What is the shared goal behind the blending obligation?
The cabinet has lowered the national green gas target from 2 to 1.3 billion m³. Of this, 0.825 billion m³ is meant for heating buildings and 0.3–0.5 billion m³ for transport fuel. The planned 0.4 billion m³ for industry will not be produced because green gas is currently too expensive. Our platform, however, still aims for 2 billion m³.
In 2024, the Netherlands produced 294 million m³ of green gas, plus about 250 million m³ of biogas from companies expected to switch to green gas soon. The blending obligation applies mainly to natural gas suppliers for homes and small users, requiring them to blend a set percentage of green gas into their total supply.
Impact on the market
This blending obligation introduces significant dynamics into the market. Biogas plants gain a new perspective for their revenue model. In addition to the existing REI (Renewable Energy Incentive) scheme, digesters now have a second option for their revenue model: the blending obligation. Digesters can choose between the models and even switch monthly between REI and blending obligation. The guaranteed offtake encourages digesters to convert to green gas production and/or build new green gas facilities. The government also gains more certainty that green gas is actually being produced.
To make all this happen, the sector faces several challenges:
- Increasing the production capacity for green gas. Many existing CHP (combined heat and power) installations are being converted to green gas injection. In 2024, only 43% of the 100% requested and available SDE was utilized. 57% was not paid out, mainly because the revenue model wasn’t viable.
- Blending obligation requires certification, so demand for certified biomass will rise. Biogas plants only meet the blending obligation if they use residual streams that are RED and ISCC compliant.
- Growth is hindered by grid congestion. The Netherlands has a detailed gas network, but it was mostly designed for one-way traffic.
Buy out
“The ‘buy-out’ value largely determines the price of green gas. For built-up areas, this fee is €450 per ton of avoided CO₂. Converted to m³ of produced green gas, the compensation for green gas from animal manure can exceed €2.50 per m³. For other biomass types, it will be lower because they save less CO₂ than manure. For industrial use, the buy-out value is €74 per ton of avoided CO₂.
Conclusion
Green gas production reduces greenhouse gas emissions (CO₂ and CH₄) and significantly contributes to climate goals. Moreover, existing infrastructure and the gas network can be used for green gas, which also strengthens the regional economy. The blending obligation helps accelerate green gas production.
