Steering Towards a Greener Gas Future

The United Kingdom is resolutely pursuing its Net Zero target by 2050, a commitment that requires a comprehensive overhaul of its energy landscape. While offshore wind power has emerged as a flagship source of renewable electricity, decarbonising heating, heavy industry, and transport—sectors heavily dependent on gas—presents a distinctive challenge. Biomethane, derived from organic waste, is becoming an essential part of the UK’s strategy, offering a pragmatic ‘drop-in’ solution that utilises the existing gas infrastructure. Unlike EU member states, the UK operates a unique biomethane credit framework, shaped by national policy and post-Brexit implications.

This article explores the complexity of the UK’s biomethane credit market, focusing on the two principal mechanisms used to recognise and incentivise green gas: Renewable Transport Fuel Certificates (RTFCs) and Green Gas Certificates (GGCs, also known as Renewable Gas Guarantees of Origin or RGGOs). We examine the operation of these certificates, their application in both compliance and voluntary markets, and the policy frameworks supporting them—alongside the distinctive characteristics of the post-Brexit regulatory environment. We also highlight how expert trading firms such as AFS Energy are instrumental in guiding industry players through this evolving landscape to achieve their decarbonisation goals.

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The UK Biomethane Landscape: Production and Strategic Role

The UK’s biomethane sector is expanding, backed by significant investment in anaerobic digestion (AD) infrastructure. Biomethane production addresses several national priorities:

• Waste Management: Offers a sustainable method for managing agricultural (e.g. manure, slurry) and food waste, diverting it from landfill and mitigating methane emissions.
• Energy Security: As a domestically produced renewable gas, biomethane bolsters the UK’s energy resilience and reduces dependency on imported fossil gas.
• Decarbonisation: Displaces fossil gas in hard-to-abate sectors including heavy transport, industrial processes, and grid-based heating—contributing directly to Net Zero targets.

Biomethane can be injected into the National Gas Grid or used directly in transport as compressed (bio-CNG) or liquefied (bio-LNG) biomethane.

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Core UK Biomethane Credit Mechanisms: RTFCs and GGCs

The UK operates two distinct certificate systems to account for renewable gas use:

1. Renewable Transport Fuel Certificates (RTFCs)

• Purpose: Incentivise renewable fuel usage within UK transport.
• Mechanism: Fuel suppliers are bound by the Renewable Transport Fuel Obligation (RTFO), mandating a specified proportion of renewable fuels in overall sales. This is fulfilled by acquiring and surrendering RTFCs to the Department for Transport (DfT).
• Issuance: One RTFC is issued per litre or kilogram of renewable fuel or gas supplied. Double certificates (2 RTFCs) may be granted for fuels derived from sustainable waste feedstocks meeting enhanced sustainability standards.
• Trading: RTFCs are tradable commodities. Suppliers may either produce renewable fuel themselves or purchase RTFCs from others. Prices vary based on market dynamics.
• Sustainability Standards: Biomethane must comply with stringent criteria covering emissions savings and land use. The UK RTFO remains closely aligned with EU RED II benchmarks.
• AFS Energy’s Role: AFS Energy supports RTFC trading, helping fuel suppliers and fleet operators meet their obligations and maximise sustainability impact.

2. Green Gas Certificates (GGCs) / RGGOs

• Purpose: Certify renewable origin of biomethane injected into the grid for non-transport uses, including heating and industrial processes.
• Mechanism: Managed by the Green Gas Certification Scheme (GGCS) under Renewable Energy Assurance Limited (REAL), issuing one certificate per kWh or MWh of eligible gas.
• Trading and Retirement: GGCs can be traded independently of the physical gas. Once claimed, they are ‘retired’ in the registry to ensure exclusivity and prevent double-counting.
• Links to Support Schemes: GGCs are integral to schemes such as the now-closed Renewable Heat Incentive (RHI) and the ongoing Green Gas Support Scheme (GGSS) and Green Gas Levy. They provide verifiable proof of renewable gas supply under these programmes.
• Sustainability Requirements: Like RTFCs, GGCs demand adherence to sustainability standards.
• AFS Energy’s Role: AFS Energy facilitates procurement and retirement of GGCs, ensuring compliance and helping clients achieve decarbonisation across heating and industrial applications.

