation in energy matters, but they must obtain the corresponding integrated environmental authorisation, as well as the corresponding town planning licences.

Given that the main purpose  of biomethane production would be its distribution through the gas grid or through isolated pipelines, such disposal facilities will require additional permits depending on the type of infrastructure (connection permits , energy permits , etc.).

Environmental permits

The growing interest in this type of projects has not been accompanied, as usual, by regulations that contemplate their particularities and regulate them. At the environmental level, Royal Legislative Decree 1/2016, of 16 December, approving the revised text of the Law on integrated pollution prevention and control and Law 21/2013, of 9 December, on environmental assessment, are applicable. According to these regulations, the production of biomethane would fall under "Chemical installations for the manufacture of inorganic chemical products such as gases (...)".

This type of installation is subject to the prior obtaining of an Integrated Environmental Authorisation (AAI) . This permit, which is the responsibility of the Autonomous Community, will be granted by the Regional Ministry of Environment of the Autonomous Community where the installation is located.

The AAI is a form of administrative intervention that replaces and brings together the dispersed set of environmental authorisations that are required. Some of the authorisations that form part of an IEA are: (i) the authorisation for atmospheric emissions, which establishes the maximum emission limits for atmospheric pollutants for industrial activity; (ii) the authorisation for discharges, which establishes the conditions for the evacuation of wastewater and discharges; (iii) the authorisation for waste, which establishes the management of waste generated by industrial activity; (iv) the water consumption authorisation, which establishes the limits of water consumption and the conditions for its use; (v) the noise authorisation, which establishes the limits of noise generated by the industrial activity; (vi) the chemical storage authorisation, which establishes the conditions for the storage of hazardous chemicals; and (vii) the land use authorisation, which establishes the conditions for the occupation of land by the industrial activity.

Processing of connection to the gas grid

For biomethane generation projects whose ultimate aim is to inject into the gas grid via direct lines, developers must apply for connection to the grid. It is important to stress that this connection application does not entail any cost or obligation for the applicant , i.e. it can be submitted without the need to present guarantees or make other financial commitments.

In the event that the connection is made to the transmission grid, once the connection point has been obtained from Enagás, the applicant must accept the technical and economic conditions issued (CTEs) and sign the commissioning contract with Enagás. Once the contract has been signed, the guarantee must be deposited, the payments indicated in the CTEs must be made and project execution may begin.

In the event that the connection is to be carried out in the natural gas distribution grids, the owners of these distribution facilities must allow direct consumers in the market and marketers that meet the required conditions to use them, based on principles of non-discrimination, transparency and objectivity. In this regard, the CNMC is expected to approve a Circular with the methodology and conditions for access and connection, which will include the content of applications and permits, economic criteria, criteria for capacity assessment, grounds for refusal, minimum content of contracts and obligations of publicity and transparency of relevant information for access and connection to natural gas distribution grids.

Likewise, with the modification of the Hydrocarbons Law through Royal Decree-Law 6/2022, incorporates the possibility of supplying renewable gases also through isolated pipelines, i.e., not connected to the gas system, which are declared to be of public utility for the purposes of compulsory expropriation and exercise of the necessary right of way. For more details on these key figures for the supply of renewable gases, see our previous publication on renewable hydrogen which deals with this issue. 

Substantive permits

As explained above, the biomethane plant does not, strictly speaking, require any additional permits other than the environmental permits already explained and the required municipal permits (building permits, etc.), the relevant town planning permits, as well as compliance with all the requirements of the applicable industrial safety regulations.

Incentives for biomethane production

In order to facilitate and encourage the trading of renewable gases in general, and biomethane in particular, a national system of guarantees of origin has been set up to certify the renewable nature of the gas and its main characteristics. The guarantee of origin is an electronic document whose sole function is to certify that a given quota or quantity of energy has been produced from renewable sources. Specifically, each guarantee of origin corresponds to the net production of 1 MWh of biomethane.

The system of guarantees of origin for gas from renewable sources is regulated by Royal Decree 376/2022, in turn developed by Order TED/1026/2022 of 28 October, and it is currently foreseen that three different types of guarantees of origin can be issued: (i) for the production of biogas; (ii) for the production of renewable hydrogen; and (iii) for the production of grid-compatible gases, i.e. biomethane.

In order to become a holder of these GoOs, renewable gas producers, as well as the rest of the subjects that can be considered holders, must register in the GoO System. The Register of Renewable Gas Production Installations will include all the installations that have been registered in this system.

For the purposes of guarantees of origin, in the event that the supply is carried out through isolated pipelines, the injection of renewable gas into these pipelines must be compatible with the measurement system of the GoO Platform; and the consumption points must be registered as consumption points outside the gas system.

Should you wish to know more about the new regulatory and energy sector rules and their potential implications, please do not hesitate to contact one of our experts listed below or your usual contact at Osborne Clarke.