Supply & Demand

Most biomethane is currently produced via anaerobic digestion technologies, as well as methane recovery systems in landfills and wastewater treatment plants; this is considered a first generation biofuel². Second generation biofuels include biomethane produced from biomass gasification technologies, which can leverage organic feedstocks such as woody biomass³.

In response to demand for low-carbon replacements to conventional gas heating, some provinces have responded proactively; BC and Québec mandated distributors to supply minimum blends of biomethane across their gas grids, and New Brunswick has begun exploring a similar policy. Provincial policies have led to increased biomethane procurement by several Canadian gas utilities. FortisBC, BC’s largest fossil gas supplier and a North American leader in biomethane delivery, signalled in 2022 that it may need to procure up to 60 Petajoules (PJ) by 2030 to meet provincial climate targets⁴. In Québec, gas utility Énergir committed in 2023 that all new gas connections would use 100 per cent biomethane⁵. As of now, national biomethane capacity was approximately 9 PJ in 2022 and is expected to rise to 18.1 PJ per year by 2026, with the launch and expansion of several facilities across Alberta, BC, Ontario and Québec⁶.  

To understand biomethane’s long-term availability, TorchLight Bioresources completed a study in 2020 examining Canada’s available feedstocks and production capacity⁷. The analysis found theoretical potential of 809 PJ (19 per cent of which is second generation)⁸ and feasible potential of between 140 - 170 PJ; the latter is significantly lower due to its exclusion of second generation technology and feedstocks deemed unviable. A more recent study, published in 2022 and commissioned jointly by the Province of BC, FortisBC and the BC Bioenergy Network, found that under optimal conditions, BC had technical potential to generate up to 83.8 PJ per year by 2050 (89 per cent of which is second-generation). By comparison, current Canadian and BC end-use demand for natural gas in 2022 was 4,435 PJ and 381 PJ, respectively.^{9, 10}

Both supply studies digressed that their projections faced a variety of risks and constraints that would limit real-world supply, including competing interests for feedstocks (e.g., Torchlight’s feasible vs theoretical potential). Feedstocks such as wood waste have other potential uses, including but not limited to biomaterials, biochemicals, methanol, and sustainable aviation fuels. The cost of biomethane also remains a challenge to scaling supply. Compared to recent natural gas prices (CAD) between $2-$5/GJ, the production cost of biomethane from a wood gasification pathway is exponentially higher at $27/GJ.^{11, 12}

Although some of Canada’s biomethane demand is currently being fulfilled by imports from the United States (US) and could continue to be in the future, the size of the gap between future supply and demand seems to bolster the case that biomethane will not be a panacea. At face value, it seems reasonable to expect that as the US decarbonizes aggressively and consumes more biomethane, the import market could dry up. Further research exploring how US decarbonization will affect Canadian customers of renewable gas would be helpful in this regard (Navius Research is one firm that has included US decarbonization as a sensitivity in its modelling).

A combination of efficiency, electrification and other renewable gaseous fuels will likely be needed to replace fossil gas consumption. Policy and market forces in Canada have largely already framed the role of biomethane as complementary but of lesser importance to electrification and clean hydrogen. Furthering this assessment, the baseline net-zero scenario in Navius Research’s Canada Energy Dashboard yields an estimate of around 600 PJ of gaseous biofuel consumption in 2050. Even in Clean Prosperity’s June 2023 report (another Navius product) which examined an extremely bullish biofuel-reliant net zero pathway, we only see annual consumption reach 2,789 PJ by 2050 (~63 per cent of current gas consumption).¹³

Technology gaps and opportunities

Biomethane’s most convenient attribute as a climate solution is that it serves as a drop-in fuel for existing infrastructure, meaning no new demand-side technology is needed to use it. Once upgraded from biogas to biomethane, the product is identical to fossil gas and utilities can blend it in as a portion of the gas delivered to customers. Nonetheless, supply-side technology limitations remain a barrier. 

One of the most significant challenges policymakers and planners have to contend with when considering biomethane as a future climate solution is the lack of certainty in the technology readiness of gasification technologies. Both BC’s 2022 renewable gas supply ^study and TorchLight’s national study considered second-generation biofuel technologies to be pre-commercial. The first and only demonstration project to-date has been the GoBiGas plant in Sweden.²⁰ Based on current findings from the IEA, biomass gasification technologies producing biomethane currently range from TRL 5-9, globally.²¹ This presents a challenge, as in BC’s case, the vast majority of long-term projected biomethane supply is second-generation.

Nonetheless, Canada has a number of innovators who are tackling this challenge. REN Energy is leading low cost production of biomethane using gasification technologies;²² their plants in BC are a first in North America and expected to be operational by 2025.²³ G4 Insights, also based in BC, is developing PyroCatalytic Hydrogenation technology, another means to convert forestry waste into biomethane and other renewable gases.²⁴ Other Canadian companies scaling RNG include Anaergia, which develops advanced anaerobic digestion systems, and Nexterra, which develops small-scale gasification systems.^{25, 26}