Analyzing the Dynamics of the Bio-methane Production Chain and the Effectiveness of Subsidization Schemes under Uncertainty
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Abstract
Bio-methane is a renewable gas option that can be injected to the natural gas grids to increase the sustainability of the energy system and to deal with natural gas supply problems. However, being based on several factors such as resource availability, competition between bio-methane and electricity sectors for biogas and biomass supply, demand, capacity installation and profitability, the future dynamics of bio-methane production is uncertain. In this study, we investigated the dynamics of bio-methane production in the Netherlands by constructing a system dynamics model and using this model for exploration of future scenarios and policy testing purposes. The results showed that the subsidization is crucial for the development of bio-methane in the early years, but increasing supply and reduced prices can cause a loss of competitiveness against the electricity sector, which can result in inadequate biomass supply for bio-methane. Future research can focus on testing more policies, enhancing the robustness of the subsidization policy and investigating the relation of bio-methane to the natural gas sector.