From farms to fuel: Ukraine’s biomethane opportunity for energy security and European decarbonisation

In 2025, Ukraine exported biomethane to the European Union (EU) for the first time – a milestone that opens an opportunity to scale-up domestic low-emissions gas. Home to the largest agricultural land area in Europe, Ukraine has the resource potential to become one of the continent’s leading biomethane producers, supplying both its domestic market and the EU via an already existing pipeline infrastructure.

The first exports of biomethane come at a critical moment. Repeated Russian attacks on Ukrainian energy infrastructure have exposed the vulnerabilities of centralised energy supply. Although biomethane relies on the same gas distribution and transmission infrastructure as natural gas, its production is inherently more decentralised than domestic natural gas extraction, reducing exposure to disruptions affecting individual production sites. Biogas and biomethane can also be used for local production of electricity and heat.  Additionally, the ongoing conflict in the Middle East continues to drive imported natural gas price volatility. In this context, countries with support schemes based on biomethane tariffs and premiums, such as France, Denmark or Italy, have been relatively successful in shielding biomethane prices from recent spikes in natural gas, including during the 2022 energy crisis.

Expanding biomethane production can contribute to improving energy supply resilience during the ongoing war while supporting the transition to a more diversified and sustainable energy system over the longer term. Realising Ukraine's biomethane potential, however, will depend less on feedstock availability than on addressing policy, infrastructure and market barriers.

Ukraine’s 33 million hectares of agricultural land provide access to substantial feedstock volumes spanning agricultural waste and residues, cover crops, agro-industrial by-products and organic municipal solid waste. The IEA estimates Ukraine’s biogas and biomethane production potential, using only waste and residues, at roughly 11.6 billion cubic meters equivalent (bcme) per year, making it the European leader in terms of available feedstock. 

Ukraine’s biomethane sector benefits from another advantage in addition to feedstock availability: well-developed domestic gas infrastructure. The country’s extensive gas network connects in the West and South to Poland, Hungary, Slovakia and Romania via Moldova, with a combined exit capacity of around 140 bcm of natural gas per year. Ukraine also hosts Europe’s largest underground gas storage facilities, with a total capacity of 31 bcm. Located mainly in the western part of the country, far from the frontline, these facilities could also be used to store biomethane alongside natural gas. Together, this infrastructure provides a strong foundation for scaling up biomethane production and unlocking new revenue streams as demand for renewable gases grows across Europe.

Ukraine’s biogas sector has expanded steadily since it began taking shape in 2015. By mid-2025, 85 plants with a combined installed electrical capacity of 140 MWe were in operation, including landfill gas facilities producing around 33 MWe. These numbers represent a biogas production in the range of 260-300 million cubic meter (mcm) per year. To date, most biogas production is used for electricity and heat generation.

Alongside this, biomethane production is beginning to emerge. Ukraine’s first biomethane plant injected gas into the national grid in 2023, marking an early but significant step forward. While biogas is usually burnt onsite for power and heat production, it can also be purified and upgraded into biomethane, which has properties similar to natural gas. This makes it compatible with existing gas grids and natural gas equipment, broadening its range of applications and enabling transport and cross-border trade through pipeline networks.

In February 2025, Ukraine reached a key milestone, exporting biomethane to the EU for the first time. In addition, the first liquified biomethane (bio LNG) from Ukraine to Germany via road took place in autumn 2025.

As of March 2026, seven biomethane plants were operating in Ukraine with an installed capacity of 111 mcm/year, equivalent to around 0.5% of Ukraine’s gas consumption. While still small relative to national gas demand, Ukraine’s current production scale is comparable to the early commercial stage of biomethane development in countries such as Denmark, where biomethane output remained below 0.2 bcm/year before accelerating rapidly in the 2010s, to around 1bcm today. In addition, five new plants with total installed capacity of 20 mcm/year are expected to become operational in 2026 in Ukraine, further scaling production capacity and signalling a shift from pilot deployment towards early market expansion.

Biomethane can make a direct contribution to Ukraine’s energy security by diversifying supply and reducing reliance on imported natural gas. This has become increasingly critical following sustained Russian attacks on energy infrastructure, which in 2025 temporarily disrupted around 60% of Ukraine’s domestic gas production capacity and heightened the country’s dependence on imports. Although biomethane relies on natural gas networks for transport and distribution, its production is inherently decentralised, relying on smaller, distributed facilities that are less exposed to large-scale disruptions. Expanding production can therefore strengthen Ukraine’s energy system resilience and help maintain supply continuity throughout the war while also supporting the transition to a more diversified and sustainable energy system over the longer term.

Beyond energy security, biomethane deployment supports Ukraine’s goals and its path toward EU accession. As a direct substitute for natural gas, it can help reduce emissions in hard-to-electrify sectors such as transport and industry. For energy-intensive industries like steel, this matters beyond Ukraine’s borders: lower-emissions production improves competitiveness in the EU market under the new carbon border adjustment mechanism (CBAM).

Given its close ties to agriculture, scaling up biomethane production can also generate broader benefits, including rural economic development, job creation, improved waste management and new markets for organic fertilisers derived from digestate. Ukraine’s relatively strong domestic manufacturing base adds a further advantage, with around half of the equipment for new plants produced locally.

