This is an extract from a recent report “Renewables 2025: Analysis and forecast to 2030” published by IEA. This extract specifically focuses on Europe’s biogas sector.

In 2024, EU production of biogases increased 3%. Growth was modest in biogas (1% year on year), but significantly higher for biomethane (14% year on year). The production of biogas, used primarily for electricity and CHP generation, is highly concentrated in Germany (53% of EU production). Following a period of decline, interest in biogas is reviving. Countries with smaller markets (Greece, the Slovak Republic, Spain and Poland) are expanding their biogas output. In contrast, biogas use is declining in other countries, with production shifting towards biomethane. Policy tools that allocate tenders for both new biomethane plants and upgrades of existing biogas facilities (e.g. in Italy and the Netherlands) support this shift. Biomethane production is on the rise in most European countries, with Germany (29% of EU production), France, Italy, Denmark and the Netherlands collectively accounting for 93% of EU production. The United Kingdom also contributes significantly, with production equivalent to an additional 23% of the EU total.

Several countries are working on their regulations to attract further investment. In Denmark, growth stagnated during 2024 due to higher feedstock costs and unfavourable market conditions. To avoid major exports of domestic production, the government is revising its CO2 taxes that currently apply to biomethane. Meanwhile, the Netherlands is developing a new blending mandate for grid injection, set to take effect in 2026. This measure is expected to boost growth significantly. Emerging producers such as Ireland, Spain and Poland are scaling up production, but more slowly than what is required to meet their national targets. Ireland has a national blending mandate for heating, a strong policy stimulating expansion. Spain and Poland, however, are facing social acceptance challenges that are delaying deployment. 

Overall, achieving the EU 35-bcm target by 2030 will require a marked acceleration in growth across both mature and emerging markets. To stay on track, year-on-year growth between 2024 and 2030 should average around 16% for biogas and biomethane combined and would need to increase 1.6-fold annually if focusing solely on biomethane. Forecasts estimate that by 2030, the European Union will achieve 68% of its target with combined production, but only 27% if the target is applied exclusively to biomethane. Use in the transport sector continues to grow, especially where renewable energy targets based on GHG emission reductions make biomethane very competitive. Markets for bio-LNG are emerging in Germany, Italy and the Netherlands, owing to its suitability for long-haul trucking. Additionally, a first contract for maritime use was signed in the Netherlands, although regulations are still being adapted. 

Creating a unified European market for trading green certificates remains a key challenge. Proof of sustainability (PoS) is the key certificate recognised by the European Commission to comply with mandates and targets, and it is also used in many member states. It certifies compliance with sustainability requirements under the EU Renewable Energy Directive (RED). Additionally, Guarantees of Origin (GOs) are used to certify renewable origins for consumers, and they are normally used in voluntary markets. Rules vary drastically. In some countries, only unsubsidised biomethane can sell GOs, while in others it is allowed and taken into account in the subsidy (e.g. Denmark). Some countries restrict GO exports, while others, following European Commission intervention, now accept foreign GOs to meet blending targets. These differences create market fragmentation and hinder the development of a common EU system. The new Union Database, expected to be operational for biogases in 2025, will facilitate the tracking of PoS certificates required under the RED.

Germany

Germany remains the world’s largest biogas and biomethane market, with a combined production of 329 PJ in 2024. However, its output has remained quite stable since 2017, unlike fast-growing markets such as France, Italy and Denmark. Driven by feed-in tariffs introduced in 2000, 72% of the biogases produced are used for power generation. However, Germany shifted to a tender allocation system in 2017 and modified reward conditions, resulting in plateaued production. To attract investment, policies are being revised to improve reward conditions under the biomass-for-power tenders. Many plants are approaching the end of their 20-year FIT contracts and are seeking new support programmes. In 2025, the government introduced a Biomass Package to support both new and existing biogas plants, to prevent decommissioning and increase grid flexibility with dispatchable renewable energy. Power generation (under the EEG, Germany’s Renewable Energy Sources Act) used up 45% of biomethane production in 2024, but this share has been declining since 2017, reflecting a shift towards more lucrative markets such as heating and transport.

