Biomethane Emissions Trading Scheme UK: The UK government has once again baffled the anaerobic digestion and biogas energy sector — this time by dragging its feet on a critical issue that’s threatening to derail billions in clean energy investment.
Despite strong public support from Energy Secretary Ed Miliband for biomethane as a “practical and cost-effective” route to net zero, the UK Emissions Trading Scheme (ETS) continues to treat this renewable gas as if it were a fossil fuel.
This contradiction is more than just a bureaucratic slip-up — it’s an obstacle to unlocking jobs, innovation, and climate progress. While the United States, under “a far less green-focused administration”, is surging ahead with biomethane adoption, the UK stalls over an “anomaly” its own officials have already admitted is wrong.
Incineration would suffer. So, does it have something to do with the degree to which the previous government allowed local authorities to place very long-term contracts for incineration, when incineration has only ever been a transitional technology on the way to a renewable energy and circular economy future? If so, why are they reticent about placing the blame for excessive incineration on the previous government – something we hear with tedious repetition in other areas!
So why is fixing it taking so long? The anaerobic digestion industry — and wider energy community — is asking the same thing.
11 September 2025 PRESS RELEASE:
Ed Miliband backs biomethane but plays for time on ETS anomaly
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 Anaerobic Digestion and Bioresources Association (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
Key Takeaway
The UK ETS was designed to mirror the EU’s system after Brexit, but in the process, an anomaly slipped through the cracks: biomethane is still lumped in with fossil fuels. This oversight is now stalling billions of pounds of green investment — even while the rest of the world, including the EU and the US, races ahead to embrace biomethane as a cornerstone of clean energy.
What is the Biomethane Emissions Trading Scheme UK (UK ETS)?
When the UK left the European Union, it also stepped away from the EU Emissions Trading System (EU ETS) — the EU’s flagship mechanism for cutting greenhouse gas emissions. To avoid losing momentum on climate commitments, the UK launched its own version in January 2021: the UK Emissions Trading Scheme (UK ETS).
ETS Timeline
The European Union creates the first major cap-and-trade system for greenhouse gas emissions.
The UK votes to leave the EU, setting the stage to exit the EU ETS.
The UK formally exits the EU ETS and prepares its own scheme.
Britain introduces its independent emissions trading system, modelled on the EU ETS.
Rules treat biomethane as if it were fossil natural gas, creating an anomaly.
Government consults on biomethane’s role but offers no immediate solution.
Industry leaders baffled as government delays fixing the ETS anomaly despite admitting it is wrong.
At its core, the UK ETS is a “cap-and-trade” system. That means the government sets a cap on the total amount of greenhouse gases certain industries can emit. Companies then buy or trade allowances that permit them to release a given amount of carbon dioxide (or equivalent). Over time, the cap is lowered, which pushes businesses to cut emissions or face rising costs for polluting.
Sounds fair enough — but here’s the twist.
Despite biomethane being a renewable, low-carbon fuel, the UK ETS still treats it in the same way as fossil natural gas. This is the anomaly that has left so many in the industry scratching their heads. It makes no sense to place biomethane — which is produced from organic waste and slurry, and which actively helps reduce emissions — in the same emissions basket as fossil fuels that add carbon to the atmosphere.
The UK’s approach has created a real contradiction. On one hand, the government talks up biomethane as vital for net zero and energy security. On the other, its own trading scheme puts unnecessary barriers in the way of investment, growth, and adoption.
And remember, this isn’t about subsidies or special treatment — it’s about correcting a policy quirk introduced after Brexit, so the UK’s system reflects reality: biomethane is not fossil fuel.
