Ireland is on the cusp of a new agricultural-based rural industry. Earlier this year, the Irish Government set an annual production target of 5.7TWh of biomethane by 2030, roughly 10% of current gas demand. This will require over 200 new anaerobic digestion (AD) plants to be built.

In the EU, the target is for over 300TWh of biomethane by 2030. This presents a significant opportunity to develop a new AD industry in Ireland, but it can only happen if the correct support policies are put in place. This was one of the key messages from last week’s Renewable Gas Forum of Ireland’s Biomethane Conference in Dublin.

Feedstock

Developing over 200 new AD plants by 2030 will require significant volumes of feedstock. While a proportion of this will come from commercial waste, the vast majority will come from agricultural sources such as slurry and grass silage.

In Ireland, a typical agricultural AD plant will require 30,000-40,000t of feedstock per annum, half of which will be biomass (likely grass silage) and the other half will come from waste sources such as slurry in order to meet the EU’s sustainability criteria.

Dr Paul Crosson of Teagasc said that his organisation sees AD as a complementary enterprise on livestock farms, meaning that grass silage which is surplus to feed requirements could be used to supply AD plants.

He said that Ireland could mobilise some 3.5-4m tonnes of silage relatively quickly for use in AD, without impacting livestock feed supply.

Sustainability

The sustainability of an AD industry and its impact on food supply was a hot topic at the conference. Jorge Pinto Antunes of the European Commission said that the rapid development of biomethane to meet the EU’s targets should not be to the detriment of food security, and legislation has been put in place to ensure this.

Antunes said the Commission envisages the use of non-food crops, residues, sequential crops, manures and waste streams in the new generation of AD plants. He did not comment on the use of grass silage as a feedstock, however.

The source of AD feedstock is only one aspect of sustainability. The aim of developing an AD industry is to reduce emissions. This reduction in emissions will largely be attributed to the energy and agricultural sectors.

But Tadhg Buckley, the IFA’s chief economist, believes there are issues around how the emission reductions are accredited to each sector, with a disproportionally high amount of credit going to the energy sector.

“The energy and emissions spent on producing or transporting the feedstock goes towards agriculture, but the decarbonisation benefits of the renewable gas goes towards energy,” he said. Buckley said this is an area that needs further work.

Finance

There was a significant focus during the conference on the funding channels that are emerging for the sector. Russell Smyth of KPMG Sustainable Futures said that funding the development of an AD sector will not be an issue, as there is a “wall of capital available for projects” with many funders now looking to invest in AD projects.

He explains that there are typically three funding options for AD plants; debt, equity or grant funding.

In his experience, very little debt funding has funded the initial construction of AD projects. Instead, they are typically built using equity funding and then refinanced with debt funding. In all cases, it is vital that the project has a secure, long-term market contract. Smyth said that the impending Renewable Heat Obligation won’t be enough to provide that.

“The investability of AD in Ireland will depend on whether developers can secure long-term, 10–15 year gas contracts which investors can be confident in,” he said.

Smyth also pointed out the need for scale and said projects need to be brought together and funded under a common approach.

“An individual farmer trying to fund this alone will struggle – it is much easier to raise funding for €50m of projects than it is for a single €5m project,” he said. The Irish Strategic Investment Fund is likely to have a role in this.

Minister McConalogue, who spoke at the conference, acknowledged the need for operational and capital support to kick-start the industry. It was suggested that the REPowerEU initiative give the Irish Government the opportunity to use rural development funding, such as CAP, to help develop the AD industry.

However, Tadhg Buckley objected to this point, as he said new sources of funding need to be secured from Europe.

The conference heard from multiple stakeholders in the dairy industry. None of the speakers suggested that developing an AD industry would create increased competition for land for dairy farmers, but instead said it would provide many solutions.

Conor Mulvihill, director with Dairy Industry Ireland, said that AD is a win-win and dairy processors and the industry are ready to invest, but they need clarity from the Government on policy in order to begin.

Joe Crockett, chair of the Dairy Sustainability Working Group, said that the dairy sector needs major supplies of biomethane at speed and scale in order to decarbonise.

He said that AD and energy generation is now seen as an economic opportunity for agriculture.

“AD now sits alongside the four sustainability pillars for agriculture; on-farm economics, water quality, climate and biodiversity and now energy generation,” he said.

Mike Megan, dairy farmer and chair of the National Fodder and Food Security committee, said he sees AD as an opportunity to better utilise slurry from his farm and reduce fertiliser requirements.

He also said that the ideal ownership structure is a co-operative model, where both farmers and the community have a stake in the project.

He also suggested that only fodder which was surplus to requirements for livestock farms should be used to supply an AD industry.

John McLenaghan farms near Garvagh, Co Derry, and is deputy president of the Ulster Farmers’ Union. He gave his experience of running and developing a 330kW farm-based AD plant, which was commissioned in 2016.

The plant is farm based and he uses grass silage and whole crop produced on his own and neighbouring farms, along with cattle slurry, chicken manure and some liquid by-product from a local milk processor. He feeds the plant 24t/day, which consists of 14t of silage/whole crop and 10t of slurry and whey.

He told attendees that farmers have to be prepared to take opportunities as they come and make the best use of their land. Equally, now that milk price has improved, he may consider getting back into dairy farming again alongside his AD operation, he said.

John said that he looked closely at the payback period when deciding whether or not to invest in AD and said that he needed a payback period of around seven years to make it work.

“An AD plant is an extremely difficult operation to manage. By the time you get to the end of the seven-year period, you will need to reinvest in the equipment to keep the various components of the plant running,” he said.

John thinks developing an AD plant was the right move for his business, but the learning curve was steep. He thinks the Republic of Ireland is now on the cusp of developing an AD industry, similar to where Northern Ireland was in 2016.