Description of support scheme
Estonia's biomethane support scheme promoted biomethane production and consumption by covering the cost gap between production expenses and market prices, ensuring compliance with EU state aid rules. A profitability assessment model was developed to verify that support met regulatory requirements. The scheme aimed to increase biomethane use in transportation and support market-driven production, allowing consumers to access biomethane at competitive prices. Funding was sourced from emission allowance sales revenues, and applications were accepted until the budget was fully allocated.
Additionally, the Biomethane Market Development Support covers production and grid injection costs to make biomethane more competitive with fossil fuels, with eligibility extended to legal entities from Estonia and the European Economic Area. The Bioresource Valorization Investment Support provides funding for establishing or upgrading biomethane production facilities, covering investments in equipment and infrastructure to ensure production quality. And finally, the Energy Sector Organization Act sets national energy efficiency goals, reinforcing biomethane as a key part of Estonia’s broader energy policy.
Amount
The support amount for biomethane in Estonia is €100 per megawatt-hour (MWh), from which the current month’s average market price of natural gas is deducted. If the total monthly traded volume of natural gas transactions in the Baltic bidding areas is below 500 MWh, the average market price for that month is set at €20/MWh. Additionally, the support per energy unit cannot exceed the difference between the levelized cost of produced energy and the market price of the same type of energy, ensuring that the subsidy only covers the cost gap without generating excess profit. The methodology for calculating this profitability threshold is developed by the system operator and published on its website.
Addressees
Biomethane support in Estonia was available to biomethane producers meeting sustainability criteria under the Atmospheric Air Protection Act, with a maximum installed capacity of 50,000 tons per year. Both Estonian legal entities and those from the EEA or Switzerland can apply if reciprocal participation in similar schemes is allowed. Applicants must not have outstanding state aid repayment obligations from the European Commission and must not owe more than €100 in unpaid taxes or social security contributions at the time of application.
Procedure
The biomethane support procedure required applicants to be registered legal entities meeting eligibility criteria under the Biomethane Market Development Support Regulation (§ 9). Registration in Elering’s origin certificate registry was mandatory, and applications were accepted from February 6, 2018, to June 30, 2024, or until funds were exhausted. Support was tied to verified biomethane consumption, ensuring competitive pricing against natural gas. A profitability assessment model by KPMG Baltics OÜ ensured compliance with EU state aid rules. The final payments were made on February 21, 2024, distributing the remaining budget proportionally among eligible producers.
Competent authority
- Ministry of Finance
- Ministry of Rural Affairs
- Ministry of the Environment
- TSO Elering
- NGO Estonian Biogas Association