Biomethane Boom Faces Policy and Cost Roadblocks

Oxford researchers warn EU biomethane production could fall far short of its 2030 target as costs and policy fragmentation slow investment

13 Mar 2026

The European Union may fall well short of its 2030 biomethane production target, according to research published in January by the Oxford Institute for Energy Studies, which highlights cost pressures and fragmented regulation across member states.

Under the REPowerEU strategy, Brussels set a goal of producing 35bn cubic metres (bcm) of biomethane annually by the end of the decade. But the Oxford study estimates that existing national commitments would deliver between 12bn and 15bn bcm, leaving a potential shortfall of 20 to 23 bcm.

Biomethane is produced by upgrading biogas derived from organic waste and agricultural residues. Because it can be injected directly into existing gas infrastructure, policymakers have viewed it as a relatively quick way to reduce reliance on fossil natural gas.

Europe already leads global production. The region produced about 4.3 bcm of biomethane in 2024, when output grew by roughly 24 per cent, its fastest expansion to date. Europe accounts for nearly half of worldwide biogas and biomethane supply.

Despite that momentum, the Oxford study, based on interviews with 15 industry executives and policymakers, identifies two structural constraints on further growth.

The first is cost. Biomethane remains significantly more expensive than fossil natural gas, and production costs have shown little sustained decline since the 2010s. If gas prices remain relatively low, governments may face rising pressure to maintain the subsidy schemes that currently underpin much of the sector.

The second challenge is regulatory fragmentation. Member states have adopted differing approaches to biomethane support, creating uncertainty for investors and project developers operating across borders.

Some new sources of demand are emerging. Shipping companies are beginning to purchase biomethane to comply with EU maritime fuel rules introduced in January 2025, which reward low carbon fuels. In 2025, biomethane volumes certified with negative emissions intensity also attracted premium prices in parts of the market.

Several governments are moving to stimulate supply. France plans to introduce a biomethane blending mandate in 2026, while the Netherlands is considering similar measures.

Researchers say the sector’s long term expansion will depend on more coordinated policy across the EU if the bloc is to approach its 2030 target.