Summary

A policy and financial analysis The European Union is the global leader in biogas production, with a production volume of 22.8 billion m3 in 2024. Most biogas is derived from the anaerobic digestion (AD) of organic materials such as energy crops, agricultural and food waste, and manure. Methane captured from landfills and sewage sludge also counts as biogas. Biogas is used for generating heat and power and is further upgraded into biomethane, which is comparable to fossil gas. Biomethane is injected into existing fossil gas grids – for use in households and businesses – and is used as transport fuel (as BioLNG). This report, commissioned by the Methane Matters Coalition, examines the current status of the biogas industry in the European Union (with specific attention to member states Denmark, Germany, Ireland, the Netherlands, Poland, and Romania) and in the United Kingdom. The report analyses the market developments in the EU as a whole and in the seven countries; the environmental impacts of biogas production; the regulatory frameworks applicable; the level at which regulations cover environmental impacts; public financing schemes for biogas; and bank and investor financing for a selection of biogas companies.

Development of the European biogas market

The development of the European biogas market is driven by a complex mix of political ambitions (increasing domestic energy production, ending gas imports from Russia, reducing greenhouse gas emissions, strengthening rural economies and recycling waste) and commercial interests of different economic sectors: the waste and livestock sector aim to generate income from their expensive waste and emissions problems, while fossil gas suppliers and consumers postpone investments in the energy transition by mixing fossil gas with biogas. Given these different interests, further growth of the European biogas sector – and especially the production of biomethane – is expected.

Project developers have until now committed to invest over EUR 28 billion in biomethane production development in the EU in the coming five years, cementing its expansion pathway Within the EU, Germany has been the leader in primary biogas production, while France, Italy, and Spain are rapidly developing the biomethane industry, producing biogas and then upgrading it to pipeline quality. Of the focus countries of this report, Germany, the United Kingdom and Denmark saw a strong growth of biogas production already in the past decades and are now experiencing some stabilisation. Growth is stronger in recent years in Ireland, the Netherlands and Poland, while the sector is still in its early stages in Romania.

Environmental and social impacts

While lauded as a renewable energy source by its proponents, the expansion of biogas production can create serious environmental impacts if environmental impact assessments are not properly conducted and expansion exceeds sustainable levels:

↘ Methane leakage: As methane is a very potent greenhouse gas, over 80 times as potent as CO2 over a 20-year period, the high leakage rates in the biogas supply chain may offset any potential climate benefits.

Biogas in the EU: A policy and financial analysis

↘ Local impacts: As methane is a precursor of ground-level ozone, leakages will contribute to air pollution, damaging human health, crops and the environment. Direct application of digestate to land may cause the release of methane and ammonia and the leaching and runoff of mineral nitrogen, affecting local waterways as well as nature. Odour nuisances and heavy traffic will also affect nearby communities.

↘ Incentivisation of industrial animal farming: Reliance on manure as a biogas feedstock creates an incentive for large-scale meat and dairy businesses that are based on poor animal welfare standards that are using enormous areas of arable land to grow feed crops. The methane and ammonia emissions from manure, combined with high enteric methane emissions and high GHG emissions because of land-use change for feed crops, together strongly diminish the positive climate impact of manure-based biogas.

↘ Using crops as feedstock: Using agricultural crops as feedstock is threatening food security and leads to monoculture expansion and GHG emissions caused by land-use change.

↘ Postponing the transition to sustainable energy systems: As it will be impossible to replace all present fossil gas consumption with sustainably produced biomethane, the mixture of biomethane with fossil gas will contribute to prolonging fossil gas dependencies and to postponing much-needed investments in a sustainable energy transition.

Regulatory frameworks in the EU relevant for biogas

At the European Union level, the following policies are most important for the biogas sector:

↘ The Renewable Energy Directive (RED III) mandates a 42.5% share of renewable energy in the EU’s energy mix by 2030. REDIII promotes the production of biomethane, its use as transport fuel and its injection into the existing fossil gas grid but discourages its use for electricity production.

↘ The REPowerEU plan outlines the target of producing 35 billion m3 of biomethane annually by 2030.

↘ The Waste Framework Directive obliges separate bio-waste collection and prioritises its conversion into compost or biogas.

↘ The Landfill Directive requires the pre-treatment of waste before sending it to a landfill and encourages biogas production through anaerobic digestion of organic waste.

