Switching your business to biogas: why and how much does it cost?

Switching from natural gas to biogas is an increasingly common decarbonization strategy in corporate climate action plans. What is biogas, what is its decarbonization potential, and how can you plan for the financial impact of making the switch?

Louise Rocagel
Climate Consultant
Publication : 
04.07.2023
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What is biogas and where does it come from?

Biogas is generally produced from the decomposition of organic matter. Whether of animal or plant origin, organic matter can be broken down by microorganisms in "anaerobic" conditions—that is, in the absence of oxygen—to generate gas that can be captured and used as fuel.

This decomposition process, known as methanization, can occur naturally in environments like marshes, or be intentionally carried out in specialized facilities called anaerobic digesters.‍

Biogas is considered a renewable energy source because it is derived from the decomposition of natural organic matter, which is itself renewable. The biowaste used for biogas production includes "kitchen and table" waste (peelings, leftovers, expired or uneaten products), "green" waste from park and garden maintenance (grass clippings, fallen leaves, shrub and hedge trimmings, etc.), as well as waste from agricultural operations.‍

More than 10 million tons of biowaste are produced every year in France. Yet today, 80% of this biowaste is destroyed, even though it could be bio-recycled and used to help produce a greener energy mix.

The terms biogas and biomethane are often used interchangeably. The difference between the two lies in the chemical composition of the gas they describe. Biomethane is pure methane, whereas biogas is the "raw" result of methanization. The raw biogas obtained after methanization contains up to 75% methane (CH4), carbon dioxide (CO2), and traces of nitrogen (N2). Biogas can be purified to increase its methane concentration and produce biomethane.

Biogas production currently comes from various sources, including:

• Non-Hazardous Waste Storage Facility (ISDND) sector: organic waste stored and decomposed under anaerobic conditions

•  Household Waste Sector

•  Agricultural and Regional Sector

•  WWTP (Wastewater Treatment Plant) Sector

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What level of decarbonization can switching to biogas offer?

Risks associated with natural gas

Natural gas refers to gas that has existed in nature for millions of years and is extracted through drilling in natural reservoirs. As with biogas, the main component of natural gas deposits is methane.

Natural gas is a less carbon-intensive energy source than oil and coal, but it remains a fossil fuel with limited available resources. Furthermore, its extraction requires heavy drilling processes and releases methane and CO2 into the atmosphere through leaks, most of which are caused by equipment failure.

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Since methane is naturally colorless and odorless, it is difficult to detect, especially in the case of leaks that can occur at natural gas drilling sites. These leaks can therefore persist for weeks before being detected, turning into massive methane releases known as "super-emitters." This is precisely what happened outside a storage facility in Los Angeles in 2015. Nearly 100,000 tons of methane escaped into the atmosphere over the course of four months.[2].

Methane is a greenhouse gas, and it is considered to be responsible for approximately 20% of the current greenhouse effect. Its "Global Warming Potential" (GWP) is 28 times higher than that of CO2.

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Why does switching to biogas help reduce your carbon footprint?

The compositions of biogas and natural gas are essentially the same, consisting of methane and carbon dioxide. Biogas can therefore replace natural gas consumption in its various uses: building heating, heat generation for industry, electricity production through combustion, vehicle fuel, injection into the grid supplying households for heating and cooking, etc.

In 2021, France's primary energy consumption stood at 2,769 TWh, 15.5% of which was natural gas, amounting to 429 TWh.[1] ADEME estimates that the use of biomethane allows for a level of decarbonization of approximately 80%, compared to the use of natural gas.[3]‍

This significant reduction is due to the differences in production processes between biogas and natural gas:

