When you face a problem, it is best to tackle its source rather than 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.
Some like Germany are trying to curb demand through energy saving as well as boosting supply through sustainable biogas. Britain is oddly failing in both despite a winter crisis likely to be just as severe.
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. Electricity prices have also risen because gas generation is the swing supplier. As a result, our consumers face 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.
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. Both France and Germany are even discussing rationing. But there is scant public discussion in the UK of such short-term prioritisation, let alone a rebooting of key housing insulation programmes like the Green Deal.
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.
It may take two years to build a biogas plant, but that is a lot faster than any nuclear power station. 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.
In Germany, which has the largest biogas sector in Europe with some 11,000 plants, the federal economy and climate change minister Robert Habeck aims to boost biogas output by up to a fifth this winter just by relaxing regulations and ceilings.
France, with a large farm sector, is looking to remove regulatory obstacles. Poland is ambitious to expand its 300 plants. Spain is subsidising investment. The European supermajors Shell and Totalenergies are now investing in biogas.
In the medium term, biogas can help tackle climate change and play a significant role in weaning Europe off Russian gas. 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).
In the UK, despite our smaller farm sector, the potential is to produce at least a twentieth of our gas demand and to replace nearly a tenth of 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. No European democracy will ever again want to depend on Russia. But if the biogas sector is to expand as quickly as it could, it will need the long-term price guarantees (through contracts for difference) that have turbocharged the UK wind sector.
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. Governments also need to help collect the feedstocks, notably food waste.
All over Europe, governments now have a unique opportunity. Biogas can improve energy independence, tackle climate change, and raise Treasury revenue to relieve cost pressures on consumers.
