Biomethane certificates are a market-based mechanism designed to support the decarbonisation of natural gas. Biomethane, also referred to as biogas, is produced through anaerobic digestion of organic materials and has significantly lower associated emissions in comparison to natural gas. However, due to uncertainty related to the technology and to ensure holistic sustainability, there are frequent debates regarding the applicability of using biomethane certificates to report a reduction in Scope 1 emissions.
This article provides a snapshot of the level of acceptance of biomethane certificates with the major mandatory and voluntary reporting standards.
How are Biomethane Certificates Used?
Biomethane certificates, also known as Renewable Gas Guarantees of Origins (RGGOs), represent 1 kWh of renewable gas. They are issued in batches according to the specific characteristics of the renewable gas produced across a given time period by a producer.
Unlike the certification market for electricity which enables companies to report zero (market-based) emissions for every MWh covered by a suitable EAC, (i.e. GOs in Europe, REGOs in the UK, RECs in the USA and Canada etc), the production and distribution of biomethane remains in the early stages of development.
Currently, international guidance on whether or not biomethane certificates are permitted to report a reduction in Scope 1 emissions is unclear, with varying opinions across different voluntary and compliance sustainability frameworks.
Where are Biomethane Certificates Accepted for Carbon Reporting?
EU Emissions Trading Schemes (EU-ETS) – Accepted
The EU ETS allows the purchase of biogas provided it meets the conditions of: biogas quantities are not double counted, and producer and consumer are connected to the same gas grid. Standard RGGOs are not permitted. In order to ensure the relevant quality criteria are met, actual quantities of biogas must be met. If mass balance is used through a biogas registry, a RED II approved certificate in the registry may be considered as a purchase record which must include proof of sustainability.
CDP – Accepted
Biomethane certificates are accepted in CDP, providing that the certified biogas is defined as a contractual instrument that meets the Scope 2 Quality Criteria in GHG Protocol Scope 2 Guidance.
Streamlined Energy and Carbon Reporting SECR (UK) – Accepted
SECR guidance states “A similar ‘dual reporting’ approach should be taken for biogas and biomethane”, directly permitting the use of biomethane certificates to report a reduction in Scope 1 emissions for UK operations.
GHG Protocol – Unclear
The GHG protocol is currently developing an updated standard which is set to include definitive guidance on biomethane and the use of certificates to report reduced Scope 1 emissions. The updated standard is expected to be released in 2028.
Over time, the GHG Protocol has both accepted and not accepted biomethane certificates. Initially, the Scope 2 guidance included the use of contractual instruments for market-based Scope 1 reporting, allowing biomethane certificates provided they met the Scope 2 Quality Criteria. However, in 2020, this was removed due to being out of scope for the guidance. Later, in 2023, the draft Land Sector and Removals Guidance explicitly stated that “certificates or credits should not be used to adjust the associated Scope 1 emissions”, although this was later removed for further exploration on the issue.
SBTi – Unclear
The current SBTi version interprets the GHG Protocol’s guidance as not permitting of biomethane certificates, and therefore states that they “cannot guarantee that these certificates would be a valid approach to meeting science-based targets”.
The SBTi is undergoing a public consultation and has developed a draft Version 2 of their Net-Zero Standard. In this updated proposed version, biogas is recognised as a way of reducing Scope 1 emissions, however, it does not specify if the biogas must be from a direct supply or if biomethane certificates are suitable.
CSRD – Unclear
There is limited discussion of biogas or biomethane within CSRD guidance or ESRS Standards. Biogas is permitted within the fuel mix, however, it does not state whether this refers to biomethane certificates or a direct supply of biogas. Market-based reporting is only a requirement for Scope 2. Alternative certificates, such as carbon credits are explicitly detailed to not be included, however, this is not the case for biomethane certificates.
UK Emissions Trading Schemes (UK-ETS) – Set to be accepted
The UK ETS does not currently accept biomethane, however, as the EU and UK ETS systems are negotiating terms to linkage, this is expected to change and allow biomethane use in line with the EU ETS.
Have Companies Started Reporting with Biomethane?
While the guidance remains unclear, companies are starting to use biomethane certificates as part of their decarbonisation strategies.
The most well-known example of biomethane being reported to decarbonise Scope 1 emissions is AstraZeneca who have recently entered a Gas Purchase Agreement (GPA) with Future Biogas in the UK. Prior to this and to cover additional markets, they have been purchasing biomethane certificates to report a reduction in Scope 1 emissions.
AstraZeneca report biomethane certificates in line with GHG Protocol guidance on biogenic fuels, however, they also state in their methodology the emissions which would be expected if they were to use conventional natural gas. AstraZeneca are verified by the SBTi, although it is unclear whether they include their market-based Scope 1 emissions in the SBTi submission.
Develop your Biomethane Certificate Strategy
NUS’ Sustainability division can guide companies through the process to develop a bespoke strategy for the purchasing of biomethane certificates. This can incorporate assessing market conditions and availability, developing an approach to the range of criteria significantly impacting costs, and carrying out a competitive tender exercise through our network of biomethane certificate traders.
If you wish to speak further about areas on how biomethane certificates could support your organisation’s sustainability journey, contact us by email: contact@nusconsulting.co.uk or visit us online.