Ireland, Spain and Poland are among a number of Member States now looking to biogas to support the transition to sustainable energy systems. Biogas can contribute to energy security, decarbonisation and the principles of circular economy, as well as providing economic opportunities for rural areas. But is biogas infrastructure a beneficial use of public funds? In new research, Sophie Scherger of the Institute for Agriculture and Trade Policy lays out the lessons that can be learned from an early adopter of biogas: Germany.
Op-ed by Sophie Scherger.
While biogas — energy produced mostly from crops or animal manure — has long been promoted as part of the European Union’s (EU) energy transition, it now receives renewed attention as a tool to address agriculture’s methane emissions.
Yet, before pouring the public’s money into the buildup of biogas digesters across the EU, it is worth having a look at the experience of early adopters like Germany.
The past and current state of the German biogas industry has shown how subsidizing biogas without a clear vision for how it fits into a broader plan for a more sustainable food system can result in billions of public funds spent on infrastructure that fails to fit into a long-term transformation of our food and energy systems.
If we want to make better use of public money, we need to change the starting point: we must see biogas primarily as a tool to utilize residual material in an agroecological and regenerative food and agriculture system, instead of an energy resource to be scaled up regardless of the consequences.
Germany has been an early adopter in the biogas industry
Germany has developed its biogas sector for more than 20 years and today has the world’s largest biogas market. It is home to roughly 8,600 biogas production sites, making up about 45% of the biogas plants in the EU.1 In comparison, as the second and third largest EU biogas producers, Italy and France have about 2,400 and 1,900 biogas plants respectively.
95% of Germany’s biogas plants process agricultural materials. 15% of those are smaller plants that rely on at least 80% animal manure.
In Germany, biogas is primarily used for electricity production, and to a smaller extent, for district heating. Biofuel and hydrogen production from biogas is marginal.2
The German biogas industry has been built up with the goal to produce more non-fossil energy. While that is a worthy goal, large-scale biogas production resulted in negative effects that other energy sources like solar or wind are better at avoiding.
Public support for these energy sources created demand for agricultural materials, in particular energy crops like maize and animal manure. Between 2010 and 2020, the input of agricultural materials more than doubled. The central problem of a focus on energy is that it often pays little attention to the impacts that substantial subsidies have created, scaling up demand for energy crops and livestock manure.
Biogas is an expensive energy source that relies on public subsidies
Biogas is a comparatively expensive energy source. To be economically viable, most plants heavily rely on public subsidies, often much more than other sources of energy. While biogas plants receive on average 17.8 cents per kilowatt-hour (kWh) for the energy they supply, solar parks only receive 7 cents/kWh.3
Germany’s industry required decades of public support to be built up. Despite attempts to move towards a more market-based system, the industry continues to rely on public funds to be economically viable.
Germany’s biogas industry started expanding in 2000 with the introduction of the Renewable Energy Act (Erneuerbare-Energien-Gesetz, or EEG). The EEG introduced a system of publicly guaranteed payments for electricity fed from energy sources considered renewable, including biogas, granting plant operators access to public subsidies for a period of up to 20 years.
Since then, it has been modified multiple times, moving from fixed government subsidies to a larger emphasis on market prices.
This shift required most plant operators to sell their energy directly to the market. However, public subsidies topped up the market price with a “market premium” to cover the difference between the market price and the level of guaranteed payments.
Going one step further, Germany introduced a competitive tendering process in 2017 — the government determines a set volume of biogas it is prepared to hand out subsidies for, and biogas producers must bid to receive those subsidies in the form of a market premium. It was introduced to cut public spending, but also to offer subsequent public funding beyond the initial 20-year period that was coming to an end for the first generation of biogas plants.
Subsidy dependence warrants discussion about use of public funds
Despite attempts to make the German biogas industry less dependent on subsidies, in most cases government funds remain central to making biogas production economically viable. In 2023, 95% of biogas plants sold their electricity directly to the market, but of that 95%, only 5% operated without any public subsidies.4
At the same time, more biogas plants have started to come to the end of their 20-year guaranteed subsidy period. By 2030, around 3,000 biogas plants will no longer receive the guaranteed payment.
The end of the guaranteed subsidy period has resulted in two developments: It has caused the number of biogas plants in Germany to decrease since 2020. At the same time, it has increased the number of plant operators — mostly, but not only farmers — applying for continued government subsidies through the competitive bidding process. In April 2025, the biogas tender received nearly three times as many offers as it had capacity for.
Handing the industry a lifeline, the government decided in January to adopt a new subsidy package that significantly increases the volume of the future tenders. The first one in October had four times the volume of the April tender.
