European Commission clears €4.7 billion for Italian biomethane and biofuels

The Commission approved the support 1 March, saying that it was in line with the EU’s rules on state-aid. The scheme will run from 2018 to 2022 to help the fuels compete with their fossil-based counterparts.

The funding is designed to allow producers of biomethane and advanced biofuels, who have significantly higher production costs, to compete with fossil fuel producers. It will be financed by transport fuel retailers who are obliged to blend a certain proportion of biofuels and biomethane into their fuels.

The premium paid to biofuel producers will be altered each year depending on operating costs to make sure that they are not over-compensated. Those who invest in improved distribution and liquefaction of biomethane will receive a higher premium.

"This is yet another step towards greater use of renewable energy in Europe and helping Italy's transition to more environmentally friendly fuel sources. The scheme will encourage the production and consumption of advanced biofuels in Italy, while limiting distortions of competition," said Commissioner for Competition Margrethe Vestager said in a statement.

The scheme is also designed to incentivise farmers to produce biofuel and biomethane from agricultural waste and residues, which they can then use to power their vehicles and equipment.

Commenting on the funding, the European Biogas Association (EBA) said: "The approval of this support scheme is a very important step towards the development of a strong biomethane sector in Italy. This will help the country reach its ambitious [climate] targets".

"[A] study presented recently by the Gas for Climate consortium, in which EBA and CIB are involved, demonstrates that it is possible to scale up renewable gas production (including biomethane and renewable hydrogen) between now and 2050 to more than 120 billion cubic metres annually. This will help Europe meet the Paris Agreement climate targets in a cost-effective way and save €138 billion annually."

See the European Commission's release for the funding here.