Italy's Snam Is Said to Sign Deal With Seat to Boost Biogas Cars

(Bloomberg) -- Italy’s Snam SpA signed a deal with Volkswagen AG’s Seat to invest in biofuel cars, as Europe’s biggest gas utility targets transportation as a top source for future growth.

Seat and Snam will jointly build infrastructure to enable the use of compressed natural gas and biomethane in the auto industry, according to a person familiar with the agreement who asked not to be named as the deal is not yet public.

The plan will focus on Italy, France and Austria, countries where both companies are already present.

1 Million Vehicles

Nitrogen oxide emissions from natural gas vehicles are about 75 percent lower than diesel-powered cars, but a lack of refueling infrastructure across Europe has thus far limited growth of the market. In Italy, about 1,300 refueling stations serve a market of about 1 million vehicles, according to the natural gas vehicle association.

“The key reasons why the market has not taken off yet are there are very few gas models being sold by carmakers and a very limited number of refueling pumps," said Bloomberg Intelligence analyst Michael Dean.

Italy’s Snam Enters Renewables With First Biomethane Deal

Snam already has deals with with Eni SpA and Api SpA to develop 250 filling stations in the coming years. The company will invest at least 200 million euros ($228 million) in energy-friendly initiatives including biomethane, according to its industrial plan to 2022 presented earlier this month. About 50 million euros will be specifically allocated to construction of methane and biomethane filling stations for cars and buses.

In July, Snam acquired a majority stake in Italian biomethane producer IES Biogas.

©2018 Bloomberg L.P.