Since 2022, the European biomethane market has experienced sustained growth, despite declining public subsidies and ongoing challenges in reducing production costs. However, this progress relies on uncertain factors, raising critical issues for industry stakeholders.
The 2022-2023 energy crisis revealed that low natural gas prices cannot be guaranteed in the long term, highlighting biomethane's potential to strengthen Europe's energy sovereignty. In response, the REPowerEU initiative set an ambitious target of 35 bcm of biomethane by 2030. However, between 2022 and 2024, price fluctuations—sometimes dropping by as much as 100% in certain markets—exposed the fragility of long-term forecasts.
At the same time, although the European regulations RED II and RED III have introduced attractive certificate markets for emission reduction, uncertainty remains about the sustainability of these price levels. Investors, therefore, face a volatile environment.
Biomethane demand, especially in sectors aiming for decarbonization (transport, industry, buildings), remains promising, but long-term consumer commitment is far from guaranteed. The emergence of competing solutions could limit their willingness to pay.
In this context, project developers and their financial partners face several key challenges:
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Identifying markets and consumers willing to buy biomethane long term, and at what price;
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Negotiating stable contracts despite price volatility;
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Forecasting prices over the next 15 years to secure financing and build viable business plans.
For more information on the European biomethane market, please consult our white paper or contact us directly for further details.
