The EU’s Bold Green Transition and the Role of Biomethane Credits

The European Union is leading the charge in the global energy transition, underpinned by ambitious climate policies such as the European Green Deal and the 'Fit for 55' package. A cornerstone of this effort is the decarbonisation of the gas grid - a monumental shift requiring the replacement of fossil natural gas with renewable alternatives.

Among these, biomethane stands out as a pragmatic, scalable solution capable of rapidly reducing greenhouse gas (GHG) emissions across heating, transport, and industry. However, since biomethane is injected into a shared gas grid, a robust and transparent system is essential to track its green credentials and ensure that its environmental benefits can be properly claimed and traded.

This is where Guarantees of Origin (GOs) come into play - the EU’s primary instrument for biomethane certification.

This article explores the EU’s biomethane credit system, with a focus on GOs, their integration with compliance frameworks, their importance in voluntary markets, and how firms like AFS Energy enable market participants to navigate this complex yet promising space.

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What Are Biomethane Guarantees of Origin (GOs)?

At the core of the EU’s biomethane credit framework is the Guarantee of Origin. A GO is a digital certificate verifying that one megawatt-hour (MWh) of energy (gas, electricity, heating or cooling) originates from renewable sources. In the case of biomethane, it affirms the renewable status of the gas and allows its environmental value to be tracked and traded—regardless of the physical mixing that occurs in the grid.

GOs are based on the Renewable Energy Directive (RED), first enacted in 2009 (RED I), revised in 2018 (RED II), and currently under further amendment (RED III). RED II sets the standard for the issuance, transfer, and cancellation of GOs, enabling seamless cross-border trade in renewable energy attributes.

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Key Features of Biomethane GOs:

• Standard Unit: One GO equals 1 MWh of renewable biomethane.
• Issuance: Handled by national authorities or appointed bodies in the country of production.
• Cancellation: Once used, a GO is cancelled in a national registry to prevent double-counting.
• Validity: Typically valid for 12 months from production, though this varies (e.g., UK GOs are valid for over three years).
• Proof of Sustainability (PoS): Often traded alongside GOs, this document certifies compliance with RED II sustainability criteria—including GHG savings, land use, and feedstock transparency. It must be independently audited, ensuring that the claim of “green” energy includes sustainable practices, not just renewable origin.

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The European Renewable Gas Registry (ERGaR): Ensuring Market Trust

The European Renewable Gas Registry (ERGaR) underpins the credibility and interoperability of the GO system across borders. Acting as a central digital hub, ERGaR connects national registries and enforces standardised procedures for the issuance, transfer, and cancellation of Certificates of Origin (CoOs).

By establishing a harmonised and transparent system, ERGaR prevents double-counting, builds trust in biomethane claims, and enables robust cross-border trading—key to improving liquidity and efficiency in the green gas market.

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Biomethane GOs in EU Compliance Markets: Enabling Decarbonisation

Biomethane GOs support a wide range of regulatory frameworks across the EU aimed at decarbonising energy usage in heating, transport, and industry.

1. Heating and Industrial Use

While no EU-wide biomethane blending mandate currently exists, several Member States have introduced national-level obligations or incentive schemes. For example, the Netherlands will implement a blending obligation from 1 January 2027, where compliance is measured by CO₂ reduction and supported by a buy-out mechanism.

GOs allow users of conventional gas to legally claim the renewable benefits of biomethane, through a “book and claim” approach—separating the physical use of gas from its environmental value. For heavy industrial processes, this enables companies to lower Scope 1 emissions by replacing fossil fuels with certified renewable gas.

2. Transport Sector (FuelEU Maritime & Blending Rules)

The transport sector is under increasing decarbonisation pressure, and biomethane - especially in liquefied form (Bio-LNG) - is recognised as a key transitional fuel. Regulations like FuelEU Maritime, effective from 2025, provide incentives for sustainable fuels and require verifiable sustainability documentation.

