Sonja Mueller-Dib, managing director of Shell Energy Deutschland, said her company is planning two biomethane plants at Karstaedt and Steinfeld, which could meet up to 5% of current national biomethane consumption by the end of this decade.

Demand outstrips supply from industry and over 150 local power plants supplied by Shell for methane from organic residue such as manure, she said in an interview during the E-World of Energy trade fair in Essen.

"Our motivation is to supply the green molecule in large quantities and at competitive prices," Mueller-Dib said.

"The value of such products is higher than a pure natural gas product and that allows us the investment."

Biomethane can be used and stored for all the same applications as fossil fuel gas and will be sought after, the more carbon emissions costs rise.

She stressed there was no intention to use food crops for biomethane applications, which reach the transport, chemicals, automotive, steel and heat sectors, under food security guidelines that put human nutrition first.

In its RepowerEU plan issued after Russia's invasion of Ukraine in 2022, the European Commission said biomethane output should rise tenfold by 2030 to reach 35 billion cubic metres in order to replace part of the 155 bcm of gas it used to buy from Moscow.

Germany, Europe's biggest economy, produced 10.5 terawatt hours (TWh), or 1 bcm, of biomethane last year, still a tiny amount compared to national gas usage of 813 TWh.

But Shell's planned two plants, probably costing several hundred million euros, could each produce 200 to 250 gigawatt hours (GWh), eclipsing the current standard size of 50-70 GWh, Mueller-Dib said.

Shell last year acquired Danish biomethane producer Nature Energy for $2 billion.

"We can use our infrastructure position to ship biogas out of Denmark," she said, adding other future suppliers could be Poland, France, Spain and the Czech Republic.

(Reporting by Vera Eckert; Editing by Rachel More and Peter Graff)

By Vera Eckert