Renewable Natural Gas Market Size and Trends

The global renewable natural gas market is estimated to be valued at USD 14.03 Bn in 2024 and is expected to reach USD 24.23 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 8.1% from 2024 to 2031.

Renewable Natural Gas Market Key Factors

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The growth in the global renewable natural gas market is driven by many countries and states increasing their renewable energy targets over the next decade. With continued expansion of waste-to-energy projects and growth of organic waste, the supply of renewable natural gas is expected to steadily rise to meet the growing demand. Many utilities and power generation companies are investing more in renewable natural gas projects as it helps them meet environmental regulations at a relatively low cost compared to other alternatives like hydrogen.

Market Driver - Government support and incentives

With the looming threats of climate change becoming more apparent, governments across the globe are focusing their policy efforts towards transitioning to more eco-friendly sources of energy. Renewable natural gas has emerged as a promising option that can leverage the existing infrastructure for natural gas while providing carbon neutral or negative options. Many jurisdictions have introduced financial incentives and policy support for the production and use of renewable natural gas, for instance, The Renewable Natural Gas Incentive Act of 2023 proposes to amend the Internal Revenue Code to increase the tax credit for renewable natural gas (RNG) used as a transportation fuel. The act aims to raise the credit to $1.00 per gallon for RNG sold for use in vehicles, aviation, or by the taxpayer. By enhancing the incentive for RNG production and consumption, the legislation seeks to drive job creation, economic expansion, and emissions reduction across various sectors. In North America, countries like the U.S. and Canada offer production tax credits and grants for setting up biogas plants and projects involving biomethane injection into natural gas pipelines. States and provinces also provide rebates and subsidies for businesses and consumers adopting renewable natural gas. This includes incentives for purchasing vehicles that can run on renewable natural gas. Such supportive policies and financial packages make renewable natural gas an attractive investment proposition and also reduce the cost of adoption, increasing its competitiveness against traditional natural gas.

In Europe as well, governments have rolled out renewable energy targets that consider biomethane and other forms of renewable natural gas as qualifying fuels. Financial incentives like carbon credits and feed-in-tariffs ensure producers of renewable gas can benefit. Italy, France, and Sweden too offer lucrative policy frameworks driving higher renewable natural gas consumption. Even in Asian nations, China and South Korea are formulating progressive policies around biogas and biomethane production from agriculture and municipal waste streams. With more commitments being made towards net-zero emissions globally, the incentives for transitioning to cleaner renewable fuels like natural gas are expected to further scale up in the coming years. This is anticipated to significantly boost investments and capacity additions in the renewable natural gas industry.

Demand for cleaner sources of energy

Around the world, businesses and consumers are embracing sustainable alternatives as climate change awareness grows. There is a strong preference for energy sources that offer carbon neutral or negative profiles compared to conventional fossil fuels. Renewable natural gas perfectly fits the bill as it can be easily integrated within existing natural gas infrastructure and provide a 'drop-in' clean replacement. As cities and industries aim for net-zero emissions targets over the next few decades, switching to renewable natural gas allows them to continue relying on familiar natural gas for various applications while meeting sustainability goals. Renewable gas provides carbon savings throughout the value chain from production to use.

Biomethane from organic wastes is increasingly seen as a viable method to transition existing natural gas users towards a greener option without major modifications. Utilities too are making investments to accommodate higher volumes of renewable gas into their networks to cater to customer needs. Even in the transport sector, renewable natural gas is emerging as a top alternative fuel for heavy-duty trucks and municipal fleets aiming to reduce their carbon footprint. As more emphasis is placed on the climate change mitigation capabilities of different fuels, renewable natural gas is attracting greater demand backed by its inherent environmental benefits over conventional sources. With a push for sustainability across end-use segments, demand momentum for renewable alternatives like natural gas is expected to really take off in the coming years.