INSPIRE-ing Energy Talks: Ep.11 - Biogas for cleaner heavy-duty transport: opportunities & obstacles

SGS INSPIRE Business Development Manager, Claire Couet, interviewed Anna Venturini, Policy Director at the European Biogas Association (EBA), and Giuseppe Welz, an expert in alternative propulsion and gas business development at IVECO Group, to explore the role of biogas and biomethane in the transport sector. Currently, 23% of the biomethane produced in the EU is used in transport, but the EBA sees significant potential for growth. IVECO highlighted that gas adoption in the heavy-duty vehicle segment has been steadily progressing. The EBA also pointed to the maritime sector as a key area for biomethane expansion.

Welcome everyone to the 11th episode of our SGS Inspire Podcast Series, Energy talks. Today. I'm thrilled to dive deeper into a critical topic. The decarbonization of the heavy duty vehicle segment: we know that heavy duty vehicles are responsible for more than 20% of the EU CO2 emissions from road transport and with the implementation of the new CO2 emission regulation standards starting this year in 2025, certain heavy duty vehicles must reduce emissions by 50%, making a significant step towards achieving climate goals.

In 2024, we had an insightful conversation with Milence about the opportunities and challenges of electrifying heavy duty vehicles. But, if electrification is an exciting solution, it's the only one.

Alternative fuels such as biogas /biomethane also offer a significant potential to contribute to emission reduction targets. Today, we are not going to discuss only bio gas in the context of heavy duty transport, but also explore the broader potential as a climate friendly solution, for even other transport sectors and industries beyond transportation.

To navigate this fascinating discussion, I'm delighted to welcome two esteemed guests.

Anna Venturini, Policy director at the European Bio Gas Association (EBA). Anna, Joint EBA in 2022 focusing on EU policies related to biogas and biomethane, particularly their end uses. She also managed (and manages the EBA) working Group on Transport and Energy and Industry, and now she leads the policy team in shaping critical policies for the biogas sector.

Before joining EBA, Anna worked in Brussels for over five years, first at the European Parliament, then as a policy and communication adviser in the transport sector. She holds a masters in European Studies and a bachelor's degree in international relations and diplomacy. Anna, you're most welcome to the podcast. Thank you.

Thank you. Many many thanks for this very kind introduction.

And you're not the only one joining us today because we also have Giuseppe Welz, an engineer specialising in automotive, engineering and industrial gases. Giuseppe, you graduated from the prestigious Politecnico di Torino, the oldest Technical University in Italy. For the past three years, you worked for the Iveco Group, which is a global leader in designing and producing trucks and buses. You will say more about your company in a second. At Iveco, Giuseppe, you focus on alternative propulsion business developments helping to drive innovation in sustainable transport solution. You're very welcome also, I'm glad to have you with us.

Thank you, Claire. Thank you very much and it's my pleasure to be here with you and with Anna.

Excellent. So let's dive in right away. Anna, I will turn to you. Could you say a few more words about your organisation, EBA and generally your position on the potential of biogas for decarbonising the road transport sector?

Yeah, sure. So in a nutshell, EBA is the voice of bio gas and biomethane in Europe, we advocate for their recognition as sustainable, on demand, and flexible energy sources that also provide a number of knock on social, economic, economic and environmental benefits. So nowadays we have in our membership more than 300 Members, both national associations and companies. And thanks to our members and growing membership, today we represent all of the value chain for biogas and biomethane. So we have seen that the sector has been definitely growing a lot and steadily in the last years from our very last data, we saw that in 2023 the sector reached 22 billion cubic metres of combined production of bio gas and biomethane, of which 4.9 were of biomethane alone, and for the future we do expect bigger and faster growth.

We know already that, at the beginning of 2024 we saw a 6.4 BCM ((Billion Cubic Meter) biomethane capacity, meaning that we do foresee that in the coming years the growth will be important. We see that we can reach more than 150 BCM (Billion Cubic Meter) by 2050, which means that, not only we will be able to decarbonize and deffosilize the gas grid in Europe, but we also be able to contribute to the decarbonisation of a number of sectors, and indeed transport is one of the most important that we're looking into right now.

