Biogas and biomethane | 6 measures in support of the sector

1. Energy Decree (Law Decree no. 17/2022 converted with Law no. 34/2022)

Article 12-bis – By-products that can be used in biogas and biomethane plants

In order to simplify the production process in plants for the production of biogas and biomethane, by-products (referred to at points 2 and 3 of table 1.A of Annex 1 to the MISE Decree (Ministry of Economic Development) of 23 June 2016)

a)     resulting from farming, animal husbandry, landscape management and forestry activities 
(livestock effluents; straw; chaff; stalks; litter hay and shavings; field residues from farms; by-products derived from the uprooting of trees; by-products derived from the processing of forest products; by-products derived from forest management; prunings, branches and residues from the maintenance of public and private green areas)
b)    resulting from food and agro-industrial activities
(by-products of the processing/processing of tomatoes; olives; grapes; fruit; vegetables; sugar beet; paddy rice; cereals; seaweed; fish processing; confectionery; coffee roasting; beer processing; and oil fruits or seeds) 

can be used by plants for the production of biogas and biomethane and are considered as include in the definition of “residues of agri-food activity” (pursuant to article 3, paragraph 1, of the decree of the Ministry of Agricultural Food and Forestry Policies of  25 February 2016), provided that:

• they satisfy the requisites to be considered as by-products and are therefore excluded from the list of waste under art. 184 bis of the Environment Code;
• the use of the by-product complies with the rules for the agronomic use of digested matter (Title IV of the Decree of the Ministry of Agricultural Food and Forestry Policies of 25 February 2016).
   

2. Milleproroghe Decree (D.L. no. 228/2021 converted with Law no. 15/2022)

Article 11 – Extension of the deadlines relating to ecological transition

IParagraph 5-septies of article 11 introduced during the conversion of the Milleproroghe Decree amended article 40-ter of Decree-Law no. 162/2019, extending the applicability of the incentive provided by article 1 paragraph 954 Law no. 145/2018 (2019 Budget Law) to 2022.

Therefore, "electricity production plants fuelled by biogas, not exceeding 300 kW and forming part of the production cycle of an agricultural, livestock farming enterprise, constructed by agricultural entrepreneurs, also acting as a consortium - where at least 80 per cent of the power supply derives from wastewater and materials deriving mainly from the agricultural enterprises carrying out the production, in compliance with the principle of connection pursuant to article 2135 of the Civil Code, and for the remaining 20 per cent from their second-harvest crops - will continue to have access to the incentives in accordance with the procedures, methods and rates set out in the Decree of the Ministry of Economic Development of 23 June 2016, published in the Official Gazette no. 150 of 29 June 2016. Access to the incentives referred to in paragraphs from the present paragraph to 957 is conditional on the self-consumption on site of the thermal energy produced, serving the company's processes."

The incentives provided by the 2019 Budget Law amounted to € 25 million. 

The mechanisms for payment of the incentive are the responsibility of the GSE, pursuant to Ministerial Decree of 23 June 2016.

3. NRRP – M2C2 – Investment 1.4

Development of biomethane, according to criteria to promote the circular economy

The National Recovery and Resilience Plan (NRRP) – with its Milestone/Target M2C2 "Renewable energy, hydrogen, sustainable grid and sustainable mobility", investment 1.4 – has provided a line of investment of € 1,923,400,000 for the development of biomethane for the four-year period 2022-2026.

This provision aims to:

• improve the efficiency of existing agricultural biogas plants for the total or partial production of biomethane for use in industrial and residential heating and cooling in both the tertiary and transport sectors;
• support the construction of new biomethane production plants;
• promote environmentally friendly practices in the biogas production phase; 
• promote methane/biomethane powered vehicles.
   

4. Implementation of the so-called RED II Directive (Legislative Decree no. 199/2021)

Article 11 – Incentives relating to biogas and the production of biomethane  

Biomethane produced or injected into the natural gas network is incentivised through the disbursement of a specific tariff of a duration and value defined by subsequent decrees of the Ministry of Ecological Transition, ensuring the producer of biomethane the same level of incentives for use in the transport sector and other uses, including those for the production of electricity and heat in industrial cogeneration plants, also in connection with district heating networks and heat networks, and excluding thermoelectric uses which are not cogenerative.

