Danish biomethane growth grinds to a halt

Insights
Biomethane market, Guarantees of Origin, Producers

Denmark’s biomethane industry has experienced a rapid growth, expanding from 2.96 TWh in 2019 to over 8.1 TWh injected into the Danish gas system by 2024, according to Energi Data Service. However, between 2023 and 2024, the pace of biomethane production significantly slowed down, driven by a combination of interconnected factors:

  • Infrastructure and grid injection constraints
  • Fluctuations in feedstock availability
  • The postponement of the green gas tender
  • Limited commissioning of new plants

Among the key factors, the policy change in recent years from a subsidy feed-in tariff to tender based investment grant with a price ceiling for new plants has more likely discouraged new projects and slowed down expansion.

In 2024, over 80% of Danish biomethane was exported through Guarantees of Origin (GoOs) to markets such as Germany and Sweden, according to Biogas Danmark. Although the physical gas often remains in Denmark, the associated GoOs are sold abroad, driven by more favorable taxation policies in neighboring countries

A major barrier to increasing domestic biomethane consumption is Denmark’s tax policy. Biomethane delivered through the gas grid is subject to the same CO₂ tax as natural gas, with no distinction between fossil and renewable gases. However, reforms are under consideration. In 2024, the Danish Ministry of Taxation proposed exempting unsubsidized biomethane from the CO₂ tax, provided its renewable origin is verified through GoOs. This policy change, however, remains under review.

Despite the recent slowdown, Denmark remains firmly committed to its goal of achieving 100% green gas usage by 2030. With a strong agricultural base and well-developed biogas infrastructure, the country is well-positioned for future expansion. Overcoming financial, regulatory, and infrastructure hurdles will be essential to revitalizing biomethane production and reaching national energy targets.

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