The Economic Commission for Latin America and the Caribbean (ECLAC) participated in the virtual seminar “The Role of Regulation in Business Development ,” held in collaboration with the International Council of Swedish Industry (NIR) , the Swedish Environmental Research Institute , and the Government of Colombia , within the framework of the capacity-building program for biogas and biomethane in Colombia. This initiative seeks to strengthen the institutional, regulatory, technical, and market capacities of key stakeholders in the country, with the aim of promoting the development of an enabling environment for the use of biogas and biomethane in the context of a just energy transition.

Representing ECLAC were Ms. Silvia Saravia Matus , Economic Affairs Officer, Mr. Diego Fernández , Mr. Alfredo Montañez , and Mr. Pedro Chavaro , members of ECLAC's teaching team of experts in water issues. The presentation, entitled “Incentives and Regulatory Opportunities for the Energy Use of Biogas in Wastewater Treatment Plants: Regional Lessons Learned and Progress for Colombia ,” addressed the relationship between methane, sanitation, water transition, and energy transition, as well as the regulatory conditions necessary to transform recoverable methane into bankable projects.

The seminar was part of an extensive program, organized into four modules that combine virtual sessions, in-person workshops, case studies, presentations by national and international experts, networking opportunities, and a technical visit. The program covers topics such as the biogas context, the regulatory and public policy framework, technical aspects and business models, and implementation and inter-institutional collaboration.

During the presentation, ECLAC highlighted that wastewater treatment remains a significant challenge in Latin America and the Caribbean. Only 46% of wastewater is treated safely in the region, compared to 55.5% globally and over 80% in OECD countries. Furthermore, it was noted that one in four river sections in the region experiences severe pollution due to a lack of treatment, creating environmental and health risks for households and ecosystems.

ECLAC also underscored the importance of methane within the regional climate agenda. According to the presentation, methane emissions have increased by 40% since 1990 in Latin America and the Caribbean, making it the second most important greenhouse gas. In this context, approximately 10% of these emissions come from wastewater treatment, highlighting the need to incorporate circular economy approaches in the drinking water and sanitation sector.

The presentation highlighted that wastewater treatment plants can play a strategic role in reducing emissions and generating renewable energy. However, ECLAC emphasized that harnessing this potential requires overcoming technical, financial, and regulatory barriers, such as limited technical capacity, restricted access to long-term financing, and the underdeveloped regulatory frameworks specifically designed for biogas energy production.

During this session, the ECLAC Methane Calculator was also presented , a tool designed to support the identification of specific emission reduction opportunities in the sanitation sector. This tool allows for the rapid estimation of methane emissions, energy recovery potential, preliminary investment costs, and the financial viability of projects in wastewater treatment plants, using information such as treated flow rate, organic load concentration, and treatment technology.

In regulatory matters, the presentation highlighted that a wastewater treatment plant (WWTP) can capture methane and generate energy, but that its economic value depends on how the regulation allows for self-consumption, the sale or compensation of surpluses, connection to the grid, access to tax or financial incentives, recognition of investments and operating costs, and remuneration for electrical or environmental benefits.

ECLAC identified various mechanisms for valuing biogas in WWTPs, including self-consumption or self-generation to reduce energy costs, distributed generation with injection of surpluses into local networks, bilateral contracts, auctions or tenders, green certificates or attributes, and premiums or additional remuneration associated with benefits for the network or the environment.

The presentation also compared regulatory opportunities in different countries in the region. In Bolivia, opportunities were identified related to self-generation and distributed generation with compensation rules; in Colombia, to the framework for non-conventional renewable energy sources, self-generation, distributed generation, and tax incentives; in Costa Rica, to the favorable framework for renewables; in Mexico, to the electricity market, clean energy certificates, contracts, and isolated supply; and in Peru, to the regulatory framework for renewables, efficiency, and energy recovery from waste.

In the case of Colombia, ECLAC explained that biogas from wastewater treatment plants can be considered part of biomass and non-conventional renewable energy sources. Among the main opportunities identified are Law 1715 and Law 2099 as promotional frameworks, tax incentives, self-generation, distributed generation, the possibility of selling surplus energy, and compensation for benefits provided to the local distribution network.

However, ECLAC emphasized that the challenge for Colombia lies in transforming these opportunities into an implementable program. This requires coordination among energy, water, environmental, and financial regulations; clear rules for self-consumption and surplus management; tariff recognition of investments and costs; incentives that do not penalize efficiency; project aggregation to improve scale; and access to climate finance and bankable business models.

The presentation also included updates on the technical assistance requested from ECLAC by the Colombian Water and Basic Sanitation Regulatory Commission and the Ministry of Mines and Energy for the period 2024–2026. This technical assistance includes the technical and economic evaluation of the potential for methane gas utilization in medium- or intermediate-capacity municipal wastewater treatment plants; the identification and analysis of barriers, incentives, and regulatory mechanisms; and support in exploring international climate finance alternatives.

The presentation identified several barriers to the development of renewable energy projects in the water sector in Colombia. These included institutional barriers, such as complex procedures and a lack of coordination between water and energy regulators; regulatory barriers, such as limitations of the current tariff framework; technical and operational barriers, related to structural deficiencies in the operation of wastewater treatment plants and limited staff capacity; and financial barriers, linked to the absence of specific instruments and restrictions on access to credit for small and medium-sized service providers.

In response to these challenges, ECLAC put forward recommendations to advance a national financing strategy for non-conventional renewable energy and circular economy projects in the water and sanitation sector. These proposals included structuring financing mechanisms with terms aligned with the useful life of the assets, implementing specialized financial funds or revolving funds, coordinating tariff regulation, energy policy, and climate finance, and aggregating projects across sectors to improve scale and risk profile.

As final messages, ECLAC highlighted that regulation is the factor that makes recoverable methane a bankable project; that Latin America and the Caribbean already have useful mechanisms, although these are usually designed mainly from the electricity sector and not necessarily from the perspective of wastewater treatment plants; and that Colombia has a clear opportunity to adapt these instruments to the water and sanitation sector and scale up methane recovery projects.

ECLAC's participation in this seminar, organized by the International Council of Swedish Industry (NIR) , the Swedish Environmental Research Institute , and the Government of Colombia , facilitated the sharing of regional lessons learned, analytical tools, and public policy recommendations to advance an agenda focused on the circular economy, emissions reduction, energy efficiency, and improved wastewater governance. The session reaffirmed that methane recovery in wastewater treatment plants (WWTPs) not only represents an environmental opportunity but also a concrete alternative for reducing energy costs, mobilizing investment, strengthening institutional capacities, and contributing to a just energy transition in Colombia and the region.