Q&A: Biogas to be priced with a prize, says Orizon

Biomethane will be a key fuel in Brazil in the next decade, said Jorge Elias, landfill manager Orizon's engineering director. Edited highlights follow.

What projects is Orizon working on?

We are focused on producing biogas from our assets. There are 12 units today, as well as others in an advanced merge and acquisition process. Considering our current installed capacity, we already have about 2.5 years of hard work ahead of us.

We made investments in power generation and have about 100MW of installed capacity.

We are experiencing very rapid growth within the company in terms of biomethane. We will have up to 2.5mn m³/d by the end of 2025, considering current assets and those under negotiation.

Will biomethane production expand in 2022?

I don't see biomethane as a solution only for 2022. The next decade has a good bias for the biogas. It meets the need for energy transition.

The purification techniques are there and many of them came from the oil and gas industry. Our technology is very mature and adaptable. It is not an isolated situation in Brazil. Europe is also migrating to biomethane.

Orizon generates biomethane from landfills. Is there any reason to be prejudiced against landfill biomethane?

I don't think so, but that comes from the past and the reality of each country. In other countries, they believe that landfill is not something acceptable. In Brazil, we are in a moment of closing landfills.

Our investment bias is not only in eco parks - as we call landfills - bringing technology from abroad and making adaptations. But operating Eco Parks in Brazil also means bringing improvements to people and seeking what is more closely aligned with environmental and social practices, leaving room for profitability and mature technology.

Biogas generation in landfills is not seasonal. The greatest potential for biogas generation is not the landfill, but rather the fact that it is the first to become a generating option, as it is not seasonal when costs are calculated. Brazil's sugar-energy sector is very competent, but they have this seasonal characteristic for biomethane production.

We are in the right place, as biogas is generated all year in landfills. Other significantly-sized participants will come if we can force that first step.

What is Orizon's view on biomethane pricing? Will it be priced like natural gas, with a green premium?

We have worked with a lot of willingness to do things and to have a competitive capex value. We see an attraction in the industry because of the environmental attribute. More and more companies are behind it. We have been working hard to make biomethane's price competitive.

In these first five years, there will be a shortage of biomethane and many other companies will look for green attributes. These companies have renewable electricity in the free market, but still struggle to switch to renewable gas from fossil gas.

We have around 70mn m³/d of fossil gas in the Brazilian market and 400,000 m³/d in the green molecule market. If we reach the predicted 2.5mn m³/d in five years, we will still have a market with high demand and low supply. The consequence will be higher prices.

If the price is the same as the fossil gas price and higher than the premium price, I will bring a series of attributes that society wants.

In addition, we generate landfill gas in Brazil. I will offer more stable prices because I am producing in Brazil with Brazilian equipment.

I cannot compete when oil prices drop too much. My way of competing is that I offer environmental attributes and predictability.

We can price using Brazil's consumer price index (IPCA) or a currency basket.

How can this price prize be valued? Is it through a certificate, like Gasrec or Cbios?

The environmental attribute has been increasingly important. We have several initiatives. But I really believe in a single movement, globally. The impact brought by the use of renewable fuel is global. I believe this will move towards a global currency or certificate. And maybe some domestic initiatives.

I like Cbios a lot, but if I were betting on something in the medium term, I think we have to have a global concept of impact, which is worth the same thing to everyone. And if it has a domestic impact, it can adjust locally, but in general, it would be global.

Today, we close our project implementation account without it. We have contemplated a certain level of green attributes. We already have very impressive [low] carbon credit emissions. We already generate renewable energy and compensate for the Brazilian energy matrix.

What is the main obstacle to increase biomethane supply today?

The main obstacle is the equipment supply industry. They are mature, but have a deadline. It does not have plug and play options. Fortunately, we have a mature industry, but it takes time.

The regulatory part is reasonably well addressed.

If I could expand my generation in six months, I would have interested clients.

By Flavia Pierry

Public link

Please use the above public link if you want to share this noodl on another website.