The UK anaerobic digestion and biogas sector has raised alarm over a policy gap in how biomethane injected into the gas grid is treated under the UK Emissions Trading Scheme (UK ETS).
In August, the Anaerobic Digestion & Bioresources Association (ADBA), supported by over 90 industry signatories, urged Secretary of State Ed Miliband to recognise biomethane as a net zero fuel within the UK ETS.
The open letter urged the government to:
- Confirm that biomethane injected into the UK grid will be eligible under UK ETS as a net zero fuel.
- Ensure that UK ETS rules fully reflect biomethane’s full value.
- Set out a clear timeline for when these changes will be implemented, to provide certainty for market confidence.
The letter also stated that failure to act threatens both the UK’s net zero targets and more than £8 billion in private sector investment.
On the 11th of September, the ADBA shared the response they received from the Secretary of State which can be viewed in full here.
Key details from the response include:
- Government officials are working with the UK ETS Authority to assess whether and how the UK ETS could account for biomethane injected into the gas grid.
- A biomethane policy framework consultation is expected by the end of the 2025/26 financial year. This will build on earlier work including the biomethane policy call for evidence, published in February 2024.
- No decision has yet been made on if, when, or how the ETS rules will be reformed to recognise grid injected biomethane separately from fossil gas.
Although the government response is not yet a full commitment it represents a generally positive response to industry concerns.
Dependent upon the Authority’s decision this may end a key distinction between the EU and UK ETS. Under the EU Monitoring and Reporting Regulation, sustainably sourced biogas may be zero rated for emissions (even if combustion occurs at a different ETS installation provided sustainability and traceability requirements are met as specified by the Competent Authority of the Member State, European Commission and RED II).
Whereas, within the UK ETS Operators can’t claim a certain amount of biogas injected into the natural gas grid as part of their purchased natural gas using certificates obtained from their biogas supplier.
Here at Swan Energy Ltd, we are following these developments closely and will continue to update our clients.
For any questions relating to biomethane within the UK or EU ETS please get in touch, email info@swanenergy.co.uk or reach out to our Carbon Consultant Beth Bailey on LinkedIn directly.