We know that by the projection of the Commission itself in the 2040 climate pan to reach 90% GHG emission reduction by 2040. Biomethane is foreseen to cover a significant parts of the demands and it is foreseen also that it will cover the transport necessities for around 16% by 2015. This is what the Commission says itself.

So we do believe that biomethane has a great role to play in the decarbonisation of all sectors, of all end users, and transport is indeed one of the most important that we are decarbonizing right now. Among the end users, this is the biggest one that we see is consuming right now biomethane, around 23% of the biomethane we produce today goes to the transport sector.

And we really hope that it this percentage will grow in the future.

Fantastic. Thank you for that overview. And we need the trucks, right. We need the trucks and the buses to make that happen. So I'm turning to you, Giuseppe, could you say more about Iveco and you know the leading position you have in the technologies that you have? We want to hear from you.

Yeah, thank you Claire. Iveco indeed is one of the leaders, if not “the” leader in the technology. Iveco is a full range commercial vehicle manufacturer. So we are working in all segments from light commercial vehicles up to heavy commercial vehicles deployed both on road and off-road. Sustainability is indeed one of the Iveco key targets since, as we know, Iveco is strongly committed to reducing its carbon footprint within 2040 and this is a target which is applied to both the direct emission, which are due to the operations of Iveco Group itself and the indirect emissions, which are the ones that come from our partners and our providers of services.

And, to do so, Iveco has a clear road map for introducing and deploying overtime, the alternative propulsions by technologies, range and by customer application.

So Iveco’s strategy is based on three pillars, which are the three technologies that nowadays exist on the road. So 1) gas and biofuel and general 2) battery electric vehicles and of course, 3)hydrogen. These pillars are applied based on the application, on the mission and the specific country in which we exist.

Claire, you mentioned natural gas, of course. It's one of the core focuses for today, Iveco has a strong legacy in, in the gas mobility. We've been pioneering this segment for more than 25 years with lots of experience and more than 60,000 units sold.

It is a leadership recognized by the market, indeed, we have a market share with around 50% or more than 50% in every in every range. So yeah, we really are proud of our legacy.

Thank you. So I would like to now look at the regulatory and market status in the EU area. So how does this basically incentivize, you know, your activities, both of you. So we have a number of legislation, Renewable energy directives , CO2 emission standards for heavy duty vehicles, the alternative Fuel Infrastructure Regulation….

Generally speaking, do you think that this is enough incentives for decarbonizing with bio gas? Anna, you have mentioned the 2040 target: this is not adopted yet, it it will be discussed by this European Commission in the next years. But you know what, what would you also think is missing from the regulatory point of view that could improve basically the market share of bio gas for transport.

I don't know who wants to start, Anna or…

Well, I can start if you want, indeed.

The fit for 55 package was a very positive step in our opinion, particularly for the renewable energy deployment in transport. We were quite happy with the Renewable Energy Directive (RED III) targets, especially the combined sub target of 5.5% for RFNBOs (Renewable Fuels of Non biological Orgin) advanced biofuels and biogas - the part A of Annex 9. This was a very important signal and a clear one for the sector, and for the recognition of advanced biogas and biomethane as a solution.

Indeed, for the transport sector, we were also quite happy with the with AFIR (Alternative Fuels Infrastructure Regulation) there we have a clear recognition also that BIO-LNG is a renewable fuel that will go progressively substituting conventional LNG in transport so obviously demonstrates a growing acknowledgement of the biomethane potential to the decarbonise the sector. On the other hand, there are a number of challenges that remain. We can talk directly about the CO2 emission standards for heavy duties (Heavy-Duty Vehicles).

Indeed, it's a good piece of legislation looking into reducing emissions, but we see that it's still limited to the tailpipe approach, and this is a methodology that goes to the disadvantage of biomethane. Sustainable biomethane is a solution that is already available, it's local, it's cost-competitive compared to other renewable gases. And it does offer an immediate pathway to lower the emissions and road transport. And also it creates a bit of an uneven playing field among technologies. So we believe that the lack of technology neutrality is a missed opportunity of this piece of legislation. And we do recognise that electrification will undoubtedly play a critical role in in achieving the climate neutrality goals of our continent. But we also believe that complementarity will be essential to reach this goal in a faster and more resilient and cost-effective way.

