It is better to deal with the problem at source than with its symptoms. Yet European governments vary widely in their response to the Russian gas supply shortage, the principal cause of Europe’s cost of living crisis.
Germany and others are working to curb demand. They also plan to increase supply by sustainable biogas. Despite a winter crisis that is likely to be equally severe, Britain is failing in both.
In the UK, gas prices move broadly in line with the continent thanks to the pipelines criss-crossing the North Sea: we are part of Europe’s energy market. Gas generation is the dominant supplier, so electricity prices have risen. Our consumers are now facing an unprecedented squeeze.
The typical household UK energy bill is likely to rise from an annual £1,200 at the beginning of last year to at least £3,500 at the start of 2023, taking a breath-taking extra 7 per cent from post-tax median household disposable income.
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In this crisis, the quick wins are energy saving, liquefied natural gas imports from friends like the USA and Qatar, and biogas output, as the EU Commission’s RepowerEU plan rightly proposes.
Energy saving measures – like lower public lighting, rescheduled shift patterns to times of surplus electricity from nuclear – can help. France and Germany even discuss rationing. There is not much public discussion in the UK on such short-term prioritisation.
It is equally astonishing that the UK government’s energy security strategy in April failed even to mention biogas – sustainable gas and biomethane from organic wastes like food waste, animal manure and slurry, energy cover crops and sewage.
Although it may take two years for a biogas plant to be built, it is much faster than any nuclear power plant. There is also room to increase output from the existing 700-strong fleet which produced about a third as much energy last year as the UK’s nuclear fleet.
Germany is home to the largest biogas sector in Europe, with approximately 11,000 plants. Robert Habeck (federal economy and climate change minister) aims to increase Germany’s biogas output by as much at a fifth this year by easing regulations.
France, which has a large agricultural sector, is trying to eliminate regulatory hurdles. Poland is aiming to expand its 300 existing plants. Spain subsidises investment. Shell and Totalenergies, the European supermajors, are now investing in biogas.
Biogas can be a significant part of Europe’s transition away from Russian gas and help to combat climate change in the medium-term. The EU Commission wants to more than double European biogas output to take its share of total gas consumption to nearly 9 per cent of last year’s demand (and much more of projected demand after energy saving).
Despite the UK’s smaller farm sector, there is potential to produce at least 20% of the UK’s natural gas demand and replace almost a tenth our natural gas imports. Yet current government plans would meet less than 1 per cent of last year’s gas consumption.
Given how high European gas prices are – and are likely to remain, because of the time to replace infrastructure – biogas will expand. Russia will not be allowed to continue to be an important part of any European democracy. The long-term price guarantee (through contracts for differences) that have fueled the UK’s renewable energy sector will be crucial if the biogas sector is going to grow as quickly as possible.
With a guaranteed gas price (“strike price”) now far lower than the market, the Treasury could reap short-term revenue as developers paid for the long-term guarantee that would unlock bank finance. The government must also collect the feedstocks, including food waste.
Governments across Europe now have a unique opportunity. Biogas can increase energy independence, combat climate change, and raise Treasury revenues to alleviate consumer cost pressures.
