Co-authored by ADBA Chair Chris Huhne and CEO Charlotte Morten, the letter (dated 8 August 2025) warns that failure to act could jeopardise GBP 8 billion in private sector investment and threaten the UK’s ability to meet its Nationally Determined Contribution (NDC) under the Paris Agreement.
The letter also pointed out the prominent role of biomethane in the Future Energies Scenarios published July 2025, with government analysis suggesting biomethane production could reach 30 TWh/year by 2030.
The letter calls for the UK government to take three actions:
Confirm grid-injected biomethane will be eligible under the UK ETS as a net-zero fuel.
Note: physically separated and delivered biomethane is already acceptable for UK ETS purposes.
Ensure UK ETS rules reflect the full value of biomethane.
Set a clear implementation timeline.
When biomethane meets the required sustainability criteria, it is considered to emit no net CO2. Every MWh of biomethane used instead of natural gas avoids approximately 200 kgCO2e emissions. At recent UK Allowance (UKA) prices as shown below, this translates into around GBP 10/MWh in value for biomethane.
The UKA itself trades at a discount of around GBP 10/tCO2eq to the EUA value. Ongoing efforts to link the two emission trading systems are expected to narrow the gap between the two carbon prices. This could be bullish for UKA prices and — if biomethane is recognised — also supportive for UK Renewable Gas Guarantees of Origin (RGGOs).
The current RGGO price (for uncertified biomethane in the voluntary market) reflects its use in corporate sustainability reporting. For example, companies using gas for heating may buy RGGOs to claim renewable gas usage in their annual disclosures.
RGGO prices have been discounted compared to the equivalent UKA value. Recognition for use in the UK ETS could therefore be bullish for RGGO prices.
However, for biomethane to count towards reducing UK ETS obligations, it must meet sustainability criteria via an approved voluntary scheme (such as ISCC). This includes meeting the GHG reduction threshold of at least 70% compared to a regular fossil fuel reference. Certification adds a cost — current estimate GBP 2/MWh — which narrows the price advantage of RGGOs over the equivalent UKA value. If this price advantage is too narrow (or negative), the case for using RGGOs to reduce ETS obligations also weakens.
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