When we look into what is really missing on the legislative side, indeed we would like to see a life cycle emission accounting. This is a methodology that is at the base of a number of pieces of legislation, but it's not for the moment applied in road transport. This shift would finally and completely recognise the environmental benefit of biomethane and also recognition of its ability to achieve also negative emissions.

When it comes to infrastructure, I was talking about AFIR (Alternative Fuels Infrastructure Regulation). Indeed, it was a positive step, but we saw that there were no set targets for LNG infrastructure, which would also allow for the expansion of the availability of BIO-LNG in refueling station to ensure accessibility to HDVs. And finally we also would like to see a demand simulation. So we saw that with the Fit for 55 package, there was an incentive for production, but we didn't see the same incentive for biomethane when it comes to the demand part. So we would like to see some concrete incentives to adopt biomethane in transport, possibly with dedicated consumption targets as we saw for other types of green gases.

Noted, noted and Giuseppe, do you want to add on to that? I mean the picture that Anna has painted is already very clear, but maybe also from a market point of view…

Of course, yeah. Anna really painted a here a clear view of the situation indeed.

The current regulatory framework is present and probably is not sufficient to fully support the biogas uptake in road transport. So the main issue in our point of view, in my point of view, is the lack of consistency across different pieces of legislation. So while some regulations, such as the Renewable Energy Directive III (REDIII), the ETS 2, etcetera, provide some fundamental incentive for biogas. Alone, they are not enough probably in order to create a framework for biogas adoption. On the other hand, other regulation either fail to support biogas or even discourage its use. One of the most important regulations is the CO2 emission standard for sure, that is the targeting the OEMs and which is primarily focused on electrification which presents a challenge for biogas, especially in the Heavy Duty Vehicles (HDV) segment. So while biogas can offer an immediate and cost-effective solution, as it was already said, for decarbonizing these vehicles, the CO2 standard doesn’t recognize the potential.

Of course, yeah. Anna really painted a here a clear view of the situation indeed. The current regulatory framework is present and probably is not sufficient to fully support the biogas uptake in road transport. So the main issue in our point of view, in my point of view, is the lack of consistency across different pieces of legislation. So while some regulations, such as the Renewable Energy Directive III (REDIII), the ETS 2, etcetera, provide some fundamental incentive for biogas. Alone, they are not enough probably in order to create a framework for biogas adoption.

On the other hand, other regulation either fail to support biogas or even discourage its use. One of the most important regulations is the CO2 emission standards for sure, that is targeting the OEMs and which is primarily focused on electrification which presents a challenge for biogas, especially in the Heavy Duty Vehicles. So while biogas can offer an immediate and cost effective solution, as Anna already said, for decarbonizing these vehicles, the CO2 standard doesn’t recognize the potential as a green fuel alternative.

Another example is the financial ecosystem, which fails to provide an advantage for the vehicles that are running on gas compared of course with those running on fossil fuels such as diesel. So this lack of financial incentive and regulatory support can sometimes, depending of course on local incentives and subsidies, be a hurdle for the fleet operators, so for our customers, to justify the transition to biogas vehicles or to a sustainable logistics because they, of course they can’t justify the costs of using alternative fuel over diesel. So to reply to your last question, while some legislation do offer limited support, even limited, but they do to for biogas - the overall regulatory environment remains fragmented and probably sufficient, so a more cohesive approach with stronger incentives across all relevant regulations is finally needed to promote the widespread adoption of biogas in the transport sector.

