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The Industry & Energy Transition Index: Portugal

Renewable molecules adoption

Progress in terms of biomethane, biofuels, and green hydrogen adoption

Biogas production is estimated to have reached 930 gigawatt hours (GWh) in 2022. However, only one plant is producing biomethane today, at quantities of 1.2 GWh per year. The announced projects for 2025 represent approximately 670 GWh. In any case, Portugal is still very far from achieving the 2030 PNEC’s 2,700 GWh target for biomethane production, and even farther from its estimated potential of 6,900 GWh.¹

Advanced biofuels in the transport sector (according to the EU RED III directive calculation framework) only accounted for 2.6 percent in 2022, but the minimum that the directive defines for 2030 is 5.5 percent. Unlike Spain, Portugal has not defined a more ambitious target than the European Union for this specific indicator in its PNEC. It does have two other targets (one in PNEC and another set by a 2023 law), but neither of them has been updated yet to reflect the latest eligible feedstocks and calculation standards outlined in the Directive.

Green hydrogen installed capacity is currently 0.3 megawatts (MW). A 100 MW project under construction in Sines puts the country ahead of its target’s trajectory. The pipeline of announcements is long—about 4,000 MW, above the 3,000 MW target for 2030.²

Subindicators

Biomethane | Biofuels | Green hydrogen

Indicator definition

The renewable molecules adoption indicator is the combination of three subindicators: (1) production of biomethane in final investment decision (FID), construction, or operation; (2) share of biofuels in transport; and (3) green hydrogen capacity in FID, construction, or operation.

Progress assessment

Each subindicator’s progress is calculated against official targets (PNEC or national roadmaps). The umbrella indicator takes the results of the three subindicators in equal proportion, that is, one-third each.

As two out of three subindicators are lagging, the umbrella indicator is lagging.

Methodological note: There is a lack of clear historical data from official public sources. As a result, the historical data points—necessary for plotting trajectory curves—were estimated using the best available public data. Considering the importance of these targets and the need for transparent tracking, we expect that the development of new public data sources could provide regular reporting on progress.

Biomethane

Biomethane production is almost zero in Portugal, but the project pipeline is set to increase in 2025.

Subindicator definition

Production of biomethane in Portugal, independently from feedstock types, in terawatt hours (TWh), in final investment decision (FID) post-permitting phase, ongoing construction, or operation.

Progress assessment

The most recent production in FID, construction, or operation is 0.0162 TWh in 2024, based on Gasnam data. A curve for operational capacity was first drawn between 2024 and 2030, starting at today’s installed capacity of 0.0012 TWh (one plant of Dourogas) and ending at PNEC’s 2.7 TWh target. This curve takes an exponential shape, with a few steps according to the biomethane action plan (a first target of 0.44 TWh in 2026 and a different speed after 2030). A second curve was drawn for FID, with the same configuration and parallel to the first curve, with a one-year period between the two curves.³ The progress assessment is focused on this second curve: in 2024, there is 0.0162 TWh of FID or construction or operational biomethane production, when the on-track range suggests it should be between 0.0184 and 0.0276 TWh (considering a standard deviation of 20 percent)⁴ to meet the production targets one year later. The assessment is therefore lagging.

Biofuels

Biofuels adoption is lagging 2030 target trajectories, under the minimum levels from the European directive.

Subindicator definition

Share of renewable fuels of nonbiological origin and advanced bios or biogas in total fuels used in the transport sector, following the EU directive promoting the use of energy from renewable sources (Annex IX, part A).

Progress assessment

The most recent share is 2.6 percent in 2022, based on the SHARES submissions to the European Commission. To assess progress, a linear curve between 2021 and 2030 is considered, being the arrival reference of the European Union’s directive minimum target of 5.5 percent (as there is no other national target). To that curve, a defined buffer of 10 percent is removed or added to create an on-track range.⁵ The indicator is lagging.

Green hydrogen

Capacity for green hydrogen that is in or near operation is ahead of the curve, driven by the 100-megawatt project in Sines.

Subindicator definition

Renewable or green hydrogen capacity in GW in final investment decision (FID) post-permitting phase, ongoing construction, or operation.

Progress assessment

The most recent capacity in FID, construction, or operation is 103 MW (or 0.1 GW) in 2024, based on our own hydrogen project tracker.⁶ A curve for operational capacity was first drawn between 2024 and 2030, taking into account today’s installed capacity of 0.3 MW (or 0.0003 GW), as well as the PNEC’s 3.0 GW target. This curve takes an exponential shape, with delayed adoption closer to the target’s timing. A second curve was drawn for FID, with the same configuration and parallel to the first curve, with a two-year period between the two curves.⁷ In practice, the FID curve reaches the 3.0 GW cumulative capacity target in 2028 instead of 2030. The progress assessment is focused on this second curve: in 2024, there is 0.1 GW of FID per construction or operational hydrogen capacity, but the on-track range suggests it should be between 0.0015 and 0.0022 GW (considering a standard deviation of 20 percent)⁸ to meet the production targets two years later. The assessment is therefore leading.

_{¹ “Biomethane production potentials in the EU,” Gas for Climate.

² Hydrogen project tracker based on press announcements.

³ Our analysis suggests a one-year period between FID and operations.

⁴ Base standard deviation for our analysis is 2014–19; in this case, 20 percent was used due to lack of data and to capture higher variability.

⁵ In this case, 10 percent was used due to almost nonexistent variability in the historical values.

⁶ No official data source reports on this target—a project tracker was built based on public information in the press.

⁷ Our analysis suggests a two-year period between FID and operations.

⁸ Base standard deviation for our analysis is 2014–19; in this case, 20 percent was used to capture higher variability related to nascent technology, such as hydrogen.}

Detail view

Energy transition KPIs

Greenhouse gas emissions reduction Renewables in energy mix Electric vehicle sales Renewable molecules adoption Energy dependency Network readiness Household electricity prices Industry electricity prices

Industrialization KPIs

Industrial gross value added Vehicle production Investment in fixed assets R&D investment Industry employment Industry exports