Turning Waste Into Power for Five Thousand Homes

Engie and PepsiCo UK ink a landmark 10-year biomethane deal, backing a £70m AD plant in Northern England

12 May 2026

In a move that establishes a new precedent for industrial decarbonization, PepsiCo UK and the energy company Engie have entered into a 10-year biomethane purchase agreement. The deal, signed in January 2026, represents the first of its kind within the United Kingdom’s food and drink sector and will provide the financial backing for a £70 million anaerobic digestion facility in Northern England. For PepsiCo, the contract is its first biomethane procurement effort within its Europe, Middle East, and Africa operations.

Scheduled to begin operations in 2027, the facility is expected to supply 60 gigawatt-hours of biomethane annually to PepsiCo’s supply chain. This volume is roughly equivalent to the gas consumption of more than 5,000 homes. Analysts noted that the agreement is projected to reduce the company's carbon output in the region by more than 10,900 tonnes per year compared to a 2022 baseline. The partnership also expands Engie’s renewable footprint in Britain, adding a fifth anaerobic digestion site to a portfolio that already contributes 210 gigawatt-hours from existing plants in Southwest England.

The technology relies on agricultural waste and rotational crops to produce gas that can be integrated into existing infrastructure without the need for significant retrofits. Such compatibility is increasingly viewed as essential for food and drink manufacturing, a sector where high process heat demands often exceed the current capabilities of electrification. By utilizing biomethane, manufacturers gain a practical lever for near-term decarbonization that renewable electricity alone cannot provide. Lord Whitehead, the Minister for Energy Security and Net Zero, described the investment as evidence of the private sector aligning with the government's clean energy objectives while strengthening domestic supply.

Yet, industry experts suggest that the United Kingdom continues to trail European neighbors such as France, Germany, and Denmark in biomethane deployment. Persistent permitting delays and policy inconsistencies have historically slowed the rollout of similar infrastructure across the country. Still, the use of long-term purchase agreements provides the revenue certainty necessary for developers to secure financing for large-scale projects, suggesting that demand-driven investment in the sector is becoming more viable.

The agreement may serve as a commercial template for other European food and drink firms seeking to navigate the transition away from fossil fuels. As companies face increasing pressure to meet stringent climate targets, the success of the Northern England facility could influence how industrial heat is managed across the continent. The outcome is likely to shape corporate energy procurement strategies for the remainder of the decade.