Biomethane is the upgraded form of biogas and is produced from organic feedstocks such as agricultural residues, livestock manure, municipal organic waste, crop residues, and industrial by-products. These materials are processed through anaerobic digestion, producing raw biogas, which is then upgraded and purified into methane that meets natural gas quality standards.
This process transforms waste materials into clean energy while reducing dangerous methane emissions that would otherwise escape into the atmosphere from unmanaged organic waste.
Biomethane is becoming one of the most important renewable energy solutions in Europe. It combines scalability, immediate usability, and strong emissions performance, making it highly attractive for industries, transport operators, utilities, and governments seeking near-term decarbonisation.
Biomethane, substantially purified methane chemically identical to natural gas, can be transported through existing pipelines, stored in existing systems, and used in existing infrastructure without modifications.
Unlike many alternative fuels that require new infrastructure, biomethane works within the current gas system, meaning it can be used for heating, electricity generation, industrial processes, and transport fuel applications without significant technical changes. This compatibility gives biomethane a major commercial and strategic advantage, making it one of the most practical renewable and sustainable fuels available today, with a potential for emission reduction of up to 80% compared with diesel or fossil gas, and in some cases can even achieve carbon-negative results, especially when produced from manure or certain waste feedstocks.
At the same time, biomethane supports the circular economy by converting waste, residues, and organic materials into valuable energy, and strengthens European energy security by reducing dependence on imported fossil fuels.
European demand for biomethane is accelerating rapidly, driven by regulation, climate policy, and rising carbon prices. The REPowerEU Plan, introduced after Russia’s invasion of Ukraine and driven by the need for independence from Russian gas imports, outlines a comprehensive roadmap for expanding renewable energy sources, including biomethane.
The REPowerEU Plan has set a target of 35 bcm of biomethane production by 2030, compared with current levels in Europe, which reached approximately 6.4-7 bcm per year in 2024, with further growth evident from 2024 towards 2025. By the end of 2024, around 1678 biomethane plants were in operation, and 165 new plants were added during the following year, with the main producing countries including Germany, Denmark, and France. This reflects the strategic importance of this renewable gas in reducing dependence on imported natural gas.
A key component of REPowerEU is the Biomethane Industrial Partnership (BIP), launched in 2022. The partnership brings together industry stakeholders, policymakers, and researchers to accelerate biomethane deployment and create favourable market conditions. Its objectives include increasing production capacity, reducing costs, and fostering innovation.
Other major demand drivers include RED II and RED III, which establish renewable energy targets in transport, heating, and industry, with RED III in particular setting sustainability criteria, renewable fuel mandates, and sector-specific obligations across EU Member States.
The EU ETS and ETS2 are also important demand drivers, which raise the cost of fossil fuel use through carbon pricing mechanisms. Specifically, under ETS2, smaller industrial facilities and gas consumers with thermal capacities below 20 MW will increasingly face carbon costs.
Biomethane demand is strongest in sectors where direct electrification remains difficult, expensive, or operationally impractical. It is important to clarify that transport accounts for the largest share at 23% of demand; construction and heating account for 17%, electricity generation for 15%, and industry for 13%. Heavy transport fleets, industrial heat users, and commercial gas consumers are expected to become increasingly important buyers.
Biomethane is therefore considered a regulatory compliance instrument and is traded with certificates such as Guarantees of Origin, which track renewable gas attributes, and Proofs of Sustainability, which demonstrate emissions savings under RED II and RED III. These systems are essential to prevent double-counting, verify the origin of feedstock, and ensure market trust.
Despite growing demand, the biomethane market faces structural barriers, and Europe remains fragmented, with different national rules about procedures, requirements, and regulatory frameworks. There is, in fact, no centralised market in Europe for biomethane certificates, and they are largely managed at the national level. Key registries include systems in Germany, France, Spain, the Netherlands, Denmark, and Switzerland. This fragmentation creates challenges for cross-border trade and increases the risk of double-counting, where the same unit of biomethane is claimed multiple times across different markets.
Aither supports participants in the European biomethane market through a range of commercial and compliance solutions.
Aither ensures that certificates are not just held for compliance purposes but are positioned as tradable assets with real market demand.
At the same time, Aither offers a range of other services that directly address the market complexity created by fragmented regulation and evolving compliance systems.
Biomethane is rapidly becoming a central pillar of Europe’s decarbonisation strategy and a highly valuable commodity.
It can simultaneously deliver immediate emissions reductions, energy security, waste management solutions, industrial decarbonisation, transport fuel compliance, and carbon cost mitigation.
The market offers significant opportunities for investors, industrial users, utilities, transport operators, and traders; however, it is fragmented, with varying certification systems and market structures.
Intermediaries like Aither can help companies navigate complexity and realise the greatest benefits from a constantly expanding market.