Smart Stories Smart Stories

Back

Sustainable Mobility using renewable Liquefied Biomethane - Lombardy, Italy

Sustainable Mobility using renewable Liquefied Biomethane - Lombardy, Italy

Smart Specialisation Platform supports interregional partnership for new sustainable European fuel supply chains

Summary of the case

Sustainable Mobility using Biomethane - Liquefied Natural Gas (SMBio-LNG) is an innovative industrial demo case, under the Vanguard Initiative’s Bioeconomy Pilot, on turning waste into green energy for sustainable mobility. Specifically, SMBio-LNG aims to make a convincing case on the viability of sustainable trans-regional supply chains for production distribution and sale of liquefied biomethane for heavy vehicles. Biomethane is produced exclusively from renewable sources generally considered as waste, such as manure, agricultural residues and agro-industrial by-products. The partnership involves Lombardy (IT – Leader), Emilia Romagna (IT), Piedmont (IT), North Rhine Westphalia (DE), Upper Austria (AT).

The demonstrator involves the Italian regions of Lombardy, Piedmont and Emilia-Romagna.  The Smart Specialisation Strategies (S3) of these regions all share the use of bioenergy and sustainability of mobility as key areas of focus: SMBio-LNG aims to explore opportunities for joint implementation of these S3s’ ambitions on a trans-regional basis. The initiative is led by the Lombardy Green Chemistry Association (LGCA), a cluster-type organisation bringing together companies with universities and other research centres and NGOs in the bioeconomy field from Lombardy. The governance structure also comprises public authorities from all three regions, as well as private companies representing all stages of the supply chain. The Entrepreneurial Discovery Process (EDP) encourages crucial interactions between these actors to optimise availability of local feedstock, ensure adequate technological innovation at each stage and promote a friendly regulatory environment for sustainable biomethane supply. 

The demonstration supply chain is now operational with the opening of its final element in September 2020, the refuelling station in Lombardy. Thanks to this initiative an innovative transport company is the first in Italy to use liquefied biomethane for its fleet, locally produced and not imported. The model is already proving profitable economically, in addition to the environmental benefits it brings, associated with the reduced use of fossil fuel in heavy road transport. The innovative business model was created with support from the Technical Assistance Facility (TAF) of the Thematic Smart Specialisation Platform for Industrial Modernisation (S3P-Industry) of the European Commission (EC).

The TAF input is facilitating the next phase of SMBio-LNG, namely replication of the business model to other European regions with similar S3 objectives, in the context of the Vanguard Initiative’s Bioeconomy Pilot. North Rhine Westphalia, Germany, and Upper Austria have shown particularly strong interest in this regard so far.

1. Territorial context and challenge faced

To achieve the climate neutrality ambition of the new European Green Deal, Europe must reduce emissions from transport by 90%, by 2050. This will be a major challenge for all European regions, which need to boost investment in non-fossil-based alternative fuels, well beyond current levels, to reach industrial-scale capacities and achieve full commercial operation. Biogas derived from waste can have a key part to play in meeting the EU’s transport emissions reduction target, touching on both energy transition and circular economy aspects of the Green Deal.  Its deployment is also supported by the recently adopted EC Strategy to Reduce Methane Emissions[1].

Italy has particular strengths in the biogas sector, as the second-largest producer in Europe and the fourth in the world, with some 1,600 biogas facilities. Normally, the biogas is used for heating and electricity generation applications. It is estimated that Italian biogas production will reach 10 billion m3 by 2030. Turning waste into new sustainable biobased products and green energy is a key feature of the Smart Specialisation Strategies (S3) of the three northern Italian regions of Lombardy, Piedmont and Emilia-Romagna, which border with each other. These regions have some of the highest concentrations of livestock in Italy, as well as the highest density of biogas plants, as part of their drive towards decarbonisation of the agricultural sector. 

  • The S3 of the Lombardy Region, places strong emphasis on circular economy and bioeconomy. Bioenergy and biomethane are important focus areas in the S3, given that Lombardy is the second region in Italy for bioenergy.  Lombardy boasts good management and recovery of biodegradable waste and a high level of recycling and recovery in the management of sewage sludge, supported by high-level skills.
  • In Emilia-Romagna, due to the agro-industrial vocation of the area, there are significant quantities of waste biomass that can be used as raw material for the production of biomethane. There is a dense natural gas distribution network and a large number of vehicles are already powered by natural gas. For these reasons, Emilia-Romagna assigns a key role to biomethane in the context of its S3.
  • The S3 of Piedmont Region uses research and innovation to transform sectors of local industrial tradition, designing new trajectories and building new knowledge and skills to respond to evolving societal challenges. The strategy is guided by the principles of smart growth, environmental and energy sustainability. Bioenergy and sustainability of mobility are at the heart of the strategy.

