The economics of biogas in Denmark: a farm and socioeconomic perspective

Brian Jacobsen, Frederik M. Laugesen and Alex Dubgaard

International Journal of Agricultural Management, 2014, vol. 03, issue 3, 10

Abstract: Denmark has been one of the leading European Countries in using Biogas for Combined Heat and Power (CHP), since the 1980s. However, in the last two decades, the increase has been limited. A new energy policy aimed at increasing the profitability of biogas was introduced in the spring of 2012. The analysis here shows that the new agreement will improve the profitability of biogas plants and increase the biogas production although the political ambition of an increase from 4 PJ to 17 PJ by 2020 seems unlikely. The analysis shows that biogas plants can be profitable even if the input is a mix of manure and solid fractions/ farm yard manure given the present level of support. The overall production costs are around J0.63 per m3 methane produced, but they can vary from 0.47–0.78 per m4 methane produced3. The profit in the CASE 2012 analysis is J420,000 per year or 0.0.8 J per m3 methane. The analysis shows that the profit from upgrading biogas is only to be preferred if the sales price of heat or the amount sold are relatively low. The socioeconomic analyses show that the costs of biogas as a measure to reduce CO2 emissions are around J151 per tonne CO2 (J85–266 per ton) and that using maize is an expensive way to reduce emissions of CO2. In an analysis comparing the Danish and German support system, it has been found that the German socioeconomic costs seem to be five times higher than the Danish, based on the same calculation method. In order to improve profitability and reduce the cost of reducing CO2 emissions, the input to the biogas plant has to be based more on farm yard manure and deep bedding, although the cost of using these inputs might be higher than was included in the analysis.

Keywords: Environmental Economics and Policy; Farm Management; Land Economics/Use (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijameu:236887

DOI: 10.22004/ag.econ.236887

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