Goldman Sachs Asset Management announced today the launch of Verdalia Bioenergy, a new biomethane-focused business, aimed at addressing opportunities created by the secular trends in Europe of decarbonization and energy security.
Under the new platform, Goldman Sachs stated that it aims to deploy more than €1 billion in biomethane in Europe over the next four years.
Commenting on the launch of the new platform, Matteo Botto Poala, Managing Director in the Infrastructure business within Goldman Sachs Asset Management called biomethane “one of the most compelling segments in the energy transition for infrastructure investors.”
Biomethane, or renewable natural gas (RNG), is expected to play a critical role in the transition to cleaner energy sources, particularly for sectors in which energy solutions such as wind or solar are less practical. Biomethane is produced from organic waste, such as agricultural, industrial, and household wastes, and is chemically identical to fossil-based natural gas, enabling it to support the decarbonization of hard-to-abate sectors such as road transport and heavy industry, without needing to replace existing transmission and distribution infrastructure.
In addition to providing the benefits of fossil gas without its carbon emissions, biomethane also helps avoid methane emissions that would be released through the decomposition of organic waste.
The expansion of biomethane production capacity forms a key plank of the EU strategy to transition to a climate neutral economy and boost energy independence. In May 2022, the EU Commission launched REPowerEU, its plan to rapidly reduce its reliance on Russian fossil fuels, while accelerating the transition to clean energy. As part of its strategy, the EU announced the Biomethane Action Plan, setting out tools and incentives aimed at ramping biomethane capacity across the EU to 35 bcm by 2030, roughly 10x current capacity.
According to industry sources cited by Goldman Sachs, the biomethane capacity increase outlined under the EU plan would require investments of approximately €80 billion.
Tavis Cannell, Global Co-Head of Infrastructure within Goldman Sachs Asset Management, said:
“Goldman Sachs Asset Management has a long history of creating and building scaled players within the green energy space. We are excited to contribute to the energy transition bringing much needed biomethane supply to Europe, which will support the continent’s decarbonization and energy security agenda.”
Goldman Sachs stated that Verdalia Bioenergy aims to become a leading biomethane operator. The business will focus on developing, acquiring, building and operating biomethane plants, investing in both early-stage development projects and larger operational assets, starting in Spain and expanding across Europe.
Verdalia will be led by Fernando Bergasa and Cristina Avila, who have been serving as founding partners and Co-CEOs of energy transition-focused private equity firm Idalia Capital.
“Renewable gas will be a key tool for Europe to achieve its commitment to be carbon neutral by 2050. We are looking to acquire mid- to late-stage development projects and operational assets across Europe as we pursue our vision of developing Verdalia Bioenergy into a leading European player in the biomethane industry.”