  • Avoided leaks: Producing biogas instead of natural gas helps avoid direct methane leaks that occur at natural gas extraction sites.
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  • Waste recovery : By using waste as the primary raw material for anaerobic digestion, biogas offers a recovery solution, allowing this waste to be processed while producing renewable energy.
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  • Avoided emissions : Recovering waste and capturing methane produced naturally in landfills helps avoid harmful emissions. Since the global warming potential (GWP) of methane is 28 times higher than that of CO2, burning methane with oxygen effectively replaces each methane molecule with a CO2 molecule.
    Simplified formula for methane combustion: CH4 + 2 O2 → CO2 + 2 H2O 
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  • Valuable by-product : In addition to biogas production, the anaerobic digestion process generates a by-product called digestate. Digestate is a nutrient-rich material that can be used as fertilizer or organic soil amendment in agriculture. This allows for further recovery of organic waste and promotes a circular economy.
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  • Closed carbon capture and release cycle: Burning gas, whether natural or bio, emits CO2 as previously noted. However, burning biogas has a lower impact than burning natural gas because, in the case of biogas, the CO2 emitted during combustion corresponds to the amount previously captured by organic sources during their growth, the decomposition of which is the origin of the biogas production. This therefore constitutes a (nearly) closed cycle of carbon capture and release, unlike natural gas, which releases carbon that has been stored for millions of years in the form of carbon dioxide when burned.
Complete diagram of a methanizer's network operation

How much does switching to biogas cost a business?

There are generally two ways today to increase the share of biogas in a business's gas consumption.

The first option is to use Guarantee of Origin contracts. A guarantee of origin is an electronic document used solely to prove to an end consumer connected to a natural gas network that a specific portion or quantity of the energy supplied was produced from renewable sources. [5]‍

Subscribing to a Guarantee of Origin contract does not guarantee where the gas was produced, but it does contribute to the injection of biogas into the networks and supports the development of the sector. This option has the advantage of requiring no CapEx investment for the company. The cost of a guarantee of origin for biogas is approximately €15/MWh. [4]

The second option is to use a PPA, or Power Purchase Agreement. A PPA is a medium- to long-term contract (5 to 20 years) signed directly between a biogas producer and a client. Clients who sign a PPA commit to purchasing a specific quantity of biogas from an energy supplier, thereby financing the development of biogas production sites. Biogas production units can be developed directly on a client's physical site (On-Site PPA) or elsewhere (Off-Site PPA). PPA clients gain access to reliable, certified green energy at a predefined, stable rate.

PPAs take longer to set up than purchasing Guarantees of Origin, but they contribute very concretely to the development of new biomethane production projects and, by extension, a low-carbon local economy, particularly by securing commercial outlets for the financed methanizer. PPAs are a reliable way to decarbonize energy consumption and contribute to the energy transition.

The cost of a PPA varies depending on the local project but generally falls within a range of €50 to €150 excl. VAT/MWh. [6]

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How can you take action to transition to biogas?


In general, considering a switch to biogas for your company should be part of a broader strategy for decarbonizing your operations and reducing your energy consumption.

Whether it involves biogas or any other energy transition, it is important to keep in mind that there is no single or predefined answer. There are as many solutions as there are decarbonization projects. The most suitable solution will therefore be the one that best fits your specific context (economic, strategic, regulatory, client-related, etc.).

The major stages of corporate decarbonization are now well established:

Nevertheless, taking concrete action and deploying initiatives on the ground (such as switching to biogas) remains difficult for many companies, particularly because they lack reliable data on the financial impact of their decarbonization levers. Here are the detailed steps for moving from building your action plan to the concrete implementation of initiatives on the ground:

How can you financially model a switch to biogas?

Let's take the example of a company that wants to switch all of its production sites in Europe to biogas.

To begin planning the transition and initiate discussions with the stakeholders who hold the necessary budgets, the teams in charge will model the impact of this action by basing the financial component on a generic theoretical price per ton of CO2 saved, say €100/tCO2e.

Local managers are then tasked with securing local PPA contracts at the best possible price. It is highly likely that prices will vary significantly from one site to another. Information on the decarbonization potential per site, combined with the actual price of PPA contracts, allows for reliable and precise feedback to be sent to the group, accelerating concrete discussions and decision-making.

At Tennaxia, our platform is designed to enable companies to adopt this type of iterative, pragmatic, and realistic approach to financial modeling. Our financial module allows you to first model the financial impact of reduction actions based on operational and business KPIs. Subsequently, local operational teams can update price information for their scope using actual quotes obtained from suppliers. This information is then automatically centralized, allowing the teams in charge of planning and financing to accelerate the transition to action.

To learn more about our financial module, click here.

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