Yes, and you're not the only one who suffers from this fragmented approach, but it's very true. And now I would like to zoom out a little bit of Europe because we like, as SGS inspire, you know, we have a global scope. So, it's always interesting to see what other regions are doing, sometimes we learn from what they're doing. And I want to mention a couple of things that are happening outside Europe. So for example, we have Korea in June 2024 that published a national biogas strategy with a target to produce up to 500 million cubic meters of biogas per year from 2026 onwards. Then if we look at the adopted the clean transport strategy mandating the blending of compressed biogas with compressed natural gas for transportation that was back in 2023. So, obviously that answers your previous comments on you know how we can go even further in EU legislation, but I want to maybe just invite you to think about also the other synergies right with other sectors of the economy, such as the farming and agri business, parts of the European economy. What can we learn from what these countries are doing to basically stimulate also these other sectors. So can you comment about that, what do you learn from that?

Well, indeed, this is a point that is that come up a lot and we do understand the concern and we are always very happy to reply to all the questions of people that have doubts. But when it comes to methane emissions, the production of biogases is the result of a biological process that would take place in any case, and thanks to the biogas sector this process is happening in a contained environment. And so the biogas production does not increase GHG concentrations in the atmosphere, but actually allows this carbon to enter in the so-called “short carbon cycle”, so the natural cycle that happens in the nature. And this is the reason also why bio gas production can actually achieve negative emissions in terms of carbon emissions. And obviously the benefits depend on the feedstocks. So, in certain cases, the negative emissions are quite important. So, as you know, biogases are obtained from the decomposition of fresh organic matter, and that's has been growing during all their life and during their growth, biomass has been capturing CO2 from the atmosphere and this is just the natural process of photosynthesis. And some of that captured CO2 is returned to the atmosphere during the combustion of biogases and biomethane. This is obviously true, but it is then recaptured by the biomass that then will be used again. So, you see that we are not talking about freeing CO2 that was stored for the longer term in other sources of energy, we're looking up of in a like short cycle that actually allows for the capture of more CO2 than what is actually released then with the use of biogas and biomethane.

It’s only a win win. And Giuseppe, if I ask for you, maybe your take on what's Iveco learns from other parts of the world outside Europe from your operations, maybe from you know your business activities. What would you say? What do you observe outside Europe?

You know Claire, in order to understand clearly the picture of our world, our situation in terms of GHG emissions, et cetera, we need to zoom out a lot. The demand for energy is continuously growing worldwide, so every country is engaged in a sort of race to secure raw materials and meet the energy demand. So in this context, as I've already said, the strategy to leverage renewable and local resources such as biogas are gaining significant attention to reduce the impact on the on the climate change. So you mentioned the two examples of Korea and India. But these are both 2 strategies which could offer valuable lesson for the other regions. Indeed, so South Korea for example, they will cut greenhouse gas emissions by 1,000,000 tonne sper year, so the plan aims to treat the five or or more than 5 tonne of organic waste each year and resources and to substitute basically fossil fuel that are wortha lot, a lot of money and a lot of a lot of emissions. So it can serve a model for EU for sure, which could develop similar policies, but as I said, we do are ahead on many points from any point of views in terms of renewable energy sources, but still there is a lot that can be done more than that. So India mandated the blending of compressed biogas in the domestic and the pipe compressed natural gas to cut basically the reliance on expensive imports and of the energy from abroad, so these are demonstrate also very important concept, so how bio gas can reduce the reliance on fossil fuels.

And is indeed an approach that any country in the world may may, may, or should consider. Maybe not just apply to bio gas, but to their own production of sustainable energy. So, moreover, biogas, local production also for synergies, as you said, with agriculture and particularly in rural areas, so this can apply specifically to some parts, to some country that base their economy on such activities. So using agricultural waste to produce biogas not only helps with waste management, but also creates new economic opportunities for farmers and it contributes either to the economy, so it creates business and richness for the country.

And as we know, in the EU area, reducing the import bill, and you know, building the strategic autonomy has never been more appealing, I guess also with the context we are in with Russia imports having to be phased out, so this is definitely added value. Now, Giuseppe, I stay with you. You mentioned, you know, Iveco being active in other types of vehicles, also battery EVs, hydrogen-based vehicles. So how do you see the competition, as a company, between these different clean fuel option, if I may say, why do a client of yours choose one over the other?

