Europe's biomethane market faces uneven growth in 2026, with numerous unsolved policy hurdles and as adoption of the EU's revised renewable energy directive (RED III) reshapes national compliance frameworks. Shipping demand will remain a key driver, particularly for certified subsidised product.
RED III's overall 2030 target gives EU member states the option to reduce greenhouse gases (GHGs) by 14.5pc, or reach a 29pc renewable energy share. RED II only required countries to reach a 14pc renewable energy share.
Some states have already transposed RED III, including the Netherlands and Germany, and pivoted incentive schemes to reward fuels on a GHG reduction basis.
This is setting up biomethane with low or negative carbon intensity (CI) as a fuel of choice for suppliers obligated to comply with the regulation in the Netherlands, where previously it lagged behind cheaper, energy-intense biofuels.
Another EU regulation that favours biomethane use is FuelEU Maritime, which came into effect in January 2025 requiring shipowners to reduce fleet emissions by 2 pc/yr in 2025 and 2026. Over-compliance can be sold under pooling schemes — which have proven profitable for bio-LNG bunkering. The mandate became a major market price driver for renewable gas guarantees of origin (RGGOs) — certificates issued to companies producing gas made from non-fossil fuel sources — and this should continue into 2026.
New schemes, either under RED III or domestic obligations, that will come into effect in 2026 will compete with maritime demand for supply. Most 2026 Dutch and Danish supply has already been sold to the maritime sector.
Growing Netherlands
As well as a pivot to GHG-based compliance with a new ERE ticket system under RED III, the Netherlands began work on a Green Gas Blending Obligation in November.
While implementation before late 2027 seems unlikely, progress should boost RGGO forward pricing. Dutch biomethane liquidity could be bolstered if the government approves mass-balancing, a method to track and verify biomethane when it is injected into the gas grid system and becomes indistinguishable from conventional gas. A motion was proposed in parliament in November, but a recent government response indicates this is unlikely.
Bio-LNG must be unsubsidised, certified and physically delivered to qualify for ERE tickets, otherwise it will be treated with a fossil gas CI of 94g CO2e/MJ when calculating a fuel supplier's overall mandate level.
Steady Germany, France
Germany will remove double-counting for waste-based biofuels under its GHG reduction quota (THG) in 2026, but biomethane should remain the cheapest compliance route for fuel suppliers, as rising mandates will support demand.
Most German imports come from the UK or Denmark. The former may benefit from Danish prices inflated by maritime demand, despite questions about UK eligibility with German schemes.
France's biogas production certificate (CPB) blending mandate starts in January, which should significantly boost domestic demand. But the country has delayed its RED III transposition, which includes a new GHG-based IRICC ticket system, to 2027.
The current energy-based TIRUERT transport ticket system will remain in place for a year, limiting transport-sector uptake. It is unclear if IRICCs can be generated from biomethane in 2027, but 3pc renewable gas obligations for transport will start in 2028, increasing thereafter.
Cross-border trade and bio-LNG bunkering should remain limited. French biomethane can only be exported as an ex-domain cancellation, the cancellation of RGGOs in one country's registry for use in a different country. This carries risk to buyers, as ownership is not necessarily transferred.
Subsidised biomethane cannot be liquefied at French LNG terminals for use outside the country. French bio-LNG must be exported via mass-balancing to other terminals in the EU, for use under FuelEU Maritime.
Uncertain UK
The UK's access to EU markets hinges on access to the Union Database for gaseous Biofuels (UDB), now targeted for launch by end-summer 2026.
Uncertainty about third-country treatment could restrict EU trade — a critical issue given the UK exported more than half its RGGOs in the first three quarters of 2025, mostly to Germany, Norway and Switzerland.
The UK is consulting on replacing volume-based RTFC tickets with a GHG-based system, but any changes would not be enacted until 2027.
Overall in Europe, biomethane remains well positioned in GHG-based systems, but policy implementation delays will probably slow overall market growth. The Netherlands, Denmark and Germany should remain anchors for European pricing, and Spain should consolidate its role as a maritime hub.
But several countries risk lagging behind without RGGO registries, export hub access, policy incentives and subsidy reform.