ARERA defines the way in which the resources for the disbursement of the incentive are covered by the revenue from the components of the natural gas tariffs.
The means for implementing the incentives for biomethane will have to be defined by a decree of the Ministry of Ecological Transition, to be issued within 180 days from the date of entry into force of the legislative decree in question.

At the date hereof, the decree of the Ministry of Ecological Transition has not yet been adopted.
 

Article 14 – Specific coordination criteria between measures included in the NRRP and the sector-based incentives

A decree of the Ministry of Ecological Transition, to be adopted within 90 days from the date of the  entry into force of the legislative decree, will regulate the procedures for granting the benefits of the NRRP measures, including those for the development of biomethane.

The provision states that: "[I]n implementation of the measure Mission 2, Component 2, Investment 1. 4 'Development of biomethane, according to criteria to promote the circular economy', criteria and modalities are defined for the granting, through competitive procedures, of a non-repayable contribution on eligible expenses related to the investment for the efficiency, partial or total reconversion of existing biogas plants, for new biomethane production plants, for the valorisation and proper environmental management of digestate and zootechnical wastewater, for the purchase of agricultural tractors fuelled exclusively by biomethane. The same decree defines the conditions of cumulability with the tariff incentives referred to in article 11 and also lays down provisions to link the incentive scheme with the one provided for by the Decree of the Ministry of Economic Development of 2 March 2018".

At the date hereof, the decree of the Ministry of Ecological Transition has not yet been adopted.
 

5. Italian Green New Deal 

Interministerial Decree MISE-MEF (Ministry of Economy and Finance) of 1 December 2021

Interministerial Decree MISE-MEF of 1 December 2021 set out measures in order to provide financial facilities in support of projects for research, development and innovation in the technological and circular transition. The resources are drawn from the Fund for Sustainable Growth (former FIT - Fund for Technological Innovation established by the Growth Decree no. 83/2012).

In order to implement these measures, the following are provided: 

• Euro 600 million by way of facilitated funding; 
• Euro 150 million as a non-repayable grant net of charges for the management activity carried out by MISE on the approved interventions.

The MISE is entrusted with the adoption of decrees for the activation of the envisaged financial facilities.  

Directed at: enterprises of any size engaged in industrial, agro-industrial, craft, industrial services and research centres, which submit projects individually or jointly.

What it finances: sustainable innovation programmes involving industrial research and/or experimental development activities in relation to:

• decarbonisation of the economy; 
• circular economy; 
• reduction in the use of plastic and substitution  of plastics with alternative materials;
• urban regeneration; 
• adaptation and mitigation of the risks on the territory deriving from climate change.

In order to be eligible for subsidies, programmes must:

• be carried out by the entities to which the incentive is addressed in one or more of their plants located in Italy;
• provide for eligible expenses and costs of no less than €3 million and no more than €40 million:
• be started after the application for the incentive has been submitted;
• have a duration of not less than 12 months and not more than 36 months.

At the date hereof, no decrees of the MISE have yet been adopted.
 

6. Tax credit for investments in capital assets

Article 1051 et seq of Law no. 178/2020 and directorial decree of 6 October 2021

Aim: to support and incentivise businesses investing in new, tangible and intangible capital goods functional to the technological and digital transformation of production processes destined for production facilities in Italy.

Aimed at: all businesses investing in capital goods intended for production facilities.

Period: from 16 November 2020 until 31 December 2022, or by 30 June 2023, provided that by 31 December 2022 the relevant order has been accepted by the seller and that down payments of at least 20% of the purchase price have been made.

What assets: the instrumental assets listed in Annexes A and B to Law no. 232/2016.
For tangible instrumental assets, the following facilities have been provided for 2022:

• 40% of investment costs up to € 2.5 million;
• 20% of investment costs in excess of € 2.5 million up to a limit of total admissible costs of € 10 million;
• 10% of investment costs up to € 10 million up to a limit of total admissible costs of € 20 million.

For intangible instrumental assets, the following facility is provided for 2022:

• 20% of the cost up to a maximum limit of admissible costs of € 1 million.

Please contact your usual Osborne Clarke contact for any queries you may have.