Incentive policies in biomethane production toward circular economy

Abstract

The transportation sector is marked by high emissions, and new sustainable solutions are required to solve this problem. Biomethane, also known as green gas, has the potential to regenerate certain wastes, promoting resource circularity. This study aimed at evaluating the profitability of small- and medium-sized plants using the organic fraction of municipal solid waste (OFMSW) and by-products, considering a new incentive decree within the mature biogas-biomethane market of Italy. Net present value (NPV) was used as a key indicator, and sensitivity, scenario, and risk analyses were proposed. The results showed that a high subsidy for by-products contributed to the profitability of by-products plants across multiple contexts. Conversely, stringent incentive values for the OFMSW led to diminished profitability for plants treating this substrate. Consequently, profitability was verified for 100 m3/h plants with by-products and 300 m3/h plants with the OFMSW. The break-even point analysis showed that the tariff value determining project profitability, contingent on size and substrate, ranged from 0.61 to 0.95 €/m3 for the OFMSW and 0.76–1.01 €/m3 for by-products. The results provide valuable policy and managerial insights, emphasizing the support needed for biomethane – a renewable and circular resource – to achieve the twin goals of energy independence and a low-carbon economy. Consequently, biomethane has the potential to contribute to the achievement of Sustainable Development Goals 7 and 12.