For the first time in the IEA’s renewable energy market report series, we are dedicating a special section to biogas. Biogas production began to grow in the 1990s and has been rising since then, but policy support has surged strongly in the last two years owing to a combination of factors. First, with energy security concerns caused by the Russia Federation’s (hereafter “Russia”) invasion of Ukraine and the subsequent energy crisis, biogas is now regarded as a domestic energy source that can reduce dependency on natural gas imports and support energy security in many countries.

Second, in view of the urgent need to limit global temperature rise to 1.5°C, countries have begun to view biogas as a ready-to-use technology that can help accelerate decarbonisation in the short term, and they are therefore developing specific policies that include biogas as a key component in their energy transition strategies.

Apart from being a clean domestic energy source, biogases (biogas and biomethane) provide other benefits. For instance, biomethane can be used to decarbonise hard-to-electrify sectors such as transport and industry. Both biogas and biomethane use reduces not only CO₂ emissions from fossil fuel combustion but also, when correctly managed, methane emissions from the waste and agriculture/livestock sectors (responsible for 60% of anthropogenic global methane emissions). This advantage aligns well with the emissions reduction objectives of the Global Methane Pledge launched in 2021 and signed by 155 countries (as of January 2024).

Thus, using biogas and biomethane helps build a circular economy around residue and waste valorisation, contributes to rural economic development and creates employment. Plus, producing natural fertilisers as a co­product of biogas and biomethane production can augment farmers’ income and help re‑­­­­establish soil health by eliminating certain environmental impacts related to untreated manure use. Biogas can also be used for clean cooking in developing countries.

In the People's Republic of China (hereafter "China"), household digesters were developed some decades ago to provide clean energy for cooking and residential use in rural areas (accounting for around 300 000 TJ/year of biogas production). Impressively, thanks to investment support from the Chinese Rural Household Biogas State Debt Project beginning in 2003, almost 42 million household digesters had been installed by 2015. In 2015, however, government policy shifted towards engineered plants for combined heat and power generation, with capital aid and feed-in tariffs being offered.

More recently, since 2019 the Chinese government has been steering a biogas industry transition, investing in large-scale (>10 mcm/year) bio-natural gas (BNG, biomethane) projects. These plants would use rural and urban waste feedstocks in an integrated manner to produce electricity and gas to inject into the grid.

China actively developed new policies in 2022 with its 14th Five-Year Plan for Renewable Energy Development. Although the biogas targets of previous five-year plans for renewable energy were not achieved, revitalisation of the sector is expected for three reasons: national and international energy companies (PetroChina, China Three Gorges Corporation, China General Nuclear Power Group, French company Air Liquide and German company EnviTec Biogas AG) are beginning to invest in biogas; policy support has been strengthened; and grid access has been improved. Nevertheless, our forecast expansion of 20% over 2023-2028 is low compared with China’s ambitious national target of 20 bcm by 2030.

India also has considerable small-scale household biogas production in rural areas lacking grid access, with biogas being an important energy source for clean cooking and lighting. Through its One Nation One Gas Grid programme, India plans to enlarge the role of natural gas in its economy by investing in new gas infrastructure, aiming to raise the share of natural gas in the energy sector to 15% by 2030 (from 6.2% in 2022). India has recently announced a blending mandate of 5% biomethane in compressed natural gas (CNG) for transport and in piped natural gas for domestic use from 2028, growing each year from 1% in FY 2025-2026.

The government has set very ambitious targets for several biogas end uses, including in transport, with extensive policy development to support them: the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme for transport and industrial fuel; the 2022 Waste to Energy Programme to finance the recovery of urban, industrial and agricultural waste; and the 2022 National Biogas Programme for rural and semi-urban areas.

