Ed Miliband backs biomethane but plays for time on ETS anomaly

PRESS RELEASE

Ed Miliband, the Energy Security and Net Zero secretary, has backed biomethane as a “practical and cost-effective” means to achieve net zero but has given no commitment to sorting out the anomaly in the UK’s Emissions Trading Scheme which treats biogas like fossil gas.

Miliband’s views came in a response to the open letter from ADBA, the Anaerobic Digestion and Bioresources Association, signed by more than 100 organisations from the biogas community.

Chris Huhne, the chair of the ADBA, said he was “mystified” about how a government committed to unblocking economic growth could take so much time to rectify the problem.

This issue is holding up literally billions in investment in a sector that can deliver good jobs in the poorest parts of the country. I am mystified about how long it is taking DESNZ to sort an issue which they have already admitted is just plain wrong” said Huhne.

ADBA has now received this response from Mr Miliband:

The Government is clear that biomethane is a practical and cost-effective way of contributing to net zero greenhouse gas emissions and delivering energy security. We understand that how the ETS treats biomethane is an important issue for operators and the biomethane sector, and this was considered in our 2024 call for evidence on a future framework for biomethane production.

We understand that providing policy certainty is important in enabling investment and supporting sector-wide growth. That is why my Department is developing proposals for a consultation on a future biomethane policy framework, which is expected to be published by the end of the 2025/26 financial year. This will take into account responses to the earlier biomethane policy call for evidence, published in February 2024, and set out proposals for supporting the growth of the sector.

My officials are currently working with the UK ETS Authority to understand whether and how the UK ETS could account for biomethane injected into the gas grid. The ETS Authority has not yet made a decision on whether or when this reform will be made.”

Mr Milliband then invites ADBA to get in contact with his officials to discuss further.

Charlotte Morton OBE, Chief Executive of the Anaerobic Digestion and Bioresources Association, commented: 

We welcome the Secretary of State’s response and the government’s clear interest in supporting the UK anaerobic digestion industry. To unlock investment, however, government must urgently confirm a timetable for including biomethane in the UK Emissions Trading Scheme – in line with or ahead of the EU – so UK companies are not disadvantaged. By spring 2026, it also needs to be confirmed that carbon captured from anaerobic digestion (AD) plants can be transported in ways other than via pipelines, to enable timely investment in what is far and away the cheapest form of carbon capture and storage.”

-ENDS-

For further information, contact:

Alasdair Rogers, Communications Manager, ADBA
E: alasdair.rogers @adbioresources.org; tel: +44 (0)20 8434 5407

Notes to editors:

• The Anaerobic Digestion and Bioresources Association (ADBA) is the trade association for the UK anaerobic digestion (AD) and biogas industry. ADBA’s vision is to see the full potential of the UK AD industry realised so it can help the UK achieve its emissions targets, energy and food security and other policy goals, creating a truly circular economy. www.adbioresources.org
• The £8bn figure referenced by ADBA reflects the private investment opportunity that could be unlocked across the UK biomethane sector with the right policy signals – notably inclusion in the UK Emissions Trading Scheme (ETS), continuation of support mechanisms, and streamlined planning and permitting.This figure is not speculative. It is based on direct intelligence from ADBA members, including developers, investors and operators who have shovel-ready projects or large-scale expansions already scoped and awaiting enabling policy conditions.

As a reference point, ADBA estimates that over £1bn of investment can be accounted for by just three major developers, indicating that the full industry has significantly more capacity to deploy capital rapidly.  The figure is also consistent with what would be required to meet the NESO 30TWh biomethane production expectation by the early 2030s. By back-calculating from the capital cost per plant and the investment intensity required per TWh, ADBA has established that achieving 30TWh of biomethane production capacity would demand around £8 billion in total private investment.

• The UK ETS is a cap-and-trade scheme that limits the carbon emissions from traded sectors such as heavy industry, energy generation and domestic aviation.  It allows the trading of unused allowances within these covered sectors.  Moving biomethane over the gas grid to be considered a net zero fuel would mean that fewer allowances would need to be used where biomethane was purchased for industrial or power generation use. This would leave the biomethane buyer with more allowances to be traded, which at the current price would add around £10/KWh to the value of biomethane.

•  About the AD industry
  • There are currently over 750 AD plants operational in the UK
  • The entire industry digests approximately 36 million tonnes of organic wastes each year – organic material that would otherwise emit greenhouse gases including highly potent methane, if left untreated in landfill.
  • An estimated 21TWh of biogas is produced each year by the AD industry – this green gas is either used to generate electricity and heat via a combined heat and power (CHP) unit or upgraded to biomethane and injected directly into the national gas grid.
  • The industry currently delivers savings of 1% off the UK’s greenhouse gas emissions every year.
  • An estimated 4,800 people are currently employed in the AD and biogas industry in the UK.
  • Overall the industry grew by 5 per cent last year as the closure of older, smaller plants was outweighed by big-scale units feeding into the gas grid.
  • Fully deployed, by 2050, the UK AD and biogas industry expected to:
    • provide between 20% and 50%  of UK gas demand
    • create 30,000 direct and 30,000 indirect jobs
    • save the UK 27 million tonnes of CO2 equivalent = taking 1/3rd of all cars off the road
    • heat 6.8 million UK homes with the 8 billion m3 of biomethane generated
• How AD works
  Anaerobic digestion (AD) is the natural breakdown of organic matter when deprived of oxygen in a container called digester. The process produces biogas, and a residue called digestate – a stable, nutrient-rich substance used as a biofertiliser which restores soil health.