Based on this strong shared potential for innovation-led development of an interregional supply chain for biomethane – transformed from biogas as a vehicle fuel - the three regions, led by Lombardy, established the partnership for Sustainable Mobility Bio-LNG – ‘SMBio-LNG’ - in 2019.  In view of growing wider EU interest, notably from North Rhine Westphalia (Germany) and Upper Austria, SMBio-LNG was incorporated shortly afterwards into the S3 Platform’s Vanguard Initiative as a use case under its Bioeconomy Pilot.

2. Aims and ambition of the initiative

The SMBio-LNG initiative aims to show that deploying liquified biomethane in heavy transport can be a highly practicable part of the emissions reduction solution for Europe.  It does so by setting up a demonstration sustainable supply chain, with functioning business model, starting from biological waste for biogas production, on to liquefaction, distribution and sale of biomethane.  The model presents a working view of circular economy principles turned into reality, including reduced distances travelled by the fuel, theoretical independence from external gas sources and a zeroing of CO2 emissions.

The initiative seeks to show that this business model is feasible and replicable, not only to serve the market on a regional scale, but also involving the entire interregional level production/logistic chain, to create a biomethane market supply chain at European level.

3. Content and implementation of the initiative

This SMBio-LNG biomethane supply chain demonstrator is based on strong partnership between the Italian regions of Lombardy, Piedmont and Emilia-Romagna. The biomethane is produced exclusively from renewable sources generally considered as waste, such as manure, agricultural residues and agro-industrial by-products.  A key advantage of the biomethane solution is that it is perfectly compatible with natural gas and can be distributed using existing Liquified Natural Gas (LNG) infrastructure. 

The model also levers in the expertise of three leading companies in the production, liquification and transportation of biogas.  Production of the biogas is managed by the Speranza Agricultural Cooperative based in Candiolo in Piedmont, a major actor in the livestock sector, which combines the production of meat and milk with that of biogas from livestock waste and agricultural by-products. Another Piedmont company, Criotec Impianti Spa, deals with the liquefaction of biomethane, whilst HAM Italia, an Emilia-Romagna company, is in charge of the transport and logistics of liquid biomethane tanks.

Finally, there is the biomethane refuelling station in Sondrio, upper Lombardy, developed by Gruppo Maganetti Spedizioni Spa, one of Italy’s leading heavy truck and logistics companies and a major partner in SMBio-LNG.  Gruppo Maganetti is currently engaged in the fuel conversion of its heavy-truck fleet to liquefied biomethane.  The new supply chain is intended as a fully operational working facility for Gruppo Maganetti, in addition to its demonstration characteristics for replication and potential future upscaling. 

Governance

Lombardy Green Chemistry Association (LGCA), the Region’s Cluster of Bioeconomy and Green Chemistry, coordinates the SMBio-LNG initiative. LGCA comprises 52 members from the region, including 27 SMEs, 7 large companies, 6 NGOs, 6 universities and 6 research centres. It exists to promote the regional bioeconomy in Lombardy and encourage cross-regional cooperation in bioeconomy and circular economy sectors, thereby supporting S3 implementation in the region.

Public authorities from all three Italian regions participating in the demonstrator are represented in the SMBio-LNG governance structure. The involvement of public authorities is important from the land-use planning point of view in particular, since good planning, policy harmonisation and citizen involvement are the key to successful development of biomethane plants.

For the private sector, Gruppo Maganetti coordinates all relevant actors along the supply chain of production, processing/liquefication distribution.  The governance model is based on agreement among participating companies and endorsed by the regions and policymakers where the facilities are located. 

SMBio-LNG is currently financed from the private resources of Gruppo Maganetti and Cooperativa Agricola Speranza, totalling €3.5m over 3 years.It also incorporates

Entrepreneurial Discovery Process

For the demonstration case, SMBio-LNG’s Entrepreneurial Discovery Process (EDP) can be characterised chiefly as ‘triple helix’.The business model encourages the integration into financing and policy measures of all the players in the supply chain, starting with primary producers, education and research providers, industry and transport operators. In this way, SMBio-LNG offers new business opportunities based on circular paradigms of production and consumption by encouraging interaction between operators from different environments.This has enabled a coordinated approach to creating the supply chain, optimising availability of local feedstock, ensuring adequate technological innovation at each stage and working towards a friendly regulatory environment for Interaction between different stakeholders on the deployment of the business model is further supported through the Open Innovation platform of the Lombardy Region.

