How biomethane procurement in Europe can help you achieve decarbonisation goals
Understanding biomethane: A comprehensive guide for stakeholders
Source biomethane certificates today
Identify and act on opportunities to reduce natural gas emissions
Meeting ambitious climate goals and scaling operations do not have to be in conflict. The urgent reality of the climate crisis demands immediate global action to address rising greenhouse gas emissions and limit global temperature rise. The advent of biofuels such as biomethane enables organisations such as chemical developers, construction material manufacturers, food and beverage manufacturers, and large consumer goods companies to expand their output with a low-carbon or, in some cases, net-zero fuel source.
In particular, biomethane stands out as an attractive option for industry given its ability to be used as a direct substitute for natural gas, while also allowing for contracts that stabilise supply and pricing, all while supporting decarbonisation goals. Biomethane procurement can play a key role in helping organisations meet their climate targets by providing a measurable pathway to reduce emissions in line with international agreements like the Paris Agreement.
In this guide to biomethane procurement in Europe, we’ll examine key areas including:
- What is biomethane and how is it produced?
- Why is biomethane a strategic choice for European industry?
- What are the key applications of biomethane across industrial sectors?
- What are the biomethane procurement options in Europe?
- What are the main challenges and considerations in biomethane procurement?
- Importance of working with advisors for biomethane procurement
What is biomethane and how is it produced?
Biomethane is a renewable alternative to fossil/geologic natural gas. This climate-friendly fuel source typically stems from biogas, which is created by the anaerobic digestion of organic materials. The volume of biogas produced comes from various sources such as landfills, wastewater treatment plants, and anaerobic digesters, with production capacity influenced by feedstock availability and technology. The biogas is then usually cleaned or upgraded into biomethane by increasing the concentration of methane to 95%+ to create a fuel source that is generally interchangeable with natural gas.
As such, biomethane can be directly injected into national natural gas pipelines or shipped directly to gas consumption sources, such as heaters or boilers at an industrial facility. Energy crops like maize and barley are also used as feedstock for biogas production, supporting the growth of renewable gas markets.
Source: European Biogas Association
What is the difference between biogas vs. biomethane?
Biogas and biomethane have different chemical compositions and thus different uses and environmental impacts. However, they share the similarity of being renewable gases, and biomethane is typically created by transforming biogas.
Biogas is usually created by capturing the gas that comes from the decomposition of organic matter in landfills or by using anaerobic digesters to capture gas from organic waste at food processing plants, agricultural facilities, or wastewater treatment plants. Waste disposal is a key aspect of this process, as proper management and treatment of waste at these facilities enable the effective capture and utilization of biogas.
This biogas is composed primarily of methane and carbon dioxide, along with some other trace compounds and elements. In some cases, biogas is injected directly into a gas engine to create electricity. It could also be used in local power markets as a limited electricity or heating source.
However, because biogas has a large proportion of compounds besides methane, it needs to be purified in order to become a sufficient substitute for natural gas. To increase the concentration of methane to upgrade biogas into biomethane, most of the CO2 and other elements are extracted.
Biomethane can also be produced by gasification, where solid biomass is broken down at a high temperature, cleaned, and then a catalyst is used to form methane. Another process involves using renewable electricity, known as power-to-methane or power-to-gas, which consists of using a renewable power source like solar to conduct electrolysis, which splits water into hydrogen and oxygen. That hydrogen can then be combined with CO2 from a biological source — perhaps even the CO2 removed from biogas after anaerobic digestion for greater circularity — which results in nearly pure methane that can be used as a biogenic fuel source.
Why is biomethane important for climate action?
Biomethane is important for climate action because it enables organisations to decarbonise hard-to-abate natural gas emissions. Because biomethane production processes use renewable feedstock, the resulting emissions from using this fuel are considered to be part of the natural carbon cycle.
In comparison, traditional natural gas comes from fossil fuels that are extracted from deep beneath the Earth’s surface or seafloor, which can be disruptive to local ecosystems, in addition to contributing to unsustainable levels of greenhouse gas emissions.
While the exact greenhouse gas accounting practices for biomethane in Europe vary according to regulatory authorities or voluntary disclosure schemes, biomethane is generally regarded as a low-carbon or net-zero fuel source. Tracking greenhouse gases and GHG emissions is essential for building accurate carbon inventories and informing climate strategies. The GHG Protocol directly supports organisations in constructing emissions inventories and setting science-based targets.
Its GHG Protocol scopes—scope 1, scope 2, and scope 3—categorise emissions across direct operations, purchased energy use, and the broader value chain, helping organisations understand and manage their total impact. GHG accounting standards, such as the Greenhouse Gas Protocol Corporate Standard, provide the basis for consistent and transparent reporting. Corporate accounting for emissions is crucial for meeting sustainability commitments and ensuring accountability. Tracking energy use is a key component of emissions reporting, especially under frameworks like the UK’s Streamlined Energy and Carbon Reporting (SECR) and the GHG Protocol.
