Why Europe's Green Gas Dream Is Falling Behind

Oxford researchers find EU biomethane output will fall 20-23 Bcm short of its 2030 target, citing cost and policy fragmentation

8 May 2026

Europe's clean gas ambitions are running into hard limits. A report published in January 2026 by the Oxford Institute for Energy Studies found that the European Union is on course to fall significantly short of its 2030 biomethane target, with structural barriers, not market volatility, driving the gap.

Production grew 34 percent between 2015 and 2024, reaching 22 billion cubic meters annually, a level that accounts for nearly half of all global output. Yet the REPowerEU plan calls for 35 billion cubic meters by 2030. Drawing on interviews with 15 senior industry participants and policymakers, Oxford researchers concluded that aggregated member state plans point to a shortfall of 20 to 23 billion cubic meters, a deficit analysts said reflects problems long embedded in the sector's economics.

Chief among them is cost. Biomethane has carried a significant price disadvantage relative to natural gas since the 2010s, and that gap has barely narrowed. Should natural gas prices decline further, the economic case for subsidy-free project development weakens accordingly. Competing industry models compound the difficulty. One camp favors circular, locally sourced production supported by national subsidies and strict feedstock standards; another prioritizes large-scale certificate trading and cross-border market integration. Both operate simultaneously under the same regulatory framework, a tension that, according to the report, has slowed capital commitment from developers and institutional investors.

Demand signals, however, offer some reason for measured optimism. FuelEU Maritime regulations, which took effect in January 2025, require shipping fleets to reduce fuel carbon intensity, and liquefied biomethane has emerged as a compatible drop-in solution for existing LNG engine technology. That regulatory pull created a substantial new demand category in 2025 and contributed to price strengthening across markets.

Still, certificate integrity remains unresolved. Without clear distinctions between subsidized and unsubsidized biomethane, and without robust linkage between certificates and physical gas flows, the risk of overclaiming and double-counting persists, obstacles the researchers warned could undermine long-term contract formation. How regulators respond to those concerns in 2026 may determine whether biomethane fulfills its decarbonization promise or hardens into a cautionary study in policy design.