Biomethane Market Growth Accelerates, Forecasted to Reach USD 8.0 Billion by 2031 - CAGR at 7.1%

The global biomethane market is set to witness robust growth over the coming years, driven by increasing awareness about climate change, a surge in demand for sustainable and clean energy sources, and rising investments in renewable power generation. Valued at US$ 4.3 Bn in 2022, the market is forecast to expand at a compound annual growth rate (CAGR) of 7.1% from 2023 to 2031, reaching US$ 8.0 Bn by the end of 2031. As a renewable, low-carbon fuel, biomethane is rapidly gaining traction worldwide and is being widely adopted across electricity generation, transportation, and other industrial applications.

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Analysts' Viewpoint

Growing concerns over climate change and the global shift toward renewable energy sources are key drivers of the biomethane market. Biomethane, derived from biogas produced by the anaerobic digestion of organic waste, offers a low-carbon alternative to fossil fuels. Its ability to be injected into existing natural gas grids and used as vehicle fuel makes it an attractive option for reducing greenhouse gas emissions and enhancing energy security. With governments worldwide implementing supportive policies-such as feed-in tariffs, tax credits, and renewable energy targets-the market is poised for sustained growth. Additionally, significant R&D investments and strategic partnerships among waste management firms, agricultural companies, and municipalities are helping secure a reliable feedstock supply and boosting production capabilities.

Market Introduction

Biomethane is a renewable energy source produced through the anaerobic digestion (AD) of organic waste such as household waste, animal manure, agricultural residues, and sewage sludge. It offers a sustainable substitute for natural gas as it possesses similar properties and can be used in electricity generation, combined heat and power (CHP) applications, and as a transport fuel. The conversion process not only reduces greenhouse gas emissions but also provides effective waste management solutions. With its extensive applications across industrial, commercial, and residential sectors, biomethane is playing an increasingly important role in global renewable energy strategies.

Key Market Drivers

Increase in Demand for Biofuels

Sustainable Alternative: With growing global concerns over fossil fuel depletion and environmental degradation, biomethane offers a renewable, low-carbon alternative for energy production.

Vehicle Fuel and Grid Injection: Purified biomethane can be used as a vehicle fuel or injected into natural gas grids, reducing reliance on conventional fossil fuels and lowering emissions.

Rise in Investment in Renewable Energy Generation

Government Incentives: Many countries are implementing policies and financial incentives to boost renewable energy production, which in turn supports the expansion of biogas-to-biomethane projects.

Waste Management Integration: The widespread availability of organic feedstock-such as agricultural waste and municipal waste-provides a steady supply for biomethane production, reinforcing its market growth.

Extensive Usage in Electricity Generation

Clean Energy for Power Plants: Biomethane is increasingly used in power plants to generate electricity, offering a sustainable option that helps reduce greenhouse gas emissions.

Combined Heat & Power (CHP): The integration of biomethane in CHP systems maximizes energy efficiency and is driving market adoption, particularly in regions with robust renewable energy policies.

Regional Outlook

Europe

Europe is expected to dominate the global biomethane market due to stringent environmental regulations, strong government incentives, and a high focus on decarbonization. European countries are investing heavily in renewable energy projects, and the region has seen substantial growth in biomethane production from diverse feedstocks.

North America and Asia Pacific

North America and Asia Pacific are also anticipated to witness significant growth driven by increasing investments in renewable energy infrastructure and a growing demand for clean energy sources in industrial and residential applications. In North America, the integration of biomethane into existing natural gas grids is enhancing energy security, while in Asia Pacific, rapid industrialization and urbanization are propelling market expansion.

Middle East & Africa and Latin America

These regions, although currently representing smaller market shares, are expected to benefit from improved waste management practices and targeted investments in renewable energy, leading to gradual market growth over the forecast period.

Analysis of Key Players

The global biomethane market is moderately consolidated with a mix of large multinational companies and regional players. Key players are heavily investing in R&D, capacity expansion, and strategic alliances to drive innovation and secure feedstock supply.

Prominent companies include:

Veolia Group
Air Liquide
E.ON SE
Nature Energy
Landwärme GmbH
Gasrec Ltd.
SGN
Future Biogas Limited
Biokraft International AB
VERBIO
Gasum Oy
ENVO Biogas Tønder A/S

These entities are profiled in the market report based on their strategic initiatives, product portfolios, technological advancements, and regional market penetration efforts.

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Key Developments

June 2023: TotalEnergies signed a landmark 100-gigawatt hours (GWh) biomethane supply agreement with Saint-Gobain, ensuring a steady supply from its BioBéarn plant starting in 2024.

October 2021: Veolia and Waga Energy commissioned France's largest biomethane production unit, located in Claye-Souilly (Paris), which is estimated to produce 120 GWh of renewable gas annually.

Market Segmentation

By Feedstock:

Organic Household Waste
Animal Manure
Energy Crops
Agricultural Waste
Sewage Sludge
Industrial Food Processing Waste
Others

By Production Process:

Anaerobic Digestion
Gasification
Pyrolysis

By Application:

Heat Generation
Electricity Generation
Combined Heat & Power (CHP)
Alternative Fuel
Others

By End-use:

Industrial
Commercial
Residential

By Region:

North America
Latin America
Europe
Asia Pacific
Middle East & Africa

By Country (Select):

North America: U.S., Canada
Europe: Germany, U.K., France, Italy, Spain, Russia & CIS
Asia Pacific: China, India, Japan, ASEAN
Others: Brazil, Mexico, GCC, South Africa

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