↘ The Nitrates Directive limits spreading digestate (a byproduct of biogas production) across arable land, but a proposed amendment would allow higher nitrogen levels if digestate is processed into so-called RENURE fertilisers.

↘ A proposed amendment to the Energy Taxation Directive sets a favourable tax rate for biogas and renewable energy sources.

↘ The Alternative Fuels Infrastructure Regulation promotes refuelling points for heavy-duty motor vehicles using BioLNG.

↘ The EU Taxonomy aims to direct public and private investments towards a list of “sustainable” activities, which includes biogas and biomethane production for use as transport fuel.

↘ The Corporate Sustainability Due Diligence Directive fosters responsible corporate behaviour in global value chains, including the imports of feedstocks and feed crops for animal farming.

National biogas policies

The six EU member states considered for the analysis have transposed the mentioned EU directives into their national legislations or are in the process of doing so. The United Kingdom, post-Brexit, retains legacy EU laws such as the Nitrates Directive but is also crafting a new Future Policy Framework for bioenergy. All seven countries look favourably towards biogas as a component of their future energy mix, but the levels of enthusiasm and support vary. The most ambitious production growth targets seem to be set in the UK (3-4 billion m3 per year by 2050), Ireland (572 million m³ per year by 2030) and the Netherlands (2 billion m³ per year by 2030).

Most countries focus attention on the upgrading of biogas to biomethane and injecting it into the fossil gas grid, with Denmark being most ambitious by aiming to increase the share of biomethane in the gas grid to 100% in 2030. Germany, although at present leading biogas production in the EU, has no clear expansion plans. Poland aims to increase biogas production by reducing permitting requirements and by introducing various support schemes. Romania has a more modest goal of a 5% share of biomethane in the national gas grid in 2030, to be increased to 10% by 2050.

European Union regulations do not address the environmental and social impacts linked to biogas production in a comprehensive way:

↘ Methane leakages: RED III requires the lifecycle GHG emissions of biofuels (including BioLNG) to be at least 65% lower than those of conventional fuels. But the assessment methodology does not take into account that methane leakages are difficult to measure and ignores GHG emissions linked to livestock farming and to locking in existing fossil gas infrastructure.

↘ Waste: The Waste Framework Directive and the Landfill Directive address methane leakages from landfills by promoting the separate collection of organic waste for use in biogas production and requiring pre-treatment of waste before being sent to a landfill.

↘ Local impacts: Water pollution and soil health issues related to biogas production are addressed in the Nitrates Directive, but the proposed amendment on higher nitrogen levels for so-called RENURE fertilisers risks strong negative impacts on waterways, nature and health. The EU Taxonomy labels post-composting of digestate as the preferred option. The Environmental Impact Assessment (EIA) Directive and the Industrial Emissions Directive (IED) address topics such as odour, air quality, and human health, but without specific biogas criteria. Moreover, the absence of intensive cattle livestock farming from the IED creates a regulatory gap.

↘ Incentivisation of industrial animal farming: RED III stimulates the use of manure for biogas and the European Agricultural Fund for Rural Development (EAFRD) supports farm-based biogas financially. As no impact assessment was done for the REPowerEU goal to increase annual biomethane production to 35 billion m3, this policy risks that manure is increasingly used as a feedstock for biomethane.

↘ Using crops as feedstock: RED III still allows the use of (energy) crops to produce biogas, but discourages these feedstocks for transport fuels. The EU Taxonomy excludes crops for biogas production, but the REPowerEU plan still allows their use as feedstock.

↘ Postponing the transition to sustainable energy systems: RED III, AFIR and the EU Taxonomy incentivise injecting biomethane in the EU gas grid and using liquefied biomethane in the current transport infrastructure. All EU policies ignore that locking-in fossil gas infrastructure could lead to the postponing of the energy transition and prolong the demand for fossil gas.

With regard to specific national regulations, Denmark and the UK have policies which address methane leakages in biogas production and transport and Ireland is planning a regulation that specifically deals with the localised impacts of biogas production. None of the seven European countries discourages the use of manure for biogas production, although the climate benefits of this form of biogas are questionable because of enteric fermentation and land-use change.

On the contrary, Germany, Ireland, the UK and the Netherlands are actually promoting the use of manure for biogas production. Limits on the direct use of food and other crops for biogas production – which threatens food security and leads to monoculture expansion and GHG emissions caused by land-use change – exist in Denmark, Germany, Romania and the United Kingdom. None of the seven countries have a policy to address the impact that promoting biomethane could have on postponing the transition to sustainable energy systems.