Sure. Well, in the heavy-duty segment, the penetration of gas has been has been constantly increasing up to 2021 basically in which the gas truck registrations in the EU recahed almost the 4% of the total industry. So there was a really, really good achievement. So despite the energy crisis that we had in the last in the last year that causde prices to grow up and not only of the gas but, as a whole, gas trucks still present today the most viable alternative diesel in, in our opinion, supported by the onsite the availability of the molecule and a well spread infrastructure all over Europe. So that's one of the strongest point for the technology. So as we know, biomethane can leverage more than 200 CNG stations in Europe and more than 780 LNG stations so it’s making biomethane mobility really ready to go and already have viable for any kind of decarbonization targets and the emission reduction that you might have. Biomethane as I said is an activator and an enabler of the circular economy, so it can be entering a raw material scarcity, as we said, it can sustain the economy and also support the municipalities in this case. So municipalities are really sensitive on the on the topic and can rely on this technology very, very well. So viability and sustainability, it is indeed what makes biomethane particularly interesting to our customer.

And you mentioned the municipalities, it's very interesting, there are projects in various cities, right. Could you mention maybe one of them just to give an example, you know municipality that has developed that fleet?

You know around Europe, we are very present in the biggest municipalities. So in Italy, in our home country, you can name any of the big ones, you can name Rome, Milano. But even you can go even to the smallest towns, most probably they are already using biomethane and they're using a very nice concept which is that they use biomethane power trucks and vehicles organic matter, which is then used to produce biomethane, which is again used to power the trucks. So, it is indeed the example and application of the circular economy itself, and many municipalities have created their own biomethane plant, so they are able to reduce costs, improve the system, improve the ecosystem of biomethane production and use. And therefore also reducing even more the emissions.

That's fantastic to hear. OK, I'm now going to move on to another topic. I would like to move beyond road transport Anna and look at the bigger picture, because you mentioned you know the potential of biogas/ biomethane for a broader scope, so. What is also your ambition for decarbonising other transport sectors? For example, the shipping sector, could you say more about that?

Well, indeed, the shipping sector is an important one that we see for the future, for you know the use of biomethane. We know that already now that the maritime sector is due to go to zero emission already by 2050 and indeed the maritime sector has been looking into alternative fuels especially in LNG right now, which is the most available alternative right now, not only in terms of production, but also in terms of bunkering, we know that already today that there are more than 500 LNG powered vessels sailing across the world and before the end of this decade, we should see the growth going beyond 1000 LNG fueled ships.

And if we look at the green alternatives or the sector bio-LNG, so the liquified version of Biomethane is again the most available and reliable in terms of production and if we look at the proven GHG abatement potential, this is also very interesting for shipping lines to achieve the their target because from a well to weight perspective, Bio-LNG can achieve negative emissions up to minus nine 190%, compared to heavy fuel oil so it's indeed very interesting to reach those targets.

We know that bio-LNG is fully compatible both with infrastructure and with these vessels, so also in terms of cost competitiveness, it's very interesting.

And what we have done, our calculations, we know that just to comply with the Fuel EU maritime regulation, the shipping sector will need around 5 bcms of biomethane by 2030, and indeed our sector is more than ready to contribute to the decarbonization and the defosillization of all transport modes and is looking especially at maritime and aviation, but obviously we're still looking very much also to heavy, heavy duty transport. So indeed, we believe that that biomethane can be a solution for the swift decarbonization of maritime right now. Also, we see that also the purchase interest is growing and in the future also aviation in it.

And a comment for both of you. You haven't mentioned the ETS, ETS 2 as a tool for road transport and the maritime sector is also getting into the carbon market. So how do you see that incentivising you know, by biogas/biomethane?

Well, we know that for maritime this the sector, the segment was already under ETS1 and indeed riad transport is under ETS2. For both, we believe that biogas biomethane will be very interesting because as per ETS, so you don't have to give up your allowances when using biogas So indeed, ETS has a great impact and it will be the importance of this. This mechanism will grow in in time with the growth of the cost of the CO2 tickets indeed.