Robust reporting practices help organisations mitigate emissions and demonstrate progress towards climate goals. Evaluating emissions across the entire value chain, including supply chain and product lifecycle, is vital for comprehensive climate action.
Understanding emissions reporting for decarbonisation
Accurate emissions reporting is a foundational step for any organisation aiming to achieve meaningful greenhouse gas reductions and meet decarbonisation targets. By systematically tracking greenhouse gas emissions, companies gain a clear understanding of their carbon footprint and can identify the most effective strategies to reduce emissions across their operations and value chains.
The Greenhouse Gas Protocol (GHG Protocol) is the globally recognised standard for measuring and reporting greenhouse gas emissions. Developed by the World Resources Institute and the World Business Council for Sustainable Development, the GHG Protocol provides a comprehensive framework that enables companies to account for emissions from all relevant sources, including direct operations, purchased energy, and supply chain activities.
Using the GHG Protocol ensures that emissions data is transparent, consistent, and comparable, which is essential for managing emissions and demonstrating progress toward climate goals. This process not only supports compliance with regulatory requirements and voluntary sustainability commitments, but also empowers organisations to make informed decisions about decarbonisation investments—such as procuring renewable gas like biomethane.
By adopting robust emissions reporting practices in line with the GHG Protocol, companies can more effectively mitigate climate change, reduce their reliance on fossil gas, and position themselves as leaders in sustainability. Ultimately, transparent and accurate emissions reporting enables companies to track their progress, communicate their achievements, and drive continuous improvement in their journey toward a low-carbon future.
Why is biomethane a strategic choice for European industry?
Companies that are typically heavy users of natural gas can take advantage of the green gas market in Europe for a mix of environmental, compliance, financial, and reputational factors. Decision makers play a crucial role in evaluating biomethane procurement options to ensure alignment with sustainability goals and operational needs.
While some decarbonisation initiatives require overhauls of existing processes, biomethane provides a drop-in solution for fueling thermal applications, transportation, and other operational areas that rely on natural gas. Biomethane can be integrated into existing infrastructure, such as the gas grid and gas network, making adoption more cost-effective and straightforward. Alternatively, in situations where physical delivery of biomethane is impractical, organisations can purchase biomethane certificates to claim the environmental attributes of biomethane production in Europe.
Specifically, key biomethane benefits include the following:
- Enables decarbonisation without major changes to current systems
- Compatible with existing infrastructure, including the gas grid and gas network
- Supports emissions reduction targets
- Provides a renewable energy source for the transport sector, offering a sustainable fuel alternative for vehicles and reducing emissions in transportation
- Enhances energy security and supply diversification
Biomethane helps organisations align with global decarbonisation goals, given that sustainable biomethane feedstocks such as agricultural waste provide a biogenic alternative to fossil inputs.
Direct usage of biomethane enables organisations to reduce scope 1 emissions that would otherwise come from on-site combustion, and biomethane certificates similarly enable organisations to claim these environmental attributes.
While certain accounting frameworks such as from the Greenhouse Gas Protocol (GHGP) and CDP have not yet issued final guidance on using biomethane certificates — also known as renewable thermal certificates (RTCs) in the U.S. or renewable gas guarantees of origin (RGGOs) in the U.K.— some voluntary and government compliance standards allow for a direct reduction in scope 1 emissions, similar to the usage of guarantees of origin (GOs).
The biomethane market fills an important gap in decarbonisation strategies, as not all industrial processes can be efficiently or effectively electrified.
For example, food and beverage manufacturers might rely on gas-powered cooking equipment that may not have an electric equivalent, or the manufacturer might be concerned that an electric version would affect product quality, given that the heating process is not always identical.
So, replacing these hard-to-abate natural gas emissions with biomethane provides a sustainable alternative.
By definition, natural gas from fossil fuels is finite and only exists in specific locations, whereas biomethane is renewable and can theoretically be produced anywhere.
Corporate buyers may face a constrained supply of natural gas, such as due to geopolitical conflicts, which can also lead to price volatility. In contrast, biomethane production in Europe can ramp up wherever there are willing project developers, and biomethane purchase agreements can be used to secure a multi-year supply at a fixed price.
As such, biomethane has greater scalability and can be more cost-effective in the long run. Even if there is a green premium, the cost of using biomethane could be more affordable than engaging in other strategies like electrification.