Public financing for biogas

At the EU level, no specific funding mechanisms have been developed to support biogas and biomethane production, consumption, and trade. But we found the following EU funds subsidising biogas plants in some of the member states researched:

↘ EU Modernisation Fund: Poland and Romania

↘ European Agricultural Fund For Rural Development: Germany

↘ European Funds for Infrastructure, Climate, Environment programme (FEnIKS): Poland – financed from the EU Cohesion Fund and the European Regional Development Fund

On the national level, all seven countries – except for Romania – offer subsidies or other forms of financial support to biogas producers.

Feed-in Premiums and Feed-in Tariffs – which guarantee a higher price for biomethane supplied to the gas grid than the price of fossil gas – are being used in Germany, the Netherlands, Poland and the United Kingdom. Direct biogas subsidies are available in Denmark, Ireland, the Netherlands and the United Kingdom.

More and more major European oil & gas, meat and dairy, and utility companies are active in the biogas sector. We identified 40 of the most important companies in this respect and listed their present or planned production capacities, located in several European countries and sometimes outside Europe.

Separately, we identified the largest dedicated biogas companies in the seven countries researched, which are mostly independent companies originating from the agricultural, livestock and waste sectors. Private financing of biogas companies We found that the main banks of the major European oil & gas, meat and dairy, and utility companies that are active in the biogas sector, are:

↘ Oil & gas companies: Citigroup (US), Barclays (UK) and BNP Paribas (France)

↘ Meat and dairy companies: HSBC (UK), BNP Paribas (France) and JP Morgan Chase (US)

↘ Utilities: Deutsche Bank (Germany), Société Générale (France) and BNP Paribas (France)

Focusing on the largest biogas companies in each of the seven European countries, we could find private credits provided to eight companies for a total amount of almost EUR 9.5 billion in the period 2016-2025. The largest financiers are NatWest (United Kingdom), BNP Paribas (France), and Santander (Spain). For five biogas companies we identified investments in their shares and bonds, with a total value of EUR 9.3 billion (May 2025). The most significant investors in these biogas companies were BlackRock (United States), Lazard (Bermuda) and Pictet (Switzerland).

Recommendations to EU and national-level policymakers

Based on the findings of this report, the Methane Matters Coalition recommends EU policymakers to conduct an immediate environmental impact assessment of RePowerEU and appropriately regulate the biogas sector to maximise the application of best practices and minimise environmental harm along the supply chain.

Concretely, this means:

↘ Reconsider the 35 billion m3 biogas and biomethane target set by REPowerEU after a proper impact assessment, to avoid locking in unsustainable production practices and land-use impacts.

↘ Define where biogas should be used: for peak load electricity production, for heavy industry and for aviation. Biogas should not be used for heating, baseload electricity and road transport, as better alternatives exist.

↘ Ban food and feed crops as acceptable biogas feedstocks from RED III and other policies, to avoid contributing to food insecurity, monoculture expansion, and indirect land-use change.

↘ Limit the use of manure as biogas feedstock in RED III, REPowerEU and other policies and make reduction of the number of livestock the leading policy goal, to avoid perpetuating the environmental and animal welfare harms of the current animal protein sector, moving instead towards agroecological farming models.

↘ Reduce methane emissions from landfills, among others by making sure that the pre-treatment of waste prior to landfilling, mandated by the Landfilling Directive, is implemented and enforced by member states.

↘ Do not increase the nitrogen limit for RENURE in the Nitrates Directive, as this is incompatible with environmental and water protection goals.

↘ Mandate in the Nitrates Directive the post-composting of digestate (what remains of the feedstock after biogas production) before its application on land to reduce risks of water pollution.

↘ Stop and reverse the Omnibus Package for the CSDDD, as the ‘simplification’ of sustainability regulations would make sustainable biogas production more difficult to achieve.

The Methane Matters coalition further recommends policymakers in all seven European countries take all necessary steps, by implementing relevant EU regulations and by supplementing those with additional criteria and safeguards, to regulate the biogas sector and maximise the application of best practices, preventing environmental harm along the supply chain. In the report, this general recommendation is further specified in specific recommendations for the policymakers in each of the seven countries.