And for our listeners, EU ETS is the EU emission trading system. For those of you who are not familiar with the jargon. OK, both of you, I have two more questions for our conversation today. First of all, I cannot - not mention- what happened recently. We are recording this podcast right after Donald Trump has been sworn in as the 47th US president so everybody in the world I guess is, is looking at how his presidency can impact their sector.

Well, indeed, we have seen the, you know, the step back from the IRA. This is well, in our opinion, a bit unfortunate. Obviously , we are for the development of all renewables and indeed for the take up of, you know, clean technologies and clean solutions. Now saying what will be the impact on the European markets because we are very much based in Europe and as EBA, we represent European producers and European value chain, this is very much difficult to say. On the other hand, I mean, we remain the leaders both in production of the biogas and biomethane itself, but also when it comes to the technology for producing bio gas and biomethane, EU remains the leader and we are actually exporting the technology, contrary to other renewables. In terms of US production of bio gas and biomethane, we will have to see indeed we have partners also in the US, which though seem not to be that concerned, with change o direction of the of Trump, but indeed, we will have to wait and see what all of this will this change will entail.

Yeah, sure. And what about you, Giuseppe? I know it's early in the process, but just a general feeling about what it means for you.

Absolutely, no, timing is perfect right now, right for this question and this podcast. So we have this big news from Donald Trump. We can read that in all the newspapers which notified the United Nations about the United States withdrawal from the Paris Agreement. So that's really a big deal. It's not a surprise. It's already the second time that the US has done. So it was somehow known and anticipated. Talking about Europe and influence in Europe, as I said that it is not easy, it is really, really complicated, but it surely influenced global dynamics on economic side and also from emission strategy. So it's important to emphasise anyway that the EU has a long-term adopted, ambitious climate policy, so that's a starting point. What we think is that the European Parliament, the European Union, will continue to pursue its policies, regardless of those that are active in the other parts of the world, most probably. We will confirm to be leaders in the green technologies and in the energy transition, including, of course, alternative fuels and biogas especially.

I agree with that, and actually to follow up on what you just said, Giuseppe, the EU will continue to push climate friendly policies. What is your wish list for the new European Commission, maybe more for you, Anna. But Giuseppe, if you want to comment after. They already announced a couple of initiatives and activities for 2025, but what would you like to see from them that can benefit your members and your sector?

Oh my God. How much time do you have? It's a very long wishlist...

Just one thing, if you want.

I will sign the wishlist of Anna at the end. I'm already proactively signing.

You know, we have seen in the in the political programme of von der Leyen, we saw also the report from Draghi, and indeed we see that competitiveness, together with sustainability and security will be a bit at the centre of this new legislative cycle, and we're actually very happy to see this because indeed we believe that biogas and biomethane can reply to this. You know the the energy because we are definitely sustainable. We are local, so we we are more cost competitive.

And we can be secure because indeed we can break the dependency from from imports from outside the EU, but obviously there are some legislative pieces that have to come finally together and I believe that a clear recognition of biometam as a key pillar for for the decarbonization of All EU economy will be important.

So we would like to see the translation of, you know, this famous target of the 35 BCMs by 2030 that was enshrined in the repower you planned, but was never really translated in a legislative piece. We would really like this. Indeed, this will entail an incredible recognition for the sector and a clarity on the legal point of view, and we will also like to see a bit the closing of this paradox, where indeed, the sector is pushed to, and rightly so, to produce more. But also a clarity of where this product should go, so not closing the doors to a number of end uses that are still very fundamental for the speed up in the growth of the sector and that still very much need clean solutions such as biomethane to reach those targets that we want to reach as a as a society.

Hmm. Well, I hope that your call will be heard, but that's for sure coming loud and clear. Giuseppe, you said you will sign up to whatever she asks for, but do you want to add anything?

For sure. No, no, I surely I agree. And to that, I can only add that we as you IVECO and all the network that we have with us, so our partners, our customers. Yes, we will go on to work and support the optimization of the regulation framework.

Great. Well, I will close the conversation here. Thank you so much for your time for your willingness to share your insights. We will be back, dear audience, with more episodes on, energy in transport. Thank you for now and and goodbye.

Thank you, Claire and congratulations.

Thanks, bye.

Thank you. Bye bye.