Is the production of biofuels and bio-chemicals always profitable? Co-production of biomethane and urea from biogas as case study

In this paper we present a techno-economic analysis of a novel route for biomethane - urea co-production from biogas. The idea emerges as an alternative path for improving the profitability of biogas upgrading plants. The profitability of four different biogas plant sizes (100, 250, 500, and 1000 m(3)/h) in four European countries (Spain, Italy, United Kingdom and Germany) is studied under the current policy schemes for biomethane production of each country. Our study evidences that with the present policy schemes for biomethane production, only medium and large scale plants (500 and 1000 m(3)/h) in Italy would be profitable. The reason is the current strong support for biomethane production in Italy through feed-in tariffs subsidies. In this sense, we analysed the potential benefits of governmental incentives through bio-methane subsidies (feed-in tariffs and investment percentage). Feed-in tariffs proved to be a worthwhile solution for large plants. Indeed, profitability is reached under subsidies of 30-48 (sic)/MWh. Overall, plants located in southern EU countries are more likely to reach profitability with lower subsidies. The potential of costs reduction (i.e. ammonia price) was also analysed, showing that cutting-down production costs is essential to reduce the amount of subsidies received. In summary, our study shows the challenge that European policies face in the path towards a bio-based economy using biogas upgrading as reference case.