As a use-case of the Bioeconomy Pilot of the Vanguard Initiative, SMBio-LNG is able to benefit from a series of actions to support interaction with clusters, policymakers, universities, companies etc. from different European regions, such as matchmaking sessions, webinars and living labs.  An EU-wide Vanguard Initiative webinar event in September 2020, for example, gathered some 50 participants from eight regions – including, outside of Italy, Wels in Austria, Slovenia, Flanders in Belgium and Central Sweden.

4. Achievements

At the current stage of implementation of SMBio-LNG, the demonstrator supply chain has been completed with the opening, in September 2020, of Gruppo Maganetti’s biomethane refuelling station in Lombardy.  To further enhance the supply chain and start a commercial activity on an industrial scale, a larger liquefied biomethane distributor is due to be completed by the end of 2020.

Through the new supply chain, 2,000 tonnes of liquefied biomethane can be delivered each year.  This covers the annual needs of 65 heavy trucks – some 7 million km.  Moreover, the experience demonstrates that using liquefied biomethane is profitable for Gruppo Maganetti.  The model developed shows positive and growing Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of more than 25% of the investment, with positive and increasing cash flows, at year 5.  Gruppo Maganetti is the first Italian company, and one of the first in Europe to use liquefied biomethane, locally produced and not imported.

Key success factors

Crucial to the success of this demonstrator has been the strength of collaboration between the Italian regions involved, based on the prominence of waste to green energy priorities in their respective S3 and circular economy strategies.The S3 approach has been instrumental in bringing together the actors from different sectors focused on the shared goal of making the new supply chain a reality.

Another important success factor so far has been the selection of the SMBio-LNG use case for support from the Technical Assistance Facility (TAF) of the Vanguard Initiative.This brought specialist inputs from corporate finance experts and legal experts from leading consulting companies to bear on improving the business plan for the demonstrator supply chain.Special attention was paid here to attracting private investments in order to encourage further replication of the model.

5. Replicability

SMBio-LNG is now working on bringing about replication of the sustainable biomethane supply chain in other regional contexts.To this end, SMBio-LNG coordinates a series of activities involving other European regions, such as:

  • mapping of relevant sector operators at European level;
  • verifying the state of technological innovation in relevant sector operators at different locations;
  • industrial feasibility assessment for use of different feedstocks according to local availabilities;
  • analysis of industrial policies for the development of biomethane supply chain.

North Rhine Westphalia, Germany and Upper Austria have expressed keen interest in the above activities, whilst a tonnes/year analysis is being developed for a company operating in Slovenia.The SMBio-LNG project also aims to demonstrate the possibility of developing a low-impact biomethane supply chain in the heart of the Alps, protecting the three main resources of the territory - the health of those who live there, the surrounding environment and the tourism industry. The model can be replicated and adapted in other European regions according to the types and availability of local biomass.

The replicability drive of SMBio-LNG is supported by the Bioeconomy Pilot of the Vanguard Initiative.The pilot gathers some 18 European regions linked by a common vision in their S3 on the importance of sustainable biogas in the transition toward a more sustainable economy.SMBio-LNG’s dialogue with potential private investors and biogas producers from different European regions is facilitated, thanks to the S3P-Industry’s TAF input.  
 

"Several Italian companies, in collaboration with universities and charging centres, have begun running heavy road vehicles on renewable biomethane, significantly improving the sustainability of road transport and local public transport. However, there remains vast potential to expand this segment, as well as that of water transport, in the quest for the major reductions needed in CO2 emissions."

Ilaria Re, SMBio-LNG Coordinator, Lombardy Green Chemistry Association

Schematic of biomethane deployment in the transport sector (Source: Rolande)

Several Italian companies, in collaboration with universities and charging centres, have begun running heavy road vehicles on renewable biomethane, significantly improving the sustainability of road transport and local public transport. However, there remains vast potential to expand this segment, as well as that of water transport, in the quest for the major reductions needed in CO2 emissions.

Additional Information

Contact:

Ilaria Re Lombardy Green Chemistry Association
Email: ilaria.re@italbiotec.it
Tel: +39 392 4751449

Websites:

SMBio-LNG context presentation - Vanguard Initiative Bioeconomy Pilot:
https://www.assolombarda.it/governance/gruppi/chimici/informazioni/presentazione-ilaria-re

Open Innovation platform of the Lombardy Region:
https://www.interregeurope.eu/policylearning/good-practices/item/1306/the-open-innovation-platform-of-lombardy-region/