Kilkenny Farming - Biomethane gas must be ‘underwritten at point of sale’ - ICMSA

Kilkenny’s Denis Drennan says biomethane gas will have to be underwritten at point of sale.

Commenting on the recently published Biomethane Strategy, the ICMSA President said that the proposals were undermined by the Government’s failure to grasp – and state publicly - that it, the State, will have to underwrite the selling price of biomethane gas to the grid or biomethane-generated electricity to the grid.

Mr Drennan said that without that vital underwriting the financial model to build these AD plants is simply unworkable and will never attract project funding.

Climate Targets
He said that there was very significant potential in the sector towards meeting Ireland’s climate targets as well as providing a real diversification option for some farmers. But without such a state guarantee the financial model laid out in the strategy is guaranteed to fail without and the funding to build and drive the sector will simply not be available.

Commercial reality
“The starting point for this idea has to be the delivery of biomethane at a price that makes it a viable alternative to fossil fuel. That’s just the commercial reality and ignoring that really undermines the whole point.

“Until a mechanism is put in place to provide a guaranteed price for biomethane over fossil fuel gas, the potential of this sector will not be reached, and it will not contribute to carbon reductions as it could – and should.

“Biomethane plants involve a significant capital investment that requires a guaranteed price over a specified period of at least 15 years and the Government needs to re-assess its strategy and underwrite the selling price of the biomethane generated by these AD plants. It has to recognise that fundamental reality or we are about nothing.

“There will also be significant changes required in terms of the planning process and the criteria and timeframe around grid connection, and in ICMSA’s opinion, it’s as well to face up to these questions at the start of the rolling-out of any strategy”, said the Dunbell farmer.

Undoubted Potential
“If we are going to realise the undoubted potential then we have to start in reality and proceed from there. What is really going to work and how do we make it attractive to engage and invest? In not recognising the reality that state underwriting will be required to make biomethane a real alternative to fossil fuel, the Government is starting off on the wrong foot and every step hereafter will take us further away from a working and viable biomethane sector”, he concluded.