Biomethane: Why Now Is the Time to Secure Supply

As companies accelerate their decarbonization efforts, securing a long-term biomethane supply is more critical than ever. With forecasts indicating potential supply shortages and regulatory changes pushing for cleaner energy, biomethane stands out as a vital solution for organizations striving to meet ambitious sustainability targets.

Why Biomethane Is Critical for the Energy Transition

Biomethane, a renewable alternative to natural gas, plays a crucial role in the global push for decarbonization. Unlike fossil natural gas, it is produced from organic waste such as agricultural residues, making it both sustainable and scalable. Key sectors like maritime, chemicals and steel are increasingly turning to this renewable natural gas (RNG) as a cornerstone of their renewable energy strategies.

• Versatile and efficient: Biomethane is chemically identical to natural gas and can be used in existing infrastructure with no adjustments needed, offering companies a fast and cost-effective way to reduce emissions.
• Regulatory compliance: With stricter regulations like the EU ETS, biomethane provides a certified pathway for companies to meet Scope 1 emissions targets and reduce their carbon footprint.

Growing Demand vs Limited Supply

The demand for biomethane is rising rapidly as more industries commit to decarbonization. However supply is struggling to keep up, creating an urgent need for businesses to secure contracts now.

• Supply tightness expected from 2025: RED III sets ambitious decarbonization targets across hard-to-abate sectors including industrial energy, heating, cooling and transport. Biomethane is cost-competitive and will be required at scale to achieve the RED III goals. Meanwhile, deployment of new capacity is behind pace to hit the RepowerEU 2030 target. RED III implementation is due in May 2025 across EU Member States, with targets being transposed into national law.
• Sector-specific growth: Historically, retail heating, industrial heating and haulage have driven demand in Europe. New energy-intensive sectors — chemicals, steel, cement and maritime — are also entering the mix.

This supply-demand imbalance presents a window for companies to lock in long-term contracts before prices rise.

Biomethane Applications: Meeting Sector Needs

• Hard-to-abate sectors: RNG offers a viable solution for industries such as maritime, chemicals, steel and heavy-duty transport which face significant challenges reducing Scope 1 emissions. These sectors are increasingly under pressure to meet regulatory standards under frameworks like the EU ETS and RED.
• Seamless infrastructure integration: A major advantage is compatibility with existing natural gas infrastructure. Companies can transition to renewable energy without investing in new infrastructure.
• Scope 1 decarbonization: By reducing on-site emissions, RNG helps companies move toward net-zero goals, making it an essential tool for decarbonization.

Certified vs Uncertified Biomethane: What You Need to Know

As the biomethane market matures, the distinction between certified and uncertified volumes is growing in importance.

• Certified: Volumes with a Proof of Sustainability (PoS) track biomethane lifecycle from feedstock to end-use. Certified biomethane ensures traceability, lower carbon intensity and regulatory compliance under systems like the EU ETS.
• Uncertified: These volumes are typically cheaper because they lack the traceability required in compliance markets. For voluntary reporting uncertified certificates are valid. Many companies choose uncertified biomethane for Scope 1 natural gas consumption rather than relying solely on offsets. This allows corporates to demonstrate decarbonization of their own operations.

Subsidized vs Unsubsidized Biomethane: Understanding the Difference

Governments often offer subsidy schemes to promote biomethane production, but understanding how these affect market applications is essential:

• Subsidized: Cheaper but may have limited applicability in compliance markets like transport where already-supported biofuel products are excluded.
• Unsubsidized: Required in higher-paying compliance markets and likely in grid blending schemes going forward.

Why Invest in Biomethane Now?

There is no better time to secure biomethane supply for your business. Recent regulatory changes and evolving market dynamics have created a brief period of oversupply, pushing prices down. However this has slowed investment in new projects, which will delay production ramp-up. Targets under RED III and other regulations will increase demand from 2025, creating tight supply until at least 2030, that will drive prices upward.

Regulatory changes — including implementation of RED III in 2026, inclusion of the maritime sector in the EU ETS, and the launch of the Fuel EU Maritime biofuels mandate — will all increase RNG demand across Europe.

By partnering with STX Group companies can lock in long-term contracts at current favorable rates, ensuring price stability and reliable supply for decarbonization strategies.

Biomethane in Action

Biomethane plays a key role in SKW Piesteritz’s journey to decarbonize ammonia production. By integrating RNG into their operations they reduced Scope 1 emissions while meeting ambitious sustainability targets. As regulatory demands tighten, securing reliable biomethane supply is critical for maintaining compliance and cost efficiency.

Take Action

Explore how biomethane can help your company meet decarbonization goals, especially in hard-to-abate sectors. Secure your supply now before prices rise and regulatory requirements become stricter.

Contact STX Group to lock in long-term biomethane contracts and protect your business against future market shifts.

Interested or have any questions?