Being an early adopter of biomethane supports market development of this more sustainable fuel source and ultimately helps move Europe toward a circular economy, where waste becomes energy. The Paris Agreement, by setting long-term climate targets such as limiting global temperature rise to 1.5°C, is a key driver for increasing biomethane production and supporting emissions reduction goals.
For example, achieving the REPowerEU biomethane target of producing 35 billion cubic metres of biomethane in the EU by 2030 is a more than 10-fold increase from the amount produced in the EU when the goal was set in 2022, according to the European Biogas Association. The Renewable Energy Directive plays a crucial role in harmonizing certification systems and supporting the growth and cross-border transferability of renewable energy, including biomethane, across the EU. That requires sufficient demand to justify the build-out of biomethane plants, with an estimated investment of €37 billion, according to the European Commission. The RED II directive further strengthens the framework for biomethane certification by introducing Guarantees of Origin and establishing a Union Database for European biomethane GOs and Proof of Sustainability, facilitating unified certification and market access.
The added revenue from selling biomethane certificates can incentivise project developers to install anaerobic digesters at facilities such as wastewater treatment plants, so the more organisations purchase these certificates, the more the EU can move towards a cleaner, independent fuel source.
In some countries within the EU, biomethane can be used for zero-emission claims under the European Emissions Trading System (EU ETS).
While biomethane policy in the EU remains a work in progress, recent efforts to standardise certificates and allow for more cross-border trading — exemplified by the ERGaR Certificate of Origin and AIB gas schemes — could enable more organisations to stay compliant with the EU ETS and avoid the costs associated with exceeding emissions limits.
Biomethane purchase agreements can also potentially provide financial savings or at least hedge against volatility.
For example, a fixed-price biomethane purchase agreement that involves physical gas delivery — either direct or through a pipeline mixed with other gas sources — provides a hedge against fluctuations in natural gas prices. Even if that does not result in net savings, companies may prefer being able to rely on fixed energy prices when making financial forecasts.
With book and claim gas purchase agreements, where organisations buy the environmental attributes associated with biomethane but do not take delivery of the gas, an indexed price provides a hedge against price fluctuations in the biomethane certificate market. This helps organisations manage pricing around decarbonisation strategies.
3Degrees strengthens European biomethane solutions with ISCC EU certification
What are the biomethane procurement options in Europe?
Biomethane procurement options in Europe include three approaches:
Certificates without gas delivery
One option is to purchase biomethane certificates without the associated gas delivery. This approach follows the book and claim model, where the organisation buys the certificates to claim the environmental attributes associated with biomethane, without directly using the gas. Still, the purchase supports climate action by financing the development of biomethane projects, enabling the buyer to claim a reduction in its own greenhouse gas emissions according to some accounting methodologies. Additionally, biomethane procurement can support alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), as it provides a structured approach to emissions reporting and helps organisations meet TCFD-aligned climate risk disclosure requirements.
The book and claim model includes two types of purchases:
- Unbundled biomethane certificates: Buying unbundled biomethane certificates means procuring environmental attribute certificates (EACs) that are not tied to delivery of the associated physical biomethane. The buyer continues to purchase natural gas from their utility but may be able to claim a scope 1 or scope 3 emissions reduction.
- Direct contract: A direct contract is a virtual gas purchase agreement that enables organisations to procure a long-term supply of EACs, often at a fixed price. This enables project developers to receive a guaranteed offtake for a given amount of biomethane that they then inject into the grid but which isn’t directly delivered to the contract buyer.
Pipeline delivery
Another biomethane procurement option in Europe is known as mass balance, which involves physical biomethane purchase agreements (BPAs). These agreements involve buying biomethane along with the associated certificates to claim the environmental attributes.
However, the actual biomethane molecules are not directly received by the buyer. Instead, the developer injects the contracted amount of biomethane into the grid that already contains natural gas. Since the molecules in the grid mix together, it’s not about taking physical delivery of the biomethane but instead contracting to inject a certain amount into the grid to balance the buyer’s gas usage. In contrast, a virtual BPA procures biomethane that could be injected into an entirely different grid than the one the buyer uses.
Direct delivery
Organisations can also buy biomethane in Europe through direct delivery, also known as the behind-the-meter model. With direct delivery, the physical biomethane molecules are separated and consumed by the buyer, which typically requires an on-site biomethane production facility, or a private pipeline or tankers bringing in the gas from a nearby plant. Because this biomethane is directly used in operations and replaces natural gas, it can reduce scope 1 emissions under most greenhouse gas accounting frameworks and regulatory standards.
What are the main challenges and considerations in biomethane procurement?
