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Markets: Organics - 27 July 2013

The biomethane vehicle market is finally starting to gain some momentum in the UK, and this could be very good news for the organic waste market. Expanding demand for biomethane creates obvious value for those generating biogas from wastes, and also offers opportunities for councils and businesses to cut emissions and costs in their own transport fleets.

Biogas produced from anaerobic digestion can be upgraded to biomethane by removing the impurities and carbon dioxide. The resulting fuel is close to 100% methane, so can be used as a natural gas equivalent. This can be used to fuel vehicles, particularly heavy goods vehicles, achieving significant cuts in air pollution and greenhouse gas emissions while also reducing the operator’s fuel bill compared with equivalent diesel vehicles.

There are a number of macro drivers for the growth of this sector, notably the importance of reducing the UK’s dependence on oil, which will lead to spiralling prices as supplies become more volatile. Perhaps even more importantly, the issue of air pollution from transport has emerged in recent months as a key problem which the greater uptake of biomethane vehicles will be pivotal in addressing.

In May 2013, Britain’s Supreme Court ruled that the government was failing to meet European air pollution limits with the possibility of large fines if nitrogen dioxide (NO2) levels were not addressed. Air pollution accounts for 29,000 premature deaths each year in the UK, with the issue particularly acute in urban areas as a result of diesel vehicle pollution.

Biomethane vehicles have been proven to reduce NO2 emissions by 85%, and it should therefore come as no surprise that the Department for Transport (DfT) is currently in the process of developing a strategy to support the increased use of biomethane in HGVs.

Local authorities and business have both proven keen to explore the advantages of biomethane vehicles. Leeds City Council achieved a £2,500 reduction in their annual running cost from trialling two biomethane refuse collection vehicles, while Coca-Cola saw a reduction in dangerous particulate matter emissions of 97% when they trialled 14 gas vehicles.

As a first step towards fuelling vehicles on biomethane, operators are looking to use natural gas as a transition fuel.  This offers significant environmental and cost benefits over diesel vehicles, and if a greater quantity of biomethane becomes available, they can be switched to running on biomethane without the need to modify the vehicles. Companies such as Tesco, John Lewis and Eddie Stobart are all exploring this opportunity, and with this commercial muscle helping to drive the sector it’s no surprise that biogas producers are starting to take an interest in the opportunities available.

A number of funding streams and resources are also helping to boost the viability of the biomethane vehicle sector. Most notably the DfT’s Low Carbon Truck Demonstration Trial has aided the development of gas vehicles and the associated refuelling infrastructure through its £9.5m fund, while the Green Bus Fund recently announced £485,000 to bring biomethane buses to Sunderland and Reading.

An important market resource was also launched at the start of June, in the form of the Gas Vehicle Hub. This provides an online national database of operating gas (natural and biomethane) producers and refuelling stations. It is expected to boost the development of the biomethane vehicle sector by providing vital market information free of charge.

The growth in demand for biomethane in vehicles could ultimately mean that there is greater value in treating organic waste through AD and upgrading it to biomethane for use in vehicles. This has obvious implications for the treatment of organic waste, and policy needs to support the development of this market.

At present just 7% of food waste in the UK is being treated through AD, while 35% is still landfilled. Separate food waste collections are on the increase however as innovative collection methods emerge and landfill tax becomes a greater burden, and this will only increase optimism in the biomethane vehicle sector as it will allow more biomethane to be produced.  All signs seem to suggest that this excellent example of the closed loop economy will flourish in the coming years.

Charlotte Morton, chief executive, Anaerobic Digestion and Biogas Association

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