On 28 May 2025, the IEA released its Outlook for Biogas and Biomethane report, highlighting the global potential of biogas and biomethane, which could rise to nearly 1 400 bcm by 2050, which represents about 7% of today’s total production of natural gas.
The IEA estimated that for 2024, approximately 40 bcm of biogas (both upgraded to biomethane, and raw) was produced globally, which pales in comparison with the global potential, estimated at 1 000 bcm, which could rise to close to 1 400 bcm by 2050 according to projections. The report also highlighted the disparity between global natural gas demand and biomethane production (10 bcm, 0.2% of NG demand).
The IEA goes a long way in limiting their estimates to only sustainable and realistic volumes. The potential was thus restricted to sustainable feedstocks, which excluded the more problematic energy crops as well as intermediate crops (classed as Annex IX, Part B in RED III for biomethane usage). Furthermore, the current outlook also includes a geospatial assessment which considers proximity to infrastructure (roads, pipelines, electricity grids), to ensure only exploitable feedstock regions are considered.
Worldwide, utilisation of biogas (i.e. actual production versus assessed potential) was just over 5% in 2023. Even in the EU, after decades of initiatives and incentives for low carbon fuels, and utilising biogas feedstocks, the IEA estimated that this still only amounted to approximately 40% of potential feedstock utilisation. Outside the EU, current utilisation drops off significantly, with China the next highest (8%) followed by North America (5%).
The EU experience offers a potential template for other regions, with incentives, infrastructure and policy establishing them as leaders in the sector. According to the IEA’s EU supply cost curve, the marginal cost of production here is USD 19.7/GJ. If this marginal cost were achievable worldwide, this would result in close to 600 bcm of biogas production – six times current levels.
Biomethane offers greater versatility over raw biogas, given the former is a drop-in replacement for natural gas and is easier to transport due to higher energy density. In the most optimistic scenario, all potential feedstock identified in the report could result in biomethane production.
However, there are limiting factors, particularly in the short to medium term, which include:
Lack of supportive policy
Biogas-related policies in frontier markets tend to focus upon waste management, and household heating – while such usage is key to a green transition, it is unlikely to lead to biomethane production in the short term. Generally, transport fuel obligations and gas blending mandates encourage biomethane over biogas. Policies supporting combined heating and power plants (CHP) production often target direct use of raw biogas, although grid-delivered biomethane can also benefit here.
Lack of access to gas networks
Produced biomethane can be used on site or transported via vehicle (after compression or liquefaction). However, direct grid connections allow gas to be more readily transported to demand centres. For the largest production plants, which have better economies of scale, this requires connection to high-pressure lines. The IEA report has a related metric, the percentage of feedstock located within 20 km of a transmission grid; we have used this in conjunction with the feedstock potential, to give an indicator of biomethane potential.
Looking at some key non-EU biomethane markets which could be due for rapid expansion in the short-medium term:
We have previously discussed opportunities for biomethane in the US; while their biogas production is a fraction of the EUs, and just over 60% of the figure for China, much of this is already in the form of biomethane (3 bcm, or 43% of all biogas energy). The IEA report highlights transport fuel mandates, in both Canada and the US, as well as regional programs in California, Oregon, and Quebec.
The growth potential on the subcontinent is large, given only 300 mcm of biomethane was produced in 2023, coupled with relatively low production costs (average cost of USD 14/GJ, cheaper than all other regions outside Asia). Furthermore, there is recent policy implemented that specifically target at biomethane production, led by the Compressed Biogas (CBG) blending obligation, mandatory since April 2025. Also in April, Japanese corporation Sojitz announced a USD 400 million investment into Indian biomethane production.
While the region has higher biogas production than all other IEA regions apart from the EU, more than 90% is for raw biogas and associated direct usage. The IEA report notes a drop in rural and household biodigesters after 2015, although guidelines for promotion of the biogas industry were released in 2019, encouraging larger-scale operations more conducive to biomethane production. In the private sector, French gas supplier Air Liquide invested in biomethane production in the Jiangsu province, which commenced grid injection in 2023. In our Q4 2024 report, we mentioned that the German BASF signed a MoU with Shanghai based Shenergy for biomethane as an industrial feedstock). The upcoming five-year plan (the 15th, for 2026-2030) will allow the government to further signal its ambitions for the nation’s biomethane industry, with blending mandates a possibility.
The fortunes of the continent are dependent on Brazil, and Argentina to a lesser extent. The IEA notes the Brazilian Future Fuels Law which requires 1% blending starting 2026, aiming for around 10% by 2034. The law was also mentioned in our January 2025 monthly report, along with Brazilian gas major Petrobras publishing the first call for proposals for acquisition of biomethane, to aid in meeting the incoming obligation. More recently in April, GEOMIT and CMAA signed a MoU to develop biomethane projects from sugarcane residues, a common by-product of the local bioethanol industry.
Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