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The Post-Brexit Landscape: Autonomy and Divergence

Brexit has reshaped the regulatory and trading context for biomethane in the UK:

• Regulatory Independence: Although UK policies remain similar to EU RED II, the government now has full authority to diverge, requiring ongoing monitoring of regulatory changes.
• Recognition of EU Guarantees of Origin (GOs):
  • No Automatic Recognition: UK GGCs are not automatically accepted in the EU and vice versa.
  • Voluntary Market Use: Some organisations may still accept foreign certificates for ESG purposes, based on internal policies.
  • Traceability Complexity: Cross-border trading can be more challenging without harmonised frameworks.
• Energy Sovereignty: Biomethane aligns with post-Brexit priorities around domestic energy production and reduced import reliance.

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Biomethane in Compliance and Voluntary Markets

1. Compliance

• Transport: RTFCs enforce the use of renewable fuels within transport. Rising obligations are expected to drive further biomethane uptake, especially in road and maritime sectors.
• Heating and Industry: The GGSS incentivises biomethane grid injection, targeting hard-to-electrify sectors. GGCs serve as evidence for renewable gas use in these contexts.
• UK Emissions Trading Scheme (UK ETS): Biomethane substitution for fossil gas in ETS-covered installations can reduce emissions obligations—providing a cost-effective route to compliance.

2. Voluntary

• UK companies are increasingly proactive in sustainability commitments. GGCs support ESG reporting and reputational goals, enabling credible claims around renewable gas usage. The GGCS ensures the reliability of such claims.

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Market Challenges and Opportunities

Challenges

• Investment Barriers: High capital requirements and long payback periods impede large-scale AD project development.
• Feedstock Security: Ensuring long-term, sustainable feedstock without conflicting with food supply remains a key issue.
• Infrastructure Needs: Expansion of injection capacity and transport fuelling infrastructure is required.
• Policy Certainty: Stable, long-term support frameworks are crucial for attracting investment.

Opportunities

• Net Zero Mandate: The 2050 target underpins market growth and policy alignment.
• Domestic Energy Focus: Biomethane is well-placed to meet the UK's push for homegrown energy.
• Waste Valorisation: Turning waste into renewable gas offers both environmental and economic benefits.
• Technological Innovation: Advances in AD, gas upgrading, and carbon capture will improve efficiency and reduce costs.
• Sectoral Flexibility: Biomethane enables decarbonisation of sectors where electrification is unfeasible.

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AFS Energy’s Expertise in the UK Market

Navigating the UK’s independent biomethane credit regime demands in-depth expertise. AFS Energy offers:

• RTFC Trading: Ensuring obligation fulfilment and revenue optimisation.
• GGC/RGGO Services: Supporting procurement and certificate retirement for decarbonisation efforts.
• Market Insight: Providing clients with up-to-date intelligence on policy and pricing.
• Regulatory Support: Guiding stakeholders through the RTFO, GGSS, and related schemes.
• Sustainability Assurance: Using ISCC, Redcert, and Better Biomass accreditations to verify environmental integrity.
• International Perspective: Bridging knowledge across UK, EU, and US biomethane markets.

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Biomethane as a Cornerstone of Net Zero

Biomethane, backed by robust RTFC and GGC frameworks, is central to the UK’s decarbonisation strategy. Despite the regulatory fragmentation brought by Brexit, the market is poised for expansion, with clear policy signals and domestic production incentives. For UK businesses, leveraging these mechanisms goes beyond compliance—it is a strategic pathway to reducing emissions, enhancing energy independence, and showcasing environmental leadership. With expert partners like AFS Energy, the complexity of the UK biomethane market becomes navigable, paving the way for meaningful contributions to a cleaner, greener future.