GOs, often combined with national fuel certificates such as:

• HBEs (Netherlands),
• THG-Quoten (Germany),
• RTFCs (United Kingdom),

are essential to verify compliance and support trading. These fuel-specific certificates are separate from, but complementary to, GOs and create important revenue streams for biomethane producers.

AFS Energy actively facilitates the trading of these certificates, supporting clients in maximising their value.

3. Interaction with the EU Emissions Trading System (EU ETS)

While GOs themselves do not reduce the number of EU ETS allowances required, the actual use of biomethane in industrial installations lowers direct emissions, thus reducing the need to purchase expensive allowances (EUAs).

AFS Energy supports clients in navigating both the biomethane and ETS markets, providing integrated decarbonisation strategies.

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Voluntary Markets: Corporate Sustainability Beyond Regulation

Beyond compliance, a growing voluntary market is emerging, as companies seek to meet Environmental, Social, and Governance (ESG) objectives and net-zero targets.

Companies procure biomethane GOs to:

• Enhance Brand Reputation: Aligning with environmental values improves stakeholder trust.
• Meet Internal Emission Goals: Biomethane GOs enable credible reductions in Scope 1, 2, and even 3 emissions.
• Attract Sustainable Investment: Transparent and verifiable use of renewable energy improves ESG scores.
• Gain a Competitive Edge: Sustainability leadership distinguishes firms in crowded markets.

GOs provide the necessary audit trail and accountability for these claims, supporting best practices in carbon and sustainability reporting.

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Challenges and Opportunities in the EU Biomethane Market

Key Challenges:

• Regulatory Harmonisation: Disparities in national GO rules, market maturity, and support schemes require ongoing coordination despite ERGaR’s progress.
• Supply Constraints: Ambitious goals (e.g., REPowerEU’s 35 bcm target by 2030) necessitate rapid production scale-up and consistent feedstock availability.
• Price Volatility: Biomethane GO prices fluctuate with policy changes, fossil gas markets, and demand, complicating procurement strategies.
• Sustainability Compliance: Meeting RED II PoS requirements demands rigorous, third-party auditing - vital for maintaining market confidence.

Key Opportunities:

• Strong Policy Backing: RED updates and REPowerEU provide a reliable framework for market development and investment.
• Growing Investor Confidence: Clearer regulations and maturing markets are encouraging capital inflows.
• Digitalisation: New platforms for tracking certificates and emissions data enhance transparency and operational efficiency.
• Cross-Sector Utility: Biomethane’s versatility makes it a valuable decarbonisation tool for power, heat, and transport alike.

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AFS Energy: Empowering Market Access and Compliance

For industry participants, understanding the complexities of the EU biomethane credit system is essential—but navigating it alone is difficult. AFS Energy offers deep expertise and end-to-end market services.

Our Services Include:

• Market Intelligence: Real-time insights into GO pricing, supply trends, and regulatory shifts.
• Liquidity Access: A strong network of market participants ensures fast, efficient trading.
• Regulatory Compliance: Expert guidance on blending mandates, FuelEU Maritime rules, and voluntary reporting.
• Certification Assurance: Verified compliance with ISCC, Redcert, and Better Biomass standards.
• Integrated Strategy: Synergising biomethane procurement with EU ETS positions for broader environmental impact.
• Strategic Advisory: Customised strategies that reflect client-specific goals and risk profiles.

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Biomethane GOs - The Engine of Europe’s Green Gas Future

Guarantees of Origin are more than bureaucratic instruments - they are the backbone of Europe's green gas revolution. By enabling traceability, preventing double counting, and monetising environmental attributes, GOs unlock biomethane’s full decarbonisation potential.

As the EU accelerates towards its climate objectives, the need for verifiable, high-quality renewable gas will only increase. For companies, participating in this market is not just beneficial - it is a strategic necessity.

With its market access, regulatory knowledge, and integrity-driven approach, AFS Energy is an indispensable partner in helping organisations harness the power of biomethane to meet both compliance demands and voluntary sustainability goals.