However, the deployment of industrial-scale production facilities is slow. For instance, in October 2023 the SATAT programme had just 48 plants commissioned of the 5 000 new plants targeted for 2024. Ongoing challenges for India are the establishment of supply chains to mobilise agricultural residue, animal manure and organic municipal waste collection as well as completion of the necessary gas infrastructure improvements (through the One Nation, One Gas Grid programme), which create forecast uncertainty. Nonetheless, India’s production of biogases is forecast to expand 30% over 2023-2028. The SATAT scheme’s very ambitious targets for transport (an additional 15 Mt/year of biomethane use by 2023/2024) are still expected to be achieved, but with some delay.

In the United States, biomethane development has historically been driven by the transport sector and support schemes such as the Renewable Fuel Standard (RFS) and California’s Low Carbon Fuels Standard (LCFS) applicable to fuels sold in California. The US has further accelerated its production growth for biomethane in the last years, prompted by new federal and state-level policy support. The new RFS Set Rule aims to double biomethane supplies in the next three years. Given the obligation volumes proposed, the pipeline of projects under development and California’s targets for injected biomethane, biogas and RNG supplies combined are expected to expand 2.1-fold in the next five years. Generous financial support from various programmes that permit additionality provide a very favourable framework for the accelerated growth.

Europe presents a mature industry with growing markets. Electricity generation has been the main impetus for biogas expansion for the last two decades, but recent policies promote diversification of biogas uses, utilising biomethane. Thus, the majority of growth in biogases in Europe over the forecast period is expected to come from biomethane, from both new plants and upgraded existing biogas plants.

In some major markets such as Germany, transport is the end use that provides the most revenue for biomethane producers who benefit from clean-fuel certificates for renewable fuel quotas. It is also a strong growth driver in countries that already have gas vehicle fleets and filling stations. In addition, the European Union has initiated the inclusion of biogas and biomethane in its Guarantee of Origin system that industry can use to comply with the EU ETS or private companies can utilise to achieve their own emissions reduction targets.

The RED II regulates biogas Guarantees of Origin. So far, some countries are already keeping count with national registries and bilateral agreements that enable cross-border biomethane trading (Denmark, Germany, the Netherlands, Austria, Switzerland, the United Kingdom and France). Further deployment of this mechanism in other countries will help increase international trade, through either physical gas exchanges or certificate trading.

Some countries are switching from fixed feed-in tariffs to tendering systems for gas (France) or changing the conditions for electricity tenders (Germany). The latest auctions for electricity production from biomethane in Germany in 2023 did not received any bids. Meanwhile, France’s new auctions for gas injection have been delayed since 2022. In Italy, however, the first auction in the new tender scheme for injected biomethane for transport and other uses in 2023 was 45% allocated just three months after its release, providing good prospects for 2023-2028. In several European countries, new policies reducing remuneration remain a forecast uncertainty as new conditions can reduce the economic attractiveness and weaken investor confidence for biogas projects.

In its 2022 REPowerEU plan, the European Union set a non-binding target of 35 bcm of biomethane by 2030, but growth will need to accelerate to achieve this target. Although some countries already have high shares of biomethane in their grids (Denmark achieved a remarkable 37.9% in November 2023), others are at earlier development stages (Belgium, Spain and Poland).

According to the IEA Net Zero Emissions by 2050 Scenario, production of biogases should quadruple by 2030. Although we expect growth to accelerate from 19% in 2017-2022 to 32% in 2023-2028, an even higher pace is required to meet the Net Zero objective for 2030. Biogas is a mature technology. It is a viable energy source for clean cooking, and can be employed as a dispatchable source of low-emissions electricity generation, which will be increasingly important as the deployment of variable renewables such as wind and solar expands.

All countries thus need to make major efforts to surpass forecast biogas production and achieve the Net Zero trajectory. China and India would have to accelerate the development of feedstock supply chains in the agriculture, livestock and city waste sectors and offer more attractive incentives to make biogas production economically attractive. The development pace of critical gas grid infrastructure and associated end-use facilities will also dictate growth. European countries will need to intensify their efforts to ensure that incentives for investors are still attractive in the new tendering systems, in view of incomplete allocations in some recent auctions. Other regions with strong biogas potential, such as Latin America and Southeast Asia, could make significant contributions to global growth if enough public support is obtained to launch development of the sector.