Biomethane's footprint ranges from 5 to -20 kilograms of CO₂ (kgCO2) per megajoule (MJ), while natural gas emits 55.8 kgCO₂ per MJ. A simple one-to-one replacement of natural gas with biomethane would not be viable, as biomethane's lower carbon intensity could offset more methane emissions than its volume suggests. Based on 2024 demand, reducing 1% of greenhouse gas (GHG) emissions would require approximately 0.5 MMcmd of biomethane, while a 10% reduction would demand around 5 MMcmd.

An operational capacity of 224 million cubic meters per year was achieved in January 2025, averaging 0.61 MMcmd, excluding seasonal variations, while additional projects under construction aim to add 0.44 MMcmd, with another 0.11 MMcmd in planned capacity. However, at least 4 MMcmd of new investments remain necessary to reach the required 5.1 MMcmd—requiring a tripling of the mapped capacity of projects underway at the ANP, which considers all operating, under-construction, and planned projects.

Natural gas and biomethane complement each other in Brazil's energy landscape. Offshore production dominates natural gas supply, with transport centralized through pipelines. Biomethane production, on the other hand, remains widespread in the interior, often in isolated projects or areas far from the pipeline network. The reliance on waste as a feedstock for biomethane drives this inland distribution, as agricultural and livestock waste, along with residues from the sugarcane industry, cluster away from coastal demand hubs. Integrating biomethane into these industries presents a strategic opportunity to reduce carbon footprints and optimize logistics for smaller cities outside the fossil gas grid.

Although most operating plants currently rely on urban waste, including sewage as feedstock, the sugar and ethanol sector holds the most significant short-term production potential. Corn, soy, and livestock industries further strengthen inland biomethane opportunities, with over 80% of the sector's projected growth concentrated away from coastal infrastructure. Expanding supply across a broader geographic area could improve market accessibility and introduce new logistical challenges.

Brazil's current biomethane capacity could offset 1% of the country's methane-related GHG emissions. However, utilization remains far below full capacity, with average daily production last year reaching just 0.2 MMcmd—less than 50% of the total available output. Inconsistent demand and natural fluctuations in waste generation limit scalability, and an underdeveloped supply chain with low stock levels further constrain reliable market growth.

Petrobras took a leading role in addressing these challenges by launching a biomethane procurement initiative in January 2025. The program aims to secure firm contracts with deliveries beginning in 2026. Contract terms extend up to 11 years, and Petrobras plans to receive gas at multiple delivery points, including refineries, thermoelectric plants, the transportation grid, and the distribution grid.

Pricing dynamics remain a key challenge for biomethane expansion in Brazil. While often indexed to natural gas prices, biomethane production costs fluctuate based on feedstock type, project scale, and logistical considerations. Prices for biomethane have ranged between BRL 2.20 and BRL 3.95 per cubic meter, around $9.2 – 18.1 per million British thermal units (MMBtu), with costs significantly influenced by incentives and carbon credit mechanisms. The logistics involved in the delivery of biomethane – either via road transportation or pipeline connections – can increase the cost. The minimum cost of truck delivery for biomethane is $0.5 per MMBtu, increasing according to distance. A connection to the transport gas grid can add $2 per MMBtu, and a connection to a distribution pipeline grid can represent at least $3 per MMBtu depending on the segment of the final consumer.

In this context, the CGOB is expected to play a crucial role in bridging the cost gap, allowing companies to meet the regulatory requirements even when direct biomethane use is not feasible. However, the long-term liquidity and pricing mechanisms for CGOBs remain uncertain, requiring further regulatory clarity.

Authors: 

Thiago Sinzato

Senior Analyst, BioEnergy Research
thiago.sinzato@rystadenergy.com

Gabriela Sanches

Analyst, Gas & LNG Research
gabriela.sanches@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)