Biomethane production in Northern Ireland: Insights from the DfE report

The Department for Economy (DfE) launched a Call for Evidence in May 2024 seeking views on the development of biomethane production and its role as a sustainable and secure renewable energy source in Northern Ireland. Last week, DfE published their report following the response from around 50 key stakeholders on the key issues, which we have summarised below.

1. Key issues: Role of biomethane and the Path to Net Zero

The report labels biomethane as a versatile energy source that could powerfully reduce carbon emissions in NI. Although a primary role was not identified, the report acknowledges the potential for biomethane to displace fossil gas from home heating, be used as a sustainable transport fuel or for industrial processes and electricity generation.

In the short term, biomethane could be used to decarbonise long haul and distribution road transport, utilising the UK’s Renewable Transport Fuel Obligation scheme which is currently scheduled to run until 2032. In the medium to long term, increased production and revenue streams from the by-products of the Anaerobic Digestion (AD) process could help lower biomethane prices. Large-scale energy storage could also be developed to assist with inter-seasonal storage.

The report highlights how setting production targets could promote greater market certainty and drive investment, however, there is concern that this may encourage unsustainable production if not managed appropriately.

Management of feedstocks

The report also addresses the management of feedstocks and potential measures to increase food waste sent to AD. These include a general ban on food waste sent to landfill, higher fees for commercial food waste sent to landfill and public awareness campaigns which would help make the AD route more attractive for disposal.

The widespread separation of slurry is largely supported to produce feedstock and improve nutrient management, however, effects on environmental compliance should be noted. A divided response was received on encouraging farmers to produce grass silage as although beneficial for providing feedstock and creating additional revenue, it may create competition with food production. Overall, it was agreed that feedstock will need to be effectively managed to facilitate nutrient recovery and alternative uses for digestate.  

Economics of producing biomethane

The report highlights that the cost of production of biomethane is higher and more expensive for consumers who are unlikely to be willing to pay a premium for biomethane. Large-scale, centralised plants may be the best approach to manage injection points more effectively and reduce operating costs with smaller plants also having a role in treating specific feedstocks and utilising biogas directly on site. Larger plants may also be better placed to explore the revenue potential of by-products with greater capital available to invest in the required infrastructure.

Government support should be explored to facilitate investment in the sector as the report highlights how producers and investors would require a minimum rate of return for investment of 10-15%, perhaps rising to 25% depending on risk. A Contracts for Difference scheme is one option suggested in the report to guarantee a minimum price.

Overall, the report notes the importance of aligning any NI support mechanisms with those in Ireland to standardise the route to market across the island.

Treatment of connection-related costs

Currently in NI, biomethane producers are required to pay all connection related costs which creates a significant barrier to development. Across the rest of the UK, Ireland and some EU countries, the connection costs are commonly shared with gas network operators.

The report outlines a variety of responses on whether biomethane producers should pay all costs for single injection sites or multiple producers should share a hub and split costs or whether costs should be socialised to reduce the burden on producers. In general, strategic investment will be required for the NI gas network to optimise biomethane injection as most production potential lies in rural areas where there is insufficient demand for large volumes of biomethane.

Other issues

The report also highlights other issues such as the need for public bodies to collaborate on the biomethane policy and the need for gas storage to support production in light of seasonal demand. Furthermore, a quarter of the responses referred to current excessive delays in the planning process which has prevented large-scale energy investment across the renewable sector.

2. Next steps

In summary, the report clearly highlights the potential for the biomethane sector in Northern Ireland whilst also addressing the key challenges that need to be considered pre-development. The next step for DfE will involve drafting a policy framework based on the outcomes of this report to facilitate the development of this sector in Northern Ireland and realise its full potential. The draft policy will be subject to a public consultation which will offer stakeholders a further opportunity to comment on the direction of the biomethane framework.

For more information, please contact Mark Stockdale, Partner, Elle McMaster, Solicitor or your usual A&L Goodbody contact.

Date published: 23 April 2025