Methane emissions account for almost 25% of the world’s carbon equivalent emissions. They arise in various sectors such as oil & gas, waste disposal, agriculture or industrial processing of liquid gas or refining of vegetable oil.
It is however one of the easier ways to reduce CO2 emissions but is barely leveraged in all industries mentioned above?
Why? For many non-obvious reasons.
1 – The gas captured is not pure, hard to clean, and contains other volatile particles which prevent its usage and its injection into the grid
2 – The gas capture is present in remote places (oil refineries, rural areas) and therefore the access to the grid network is not even possible
3 – It requires investment in order to be captured, cleaned and making it available to consumers.
Carbon credits can change the game in this industry by solving these last three obstacles :
1 – Carbon credits makes the financing accessible and at the same time enables us to further the investment in order to extract the full value of the biogas by either cleaning it or liquefying in order to make it accessible to the whole world.
2 – The carbon reduction impact is double: on the one side, methane is not emitted into the atmosphere and on the other side, the biogas captured can be used as an alternative source of energy locally or remotely since it can now be cleaned
3 – The impact is immediate: after day 1 carbon credits can directly be emitted
4 – It is easier to track compared to past data, considering the data available regarding methane flaring in the world.
What does economics look like? What is the business case?
Tracific was well involved in methane capture from industrial waste.
Palm oil mill effluent (POME) is a waste produced from oil palm processing. It contains biological oxygen demand (BOD) and chemical oxygen demand (COD). Untreated pome releases methane, which has 25 times greenhouse gasses (GHG) potential more than carbon dioxide (CO2). The biogas is produced by bacterias which are present in POME. Biogas can be trapped through anaerobic digestion. The captured biogas will be utilized in a gas engine for the generation of electricity and in two boilers for the generation of heat.
Such project involves the installation of two biodigesters and a biogas recovery system per mill.
Estimation on methane capture is around 150,000 ton CO2e per year for one mill. We can expect to generate around 1.5Mi USD per year. (Assuming price of 10 USD per carbon credit)
For capturing carbon for waste, Tracific estimates at around 9 to 12 EUR per tone of CO2eq.
ROI of the investment is close from 3 to 5 years assuming the methane prices of early 2023.
What is the best business model?
At Tracific, our business models to approach such projects are clear. Since the risk is high and the return on investment quick, it therefore makes sense that the carbon credit buyer should also be the investor in the assets.
Shares need to be shared between different stakeholders including the project developer, the financing party and the project.
Should you like to get to know more on our projects on this subjects, feel free to reach us at contact@tracific.com