Budget Day Reflections: What the Announcements Mean for the UK’s AD and Biogas Sector

Budget Day Reflections: What  the Announcements Mean for the UK’s AD and Biogas Sector

by Cameron Ball, External Affairs Lead, Anaerobic Digestion and Bioresources Association (ADBA)

Yesterday’s Budget landed at a crucial moment for the UK’s transition to Net Zero. With pressure growing on government to accelerate low-carbon infrastructure, strengthen waste resilience, and stimulate investment in green energy, ADBA watched closely for signals of progress.

Our sector is already delivering on multiple fronts – cutting emissions, boosting energy security, and supporting a circular economy – but realising its full potential requires joined-up, long-term policy.

Below, we set out ADBA’s response to the announcements most relevant to the AD sector and the businesses we represent.

Planning: A Welcome Boost, but More Still Needed

The Budget’s increased investment in the UK’s planning system is an encouraging step. For an industry like ours -where the deployment of new anaerobic digestion (AD) and biomethane plants is frequently slowed by planning delays – this investment is vital. Meeting Net Zero requires the rapid rollout of low-carbon infrastructure, and that can only happen if the planning system is properly resourced and aligned with national priorities.

However, funding alone will not solve the structural issues that hold projects back. AD plants continue to face inconsistent decision-making at local level, unnecessary duplication of assessments, and a lack of clarity around how their environmental and economic benefits should be evaluated.

That’s why ADBA is calling for part of this new investment to be directed towards national guidance issued jointly by the  Ministry of Housing Communities and Local Government (MHCLG) and the Department for Energy Security and Net Zero (DESNZ). Clear, consistent guidance would remove ambiguity, reduce local authority costs, and ensure planning decisions reflect the system-wide value of AD – not just localised concerns.

We are also urging Government to bring large AD and biomethane plants into the Nationally Significant Infrastructure Projects (NSIP) regime. Recognising their strategic importance would give developers greater certainty, help unlock investment, and support timely delivery of infrastructure that is essential for decarbonising heat, transport, and waste management.

Renewables Obligation: Support Welcome, but Indexation Must Not Undermine Viability

We welcome the Government’s continued commitment to the Renewables Obligation (RO), and particularly the recognition that the scheme needs a more equitable funding model, supported in part by the Exchequer.

However, this sits alongside the ongoing consultation on shifting Renewable Obligation and Feed-in-Tariffs payments from Retail Price Index (RPI) to Consumer Price Index (CPI) indexation – an issue of critical importance to the AD sector. Unlike solar and wind, AD plants carry high and continuing operating costs, including long-term feedstock supply contracts that are frequently indexed to RPI. An abrupt switch to CPI would leave many plants facing a widening gap between rising costs and slower-rising revenues, jeopardising their financial viability.

In a sector that underpins waste resilience, energy security, and the UK’s Clean Power 2030 ambitions, this risk cannot be ignored.

UK ETS: A Missed Opportunity for Biomethane

One of the most disappointing outcomes of the Budget is the continued absence of biomethane from the UK Emissions Trading Scheme (ETS). This is despite widespread cross-industry and cross-party support and the Government’s own acknowledgment that the current situation is unfair.

Inclusion in the ETS would unlock more than £8 billion of domestic and international investment, align the UK with the EU ETS – which already recognises biomethane – and send a clear signal that the UK is serious about growing its green gas sector.

The delay risks undermining investor confidence and slowing deployment at a time when the UK urgently needs scalable, cost-effective decarbonisation solutions. Meanwhile, other sectors – such as maritime – are being brought into the ETS, generating new Treasury revenue. ADBA remains clear: including biomethane carries no net cost and would deliver significant economic and environmental benefits.

We urge the Government to prioritise the necessary legislative amendments without further delay.

Landfill Tax: Alignment with AD Remains Key

The Budget’s decision to continue Landfill Tax and uprate the higher rate in line with RPI is positive. This mechanism remains one of the strongest drivers for diverting organic waste away from landfill – a core function of AD.

To maximise impact, waste policy must remain firmly aligned with AD deployment. The sector’s ability to capture methane, recycle nutrients, and produce renewable energy makes AD a cornerstone of a more resilient, circular waste system. Continued policy coherence will be crucial as Simpler Recycling and related reforms come into force.

Business Rates: Mixed Impact Across the Sector

Changes to business rates – lower rates for properties valued below £500,000 and higher rates for those above this threshold – will have varied consequences across the industry. Our initial view is that smaller legacy AD plants on ROCs and FiTs may benefit, while large biomethane injection plants could face higher costs.

ADBA is gathering member feedback to provide a full assessment, particularly in light of the ongoing tribunal case concerning the valuation of AD plants. We will update our members once we have analysed the implications in detail.

Looking Ahead

Today’s Budget offers a mixed picture for the AD and biogas sector. While there are welcome steps – particularly on planning system investment and continued support for the RO – significant missed opportunities remain, most notably the failure to include biomethane in the UK ETS.

ADBA will continue working with Government, industry partners, and our members to push for the clarity, consistency, and ambition needed to fully unlock the sector’s potential. We have already begun this engagement, reporting much of the above to the Treasury and letting them know what the industry needs.

The contribution AD can make to Net Zero, energy security, farming resilience, and the circular economy is substantial – what it really needs now is the right policy environment.