Transport usage has driven biomethane demand growth in the last five years, supported by Germany’s GHG quota system, which rewards low-emission fuels. This system particularly favours biomethane, especially when it is made from animal manure, as this type of feedstock can lead to very low (sometimes negative) GHG emissions. However, Germany’s draft RED III transposition, to be adopted in 2026, is likely to eliminate the double-counting benefit for biofuels made from waste, in force in the European Union since 2009. From 2018 to 2023, transport biomethane use rose 4.6-fold, though growth slowed in 2022 and 2023 due to a sharp drop in quota prices, following a biodiesel credit oversupply tied to suspected fraud. This has created ongoing uncertainty over quota prices. Lastly, the Buildings Energy Act (GEG) promises the possibility of a major future market for biomethane over the medium term. It requires 65% renewable energy in heating systems in new buildings in developing areas by 2024 and 100% by 2045, and lower rates for existing buildings, starting at 15% in 2029 and ramping up to 60% by 2040. According to the German Energy Agency (dena), biomethane use in buildings could grow to 13-45 TWh/year by 2040, significantly expanding its role in Germany’s energy transition.

Germany’s biogas and biomethane sectors are undergoing major changes, driven by the need to address profitability challenges in its ageing biogas fleet. Larger plants are shifting towards biomethane production, while smaller ones are exploring joint production models. For sites without grid access, compressed biomethane or bio-LNG for transport are emerging alternatives. The next few years will be crucial in determining the success of these transitions. While Germany’s 2024 NECP lacks a specific biomethane target, recent policy updates have renewed optimism. 

The transport market, once a key growth driver, is now facing low prices due to market distortions, but the industry and heating sectors remain promising. Electricity markets may also receive renewed interest. Maintaining current biogas output for biomethane production will be essential to meet the EU 35-bcm biomethane target by 2030. The forecast for 2025-2030 expects 2% combined growth, and a 19% increase in biomethane alone, revised down from last year’s outlook to reflect the slowdown in 2024. In the accelerated case, final-use demand for biogases could be higher in 2030 if they are used more extensively to support electricity grid flexibility.

France 

France is Europe’s fastest-growing market, having many small to medium-sized agricultural plants (averaging 200 Nm³/h), all connected to the gas grid under the “right to inject” law. Biogas is widely seen as an agricultural support, with strong DSO/TSO engagement through grid zone planning and reverse-flow infrastructure. Public acceptance is high. After using biomethane grid injection feed-in tariffs from 2011, France introduced tenders in 2024 for plants producing over 25 GWh/year. Due to low participation, however, these were replaced by blending obligations (Biogas Production Certificates), which will take effect in 2026 to support projects without relying on public funds. Biomethane purchase agreements (BPAs) between energy companies and industry are also becoming popular. 

In France, BPAs cover unsubsidised biomethane and can help industries meet EU ETS requirements or transport tax incentives for biofuels, such as TIRUERT (Taxe Incitative Relative à l’Utilisation d’Énergie Renouvelable dans les Transports) or the newly proposed IRICC (Incitation à la Réduction de l’Intensité Carbone des Carburants). Transport is the main growth driver. France has Europe’s largest CNG truck fleet, with biomethane covering 39% of fuel use in 2023. The fleet continues to grow, with a 35% increase in the number of buses in 2022-2023 and 26% more trucks. Under these currently favourable conditions, France’s biogas and biomethane market is forecast to grow 71% during 2025-2030.

Italy

Italy is the second-largest biogas market in Europe and one of the most dynamic ones, growing in both biogas and biomethane production. Nearly all biomethane is used in transport. It has the largest natural gas vehicle (NGV) fleet in Europe, with a 60% biomethane share. In Italy, the integration of different types of feedstocks is good, with municipal solid waste accounting for about 45% of biomethane feedstocks, the rest being agricultural.

Italy’s production of biogases to increase 77% over 2025-2030. However, despite ambitious NECP targets and strong policy support to convert biogas power plants to biomethane, growth has slowed over the past two years due to permitting and feedstock challenges. Short-term prospects remain uncertain, though the Italian government is taking action to increase investment interest.

Denmark

Denmark has the highest biomethane share among all EU gas grids (40% in 2025), and its target is to reach 100% green gases by 2030. The country’s aim is to phase out gas use in households and to direct biomethane use to more hardto-electrify industrial heat systems. Despite strong development historically, a rise in feedstock costs (as well as other market conditions) slowed growth between 2023 and 2024. Several regulatory changes are being discussed in 2025, for instance an increase in gas distribution tariffs or the revision of gas CO2 taxes, which may affect the market. However, the forecast expects growth of around 33 PJ (around 0.93 bcme) from 2025 to 2030.

Access the report here