The EU’s twin challenge of strengthening energy security while advancing emissions reductions have only grown more urgent in the wake of recent supply disruptions. The planned phase-out of Russian gas has further accelerated the need to diversify supply sources and expand domestic clean energy production.

The EU has identified biomethane as a key component of its energy transition strategy. Under the REPowerEU Plan (2022), it aims to increase production from nearly 5 bcm in 2025 to 35 bcm by 2030. However, recent IEA projections suggest biogas and biomethane combined output may only reach around 26 bcm by that date, indicating a potential supply gap. This shortfall underscores the strategic value of reliable external suppliers. More recently, in April 2026, the European Commission presented the AccelerateEU package, where it highlights the political priority of clean energy, including biogases, to provide affordable and secure energy in response to renewed geopolitical tensions and concerns over EU energy resilience and import dependence.

Strong EU demand – particularly in markets such as Germany – creates attractive price signals for Ukrainian producers. Ukrainian biomethane production is estimated to be profitable at EUR 800-900 per thousand cubic meter (tcm), against its production costs of about EUR 650/tcm and domestic natural gas prices of around EUR 382/tcm prior to the onset of the Middle East conflict. In contrast, some EU biomethane markets offer up to EUR 1 000/tcm, making exports particularly attractive. According to the Bioenergy Association of Ukraine (UABIO), roughly half of future production could serve domestic demand, with the remainder destined for export. Depending on the regulatory framework and available support mechanisms, the export share could increase further, given the higher revenues in export markets.

Ukraine’s biomethane production deployment programme, approved in April 2026, sets ambitious production targets of 1 bcm of biomethane per year by 2030 and 2.1 bcm per year by 2035, building on the previous production target in its National Energy and Climate Plan (NECP) and National Renewable Energy Action Plan (2024). The NECP also includes projections for heating and cooling output from biogas, electricity generation from both biogas and biomethane, and biomethane use in transport. Altogether, these projections correspond to the equivalent of an additional 2 bcme of biogas by 2030, on top of the 1 bcme biomethane target. While biomethane is expected to expand more rapidly, biogas, a lower-cost fuel that can be consumed directly on site, will continue to represent a significant share of the country’s renewable gases supply.

However, several challenges continue to constrain sector growth. Currently, biomethane struggles to compete in a highly subsidised natural gas market, where households and district heating companies pay only around one third of market prices. Support mechanisms that reflect the environmental benefits of biomethane also remain weak. For instance, Ukraine’s CO2 tax is very low – around UAH 30/t CO2 or EUR 0.6/t CO2 - and biomethane is still subject to fossil CO2 taxation, despite being a biogenic fuel, unlike in countries such as Sweden, Germany and the United Kingdom.

Infrastructure and technical constraints add further challenges, including the need to upgrade and adapt existing gas network infrastructure, ensure compliance with gas quality standards, and coordinate with system operators for grid integration. In addition, war-related risks continue to weigh on investor confidence, concerning both national and international investors.

Ukraine’s experience with renewable electricity offers a useful reference point. Support mechanisms under the Alternative Energy Sources Act, combined with competitive auctions, have helped drive the deployment of biogas-based power generation. A similar stable and transparent policy framework for biomethane could accelerate investment, reduce risks and support further integration with European energy markets.

Access to EU export markets is particularly important for generating demand signals and attracting investment, and Ukraine has taken concrete steps to enable this. These include permitting biomethane exports while maintaining the broader domestic natural gas export ban introduced after Russia’s full-scale invasion in 2022, and a range of project incentives in place since 2023 for biogas and biomethane projects above EUR 12 million, covering tax exemptions, import duty waivers on new equipment, preferential land use rights and compensation for grid connection costs. A further milestone was the launch of a national biomethane registry in February 2026, aligned with EU sustainability, certification and tracking requirements, following a Ukraine-EU Memorandum of Understanding signed in 2023. The registry enables certificates to be issued, transferred and cancelled, preventing double counting and laying the groundwork for future interoperability with the EU Union Database. More recently, the approval of a Programme for the Development of Biomethane Production by 2035, together with its accompanying Action Plan, marks an important step in establishing short- and medium-term production targets backed by institutional coordination and a clear implementation strategy.

Ukraine can unlock its biomethane potential through a clear and stable policy framework that lowers investment risks, builds domestic demand, and supports integration with European markets. Key priorities include:

1. Ensure implementation of a clear long-term strategy and governance framework

Building on the adopted Ukraine Biomethane Development Program 2035, ensure effective implementation through clear governance and coordination, while extending the strategy with post-2035 targets aligned with European Union climate goals.

2. Deploy targeted financial support and de-risk investment

Explore the introduction of incentives to production - such as feed-in premiums or contracts for difference -, capital grants, concessional finance and risk-sharing tools, while continuing to mobilise international funding.

3. Enable infrastructure integration and EU market access

Simplify permitting and grid connection, upgrade gas networks, continuing to align sustainability standards with the EU, and remove remaining export barriers.