The biogas sector has been gaining more space in Brazil in recent years. It is a critical segment in the current global scenario, in which sustainable solutions are sought in the energy transition effort. In this sense, having an adequate legal and regulatory framework and abundant raw material are fundamental factors for the development of biogas projects, as evidenced by international experiences.

In relation to the raw material, Brazil figures in a prominent position in the global scenario, according to the Brazilian Association of Biogas and Biomethane (Abiogás). The country is one with the highest potential for biogas production in the world from waste from agroindustry (especially sugar alcohol), livestock, and sanitation.

In 2022, we have seen a strengthening of the incentive to use biogas and biomethane with the publication of Decree 11,003/22, which instituted the Federal Strategy to Encourage the Sustainable Use of Biogas and Biomethane. Following the decree, the Ordinance 71 of the Ministry of the Environment, which established the National Methane Emission Reduction Program (Zero Methane Program), and the Normative Ordinance 37 of the Ministry of Mines and Energy, which have included biomethane production projects in the list of the Special Incentive Regime for Infrastructure Development (Reidi).

This scenario of favourable conditions to produce biogas and biomethane in the country, associated with the need for viable solutions in the short term for meeting the goals of decarbonization and increasing national energy security, has led agents to point the sector as extremely attractive for investments. The establishment of programmes and policies aimed at the development of structuring biogas projects are paramount to attracting more investments. This is the case of initiatives such as the Zero Methane Program, which stipulates some guidelines for reducing methane emissions.

The challenges around biogas regulation, however, are still considerable. Despite its equivalence to natural gas for regulatory purposes (provided for in Law 14.134/21 (Gas Law) and Decree 10,712/21 (Gas Decree)), it is necessary to consider that all the regulation applicable today to biomethane was elaborated under the rationale applied to fossil hydrocarbon. Because it is a "borrowed" regulation, there are some regulatory gaps or even relevant doubts that can generate legal uncertainty for the development of projects in the area.

The timing of regulatory review, therefore, is opportune for agents of the sector to stand before the National Petroleum Agency (ANP), to contribute to the establishment of standards capable of meeting the needs of the market.

In addition to the effort at the federal level, it is urgent to develop state policies. The absence of specific regulation in most states of the country reveals an important bottleneck. Few states have legislation focused on biogas and/or biomethane: São Paulo, Rio de Janeiro, Rio Grande do Sul, Paraná, Santa Catarina and Goiás.

Biomethane has an unparalleled internalization potential, which can contribute to the demand formation in regions not integrated into the national gas transport grid – such demand creating is fundamental to anchor the infrastructure building in new markets. This potential for the internalization of biomethane production also reveals a vocation to reach local markets, which as more restricted, through its injection into the distribution grid.

The biomethane production scale tends to be comparatively lower than that of natural gas. The daily production volume and the corresponding injection into pipelines is more compatible with an operation involving local distribution networks than gas transport networks.

Once the initial injection occurs in the distribution network, the biomethane commercialization would be restricted, at least at first, to that concession area. This is because it is currently considered impossible to reverse the flow and inject the gas into the transport network from a distribution network.

That is, for the biomethane achieves national projection through its injection into transport pipelines, bottlenecks of an operational nature need to be overcome.

Investments in gas compression to enable the injection of biomethane directly into transport pipelines would allow the formation of a nationwide market. But considering that the costs involved in these operational solutions can be huge and discourage market formation, other creative solutions need to be considered.

There is, for example, the possibility of carrying out Swap (exchange) of natural gas, both at the local grid, to connect different distribution networks, as well as at the national level, involving distribution networks and transport networks . But these solutions still run into legal and regulatory questions.

Despite recent advances, much is still to be done for Brazil to develop its full potential for biomethane production. For that, it is fundamental to prompt a more attractive sector for investments.