How can renewable gas certificates be used to comply with the renewable energy targets?
Renewable Energy Directive
The European Union has put forward the Renewable Energy Directive III (Directive (EU) 2023/2413 amending RED II Directive (EU) 2018/2001). This includes a binding renewable energy target of 42,5%, aiming for 45% by 2030, which aims to increase the share of renewable energy sources across the European Union. Member States have national renewable energy targets they need to meet and developed national energy and climate plans (NECP) to achieve this.
Renewable gas can be used to meet national renewable energy targets where a Proof of Sustainability is issued and the renewable gas is tracked to an eligible end use in the country of consumption.
RED I, II and III have consistently ruled out the use of Guarantees of Origin to directly effect target counting at national level, restricting their primary role to consumer disclosure. Nevertheless, some Member States foresee a role for GOs in their national frameworks for accounting renewable energy towards national targets.
Emission Trading Scheme
The EU emissions trading scheme requires that certain companies calculate and report their emissions and match these to emissions allowances (EUA).
Those companies can lower their reported emissions with biomethane certificates based on the rules in the EU ETS Monitoring and Reporting Regulation. Generally, both a PoS and GO/CoO are needed to prove the use of biomethane. However the implementation rules are not harmonized at EU level and requirements differ between Member States. Furthermore, the implementation is expected to change as soon as the UDB becomes operational and can be used to prove compliance with certain requirements.
FuelEU Maritime Regulation
FuelEU Maritime Regulation establishes progressive mandates for ships to reduce their average GHG emissions and to create a long-term demand for sustainable marine fuels.
FuelEU Maritime recognises renewable fuels, including liquefied biomethane known as bio-LNG, certified under the Renewable Energy Directive and uses the RED mass-balance framework to trace their sustainability characteristics. Book & claim chain of custody model and relevant certificates are not currently accepted.
Bio-LNG can reduce a ship’s calculated GHG intensity where it meets the applicable RED sustainability and emissions-saving criteria. Compliance is generally supported by a Bunker Delivery Note and a Proof of Sustainability, or by a temporary Proof of Compliance where permitted.
CBAM
The Carbon Border Adjustment Mechanism, commonly known as CBAM, is the EU’s system for applying a carbon price to the emissions embedded in certain goods imported from outside the European Union.
Its purpose is to reduce the risk of carbon leakage and ensure that imported products face a carbon cost comparable to products manufactured under the EU ETS. Companies under CBAM must report the embedded emissions of imported goods and surrender the corresponding number of CBAM certificates.
For the biomethane sector, CBAM is relevant where a non-EU producer uses biomethane instead of fossil natural gas to manufacture a product covered by the mechanism. By using biomethane, the product’s declared embedded emissions are reduced and the resulting number of CBAM certificates required. However, the biomethane must meet the applicable RED sustainability and greenhouse gas emissions-saving criteria. This must be supported by appropriate evidence, such as a Proof of Sustainability or the cancellation of the corresponding quantity in the Union Database or a linked national database. A Guarantee of Origin alone is not sufficient.
National blending obligations or other national quotas
As part of the efforts to decarbonize, some EU Member States – including France, Austria, Netherlands, Ireland, and Portugal – are preparing and setting national biomethane blending obligations. These require that a certain proportion of the gas used in the country comes from renewable sources, for example 20% by 2030.
The certification requirements for these national blending obligations differ per country and can include the existing PoS or GO or make use national of certification schemes.