While there are many biomethane benefits, there can be some challenges and complexity involved with biomethane procurement, such as in the following areas:
Regulatory uncertainty
One of the top biomethane challenges in Europe relates to regulatory uncertainty. Different countries within the EU and other parts of Europe have their own rules around using biomethane certificates to decarbonise. Not all countries allow for biomethane certificates to offset natural gas emissions under the EU ETS, for instance, and even when it is allowed, cross-border trading of the certificates remains limited.
Understanding how biomethane procurement fits into local regulatory regimes might factor into decisions like procuring direct delivery of biomethane vs. unbundled certificates.
Market volatility and lack of liquidity
Because the biomethane market is still fragmented, there can be pricing volatility and limited liquidity, in terms of matching buyers and sellers. While a biomethane purchase agreement can remove pricing volatility once the contract is secured, those without a contract or who want to procure more may find that prices quickly change, and the limited liquidity can make price transparency difficult.
Feedstock reliability
Related to the pricing and liquidity issues, there can be biomethane challenges related to feedstock reliability. While the inputs are renewable, the availability and quality of the feedstock can differ. To qualify for Proof of Sustainability (PoS) documentation, which verifies the sustainability of biofuels, as required in many EU member states, buyers need to ensure that the feedstock comes from sources that contribute to a low-carbon economy. For example, some biomethane feedstock, like solid biomass turned into biomethane via gasification, may be of low sustainability quality, due to clearing forestry specifically to create the gas, rather than using waste that would have occurred regardless of biomethane production.
Green premium cost
Another consideration is that biomethane generally carries a green premium. As biomethane production in Europe scales, affordability should improve, but for now, especially when purchasing biomethane certificates, there’s typically an added cost above natural gas rates.
Limited supply
Biomethane has a limited supply, given that there are only so many facilities built to convert waste into this renewable gas. Biomethane market trends in Europe point to a growing supply, especially if the EU is going to reach the REPowerEU biomethane target by 2030. For now, though, biomethane isn’t always as readily available as natural gas.
Importance of working with advisors for biomethane procurement
Given the many challenges and considerations around biomethane procurement and the strategic importance of decarbonisation, it is prudent to work with an experienced advisor.
The right partner can help you in several areas, such as:
- Identifying the right biomethane procurement option between book and claim, mass balance, and direct delivery
- Building a biomethane procurement strategy that meets the needs of a multinational corporation with different energy needs across different markets
- Modeling the financial and emissions impact of a biomethane purchase agreement or direct delivery of biomethane
- Guiding you through regulatory, legal, and environmental accounting nuances of biomethane usage
3Degrees recently secured International Sustainability and Carbon Certification (ISCC) EU certification for our biomethane solutions, meaning we can offer clients biomethane certificates that provide robust assurance and traceability for renewable energy strategies.
Want to learn more about the best biomethane procurement option for your organization? Reach out to us today.
FAQs about biomethane in Europe
Want some quick answers to frequently asked questions about biomethane in Europe? Take a look at the following:
The EU’s 2030 biomethane target, as part of the broader REPowerEU plan, is to produce 35 billion cubic metres (bcm) of biomethane in the EU by 2030, compared to the approximately 3 bcm produced in the EU around the time this goal was set in 2022, according to the European Biogas Association.
The most recent data from Q1 2025 from the European Biogas Association finds that the number of biomethane plants in Europe reached 1,678, up from 1,548 the year prior. Installed production capacity grew to 7 billion bcm annually, a 9% increase from the past year, but perhaps not fast enough to be on track for the EU’s 2030 biomethane target.
Biomethane can be produced through many different types of waste sources, such as animal manure, food waste, and agricultural residues. Naturally, these waste sources release methane during decomposition. By capturing the methane in an anaerobic digester and then separating out other compounds, the resulting biomethane can be used as a natural gas replacement, given its chemical similarity, if not identical composition.
3Degrees Group, Inc. (“3Degrees”) is a Commodity Trading Advisor registered with the United States National Futures Association. These materials are provided as general information only. Nothing contained in the material constitutes investment, legal, tax or other advice. Any projections, market outlooks or estimates contained in this material constitute forward-looking statements, and are based on certain assumptions and subject to certain known and unknown risks. Accordingly, such forward-looking statements should not be relied upon as being indicative of future performance or events–past performance is not indicative of future results. 3Degrees encourages you to carefully consider whether a transaction is suitable for you based upon your particular circumstances.
The information contained herein has been given in good faith and every effort has been made to ensure its accuracy. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. 3Degrees accepts no responsibility for any losses, whether sounded in tort, contract, negligence, or otherwise, directly or indirectly resulting from any reliance placed on any part of the contents of these materials and disclaims any liability for its accuracy or correctness, including as to any errors or omissions in any materials provided by 3Degrees. Swaps, futures and options trading involve significant risk of loss and may not be suitable for everyone.
