Summary Report on Biogas for Commercial Vehicle Fuel
On-site anaerobic bio-energy plants convert processing residues from manufacturing operations, such as distilleries and dairies, into valuable renewable energy for factory use. To date utilising the biogas on factory sites has mainly involved Combined Heat and Power (CHP) engines. Clearfleau has identified the transport sector as a potential growth market and requested Aker Associates Ltd to undertake a study into small scale, on-site production of biomethane as a low carbon alternative to diesel in commercial vehicles.
The detailed report focused on biomethane for transport (BfT) technology for supplying biomethane into the commercial vehicle market, looking at the drivers for change and the barriers that are blocking the wider adoption of biomethane in the transport sector, as well as its adoption for smaller on-site AD plants.
As an alternative to combustion in a CHP unit, biogas can be converted into biomethane for injection into the local gas distribution grid or possible use as a renewable transport fuel. Of particular interest is the dairy sector, as creameries deploy trucks that collect milk from local farms and return back to base, making them ideal candidates for considering biomethane for shorter haul transport solutions.
A BfT upgrade facility typically comprises biogas upgrading and vehicle refuelling. They can supply either compressed biomethane (CBM) or Liquid Biomethane (LBM). Technologies to upgrade gas to biomethane for use in vehicles include Pressure Swing Adsorption (PSA), Water Scrubbing, Amine Scrubbing, Membrane and Cryogenic. The study included a detailed financial evaluation of both CBM and LBM conversion.
The road freight sector is under significant social, political and environmental pressure to cut its Greenhouse Gas (GHG) emissions. Heavy Goods Vehicle (HGV) OEMs have developed gas powered vehicles and the Government is keen to decarbonise transport, encouraging the adoption of renewable transport fuels.
The Renewable Transport Fuels Obligation (RTFO) is in place to support the market and address barriers to change. A combination of external pressure on the commercial transport sector, increased vehicle and fuel availability and supportive legislative and fiscal regime will stimulate use of biomethane as a transport fuel.
The financial evaluation of the CBM and LBM solutions indicated a potential project return of circa 14% and key financial outputs of the evaluation of the Base Case for each solution are summarised below.
Evaluation of CBM and LBM.
The comparative analysis of CBM and LBM solutions against CHP found that both options generate greater annual profit but, given higher capital costs, payback is currently slightly shorter for CHP depending on the BfT solution adopted. The LBM solution also facilitates capture of the CO2 removed from the biogas. Should all the CO2 be captured and utilised on-site, displacing CO2 purchased on the merchant market, then project profitability could be improved.
The key variables having the biggest impact on the project return were movements in the Renewable Transport Fuel Certificate (RTFC) and diesel prices, as well as the vehicle efficiency gap, the difference in vehicle performance between the gas-powered vehicle and the equivalent diesel-powered vehicle.
Conclusions / Recommendations
This report assessed the potential for using biomethane as an alternative low carbon renewable transport fuel for the commercial vehicle sector and concluded that on-site production and supply of BfT does present a valuable proposition for industrial sites. Given the market drivers for change the attractiveness of the proposition is likely to improve and we should see greater interest in the use of biogas as vehicle fuel.
Other key conclusions from the Biomethane for Transport report were as follows:
- Technology is available for small-scale production and supply of CBM / LBM for commercial vehicles.
- Of the technologies considered, PSA upgrading technology could offer the optimal solution for CBM.
- Small scale cryogenic liquefaction can be used for LBM production but there are limited suppliers.
- Diesel is the dominant fuel for commercial vehicles but social, political and environmentalpressure is being exerted to find low carbon renewable alternatives.
- Government measures like the RTFO support the reduction of GHG emissions from road transportand should encourage wider adoption of renewable fuels like biomethane.
- Key barriers to change such as vehicle availability and price are being addressed and it isanticipated that there will be increased demand for biomethane for transport in the future.
- The simple payback for CBM is estimated at 5.7 years and for LBM at 7.5 years which comparesfavourably to CHP at an estimated 5.6 years.
- The payback position is set to improve further for CBM and LBM, with RHI and FIT levels set todecline further and diesel prices forecast to increase.It is important to note that the economic viability of Biomethane for Transport on industrial sites is dependent on a range of site-specific factors such as the numbers and types of vehicles operating from the site, the quantity and types of organic residues available, quantity of biogas produced and site location itself.The report did not consider a specific site but gives a good indication as to the economic viability of smaller scale solutions for producing CBM or LBM on factory sites. A detailed feasibility study considering all site-specific factors would need to be undertaken for each site as part of the project evaluation process.
Prevailing social, political and environmental factors impacting the commercial vehicle market are likely to make the proposition more attractive over time. It is recommended that, where appropriate, BfT solutions are offered as an alternative proposition to CHP for maximising the value of the bio-energy generated.
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