The implications of economic instruments on biogas value chains: a case study comparison between Norway and Denmark

Abstract

This paper studies biogas value chains and the effect from various economic support instruments on these value chains. This is done by comparing two European countries that are quite similar in size, income levels and environmental ambitions, but which are using very different instruments to support biogas development. Norway provides investment support combined with support for inputs, while Danish support is focused on the biogas output side. The aim of the comparison is to clarify whether the policies in use have affected the design of biogas value chains such that they are determined by national support and are not viable under alternative support structures. Based on the findings, possible modifications of national support and other biogas regulation policy are suggested. The comparative study assesses the costs and income of an exemplary Norwegian value chain and a Danish value chain. The cases are evaluated by assessing the economic consequences of implementing the Danish instruments for a Norwegian value chain and vice versa. We find that structural and regulatory conditions have a large impact on the configuration of the value chains. The Danish value chain in Norwegian settings results in a large deficit (− 12.7€/tonne), while it was profitable in Denmark (+ 4.9€/tonne). The same is observed for the Norwegian value chain, but to a lesser extent. The policy implication of end-use support in Denmark is large-scale plants, maximising the output through co-digestion of manure and high-yield substrates, while avoiding losses. Investment support in Norway has increased biogas production from organic waste with less emphasis on efficient gas usage, while input support regarding manure has led to an increase in the usage of manure as substrate.

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Notes

  1. 1.

    Examples of this can be found in Lukehurst et al. (2010); however, it should be noticed that this is not always the case.

  2. 2.

    If the power producer also is supplied with other fuels such as natural gas, will the plant receive a feed-in premium for the electricity based on biogas.

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Acknowledgements

The authors acknowledge the financial support from two projects: The BioValueChain project funded by the Norwegian Research council through the EnergiX programme (Grant Number: 228821) and the project “Optimisation of value chains for biogas production in Denmark” (BioChain) funded by the Danish Council for Strategic Research (DSF) (Grant Number: 12-132631). The authors have the full and sole responsibility for the content of this publication.

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Lyng, KA., Skovsgaard, L., Jacobsen, H.K. et al. The implications of economic instruments on biogas value chains: a case study comparison between Norway and Denmark. Environ Dev Sustain 22, 7125–7152 (2020). https://doi.org/10.1007/s10668-019-00463-9

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Keywords

  • Biogas
  • Environmental policy
  • Regulation
  • Value chain