COPENHAGEN (Reuters) - Royal Dutch Shell (RDSa.L) said on Tuesday it has agreed to buy renewable gas, known as biomethane, from Denmark’s Nature Energy, in what the smaller company termed the largest deal of its kind.
The gas will be supplied to Europe’s pipeline network from July 1. The size and financial details of the contract were not disclosed.
In April, Shell laid out the oil and gas sector’s most extensive strategy yet to reduce greenhouse gas emissions to net zero by 2050.
Biogas, produced from methanisation of agricultural and other biological waste, could play a key role in Europe’s ambitions to become a low-carbon society.
“Biomethane has an important role to play in the energy transition,” said Jonathan McCloy, head of gas at Shell Energy Europe.
“This purchase is an important part of our work to provide a range of lower-carbon energy choices for our customers across Europe.”
Denmark and Germany are pioneers in the nascent biomethane industry, which still depends on government support and has yet to see the breakthroughs in technology and scale seen in wind and solar power.
Biogas competes in Europe with cheaper natural gas imports from countries like Russia and Algeria.
Depending on continued political support, biogas has the potential to supply Denmark’s entire gas consumption by 2035, up from one-fifth now, according to Nature Energy Chief Executive Ole Hvelplund.
Nature Energy plans to produce 170 million cubic metres of gas from its ten plants this year, a tiny fraction of Europe’s total consumption.
Reporting by Jacob Gronholt-Pedersen; Editing by Jan Harvey