As the pressure from the biogas industry builds to extend public subsidies for biogas production in the long term, it is critical to ask the question why we should continue to support biogas production given the fact that it is expensive, highly dependent on public subsidies, and provides critical environmental and climate challenges.
Germany has one of the world’s largest biogas industries, and as such, faces different challenges than countries relatively new in the sector, such as Ireland, Spain, or Poland. Its key challenge is deciding how much and what type of biogas infrastructure is worth subsidizing, as the country must assess where biogas can provide societal benefits that are worth being publicly supported.
This also requires explicit analysis of the negative effects public subsidies for biogas have had on Germany’s agricultural production in the past.
Excessive demand for energy maize required government restrictions
The buildout of the German biogas industry in the 2000s resulted in widespread cultivation of maize as the main input of biogas production. This was not a side effect but — at least initially — a desired outcome, given specific bonus payments for the use of energy crops.
Today, plant operators continue to rely on maize because it is more energy-dense and as such more economical than animal slurry.
Yet, the widespread reliance on energy maize for biogas production heavily impacted crop cultivation across Germany. In some areas, the focus on energy maize crowded out other crops, caused ploughing of carbon-rich grasslands for maize cultivation and exacerbated existing challenges with nutrient surpluses, soil erosion, and water pollution.
These observations resulted in the German Environmental Agency calling for early restrictions on maize use for biogas production. Already in 2012, the German government saw itself forced to introduce a “maize cap” to address these impacts, limiting the share of maize in biogas production for each plant to 60%. The cap has been progressively lowered since then and will be limited to 30% in 2026.
As a result, the share of energy crops in biogas production decreased. Nevertheless, in 2023 energy crops still provided about 70% of the energy from biogas while being 40% of the materials used for biogas production.
Animal manure is not a simple replacement for energy crops
Using fewer energy crops while maintaining or expanding biogas production creates more demand for other materials, especially so-called “waste products” like animal manure.
Currently, the majority of biogas plants rely on at least 30% manure (see graphic). 80% of the manure used comes from cows — pig and chicken manure only make up a only around 10% and 5% respectively.
The German biomass research center and the German Environmental Agency conclude that much more biogas could be produced from manure. While certainly more desirable than energy crops from near-monoculture systems, policymakers should be cautious about the extent to which such theoretical potential may be possible, sustainable, and desirable.
Considering how biogas may fit into a more sustainable food system is critical to avoid effects of biogas plants going hand in hand with the expansion of industrial livestock production, as observable in the United States, standing at odds with the transformation needed.
A more sustainable future food system comes with fewer animals — and less manure for biogas
To address the climate crisis, reducing methane emissions — including from livestock — is the closest tool we have to an emergency brake.
One of the main sources of agricultural methane emissions is manure. Biogas may help to mitigate some of those emissions, but it has its limits. An EU study concluded that technical measures, including biogas production, can only address about 25% of direct emissions from livestock.
Critically, our current size and model of livestock production is responsible for climate pollution beyond emissions from manure. As such, scenarios that explore the role of the EU and German agriculture sector in achieving climate targets, show that reducing the livestock herd while shifting to healthier diets is a critical measure.
Global analysis shows that to meet our climate targets, we need to shift to more plant-rich diets, which in turn also means addressing the size of the livestock herd. A smaller livestock herd in Germany would also reduce the amount of overall manure that would be technically available for biogas production. Such a reduction would reduce the potential of replacing energy crops with manure.
Broad incentives for propping up manure-based biogas production could in turn create a perverse incentive, maintaining or even expanding livestock production that delivers sufficient manure.
More biogas production comes with structural decisions
Aside from quantity, where the manure is being produced also matters for biogas production. This is because even small biogas plants require a certain amount of manure to be economically viable, and it makes little economic or environmental sense to transport manure over more than 10 to 15 kilometers.
The German experience shows that the structure of agricultural and livestock production across different regions has influenced where biogas plants have been built, their size, and to what extent they rely on manure. This includes the size of the livestock herd at the regional level as well as on individual farms, the crops grown in the area, and the financial incentives for specific types of biogas plants.
A 2016 analysis of the manure-based biogas production potential in Germany concluded that farm size is the key limiting factor for processing manure to biogas.
To support manure-based biogas, but avoid long transport routes, Germany currently provides support for “small manure-based biogas plants.” However, while such plants are classified as small, they require manure from a larger-than-average size of livestock farm to be economically viable.
The Bavarian Biogas Forum outlines that economically viable biogas production would require manure from at least 300 adult cows if a plant relies on manure only, and half of that if they add 20% energy crops. Running the maximum size of such a “small” plant would require more than 450 cows or more than 17,000 hogs if the plant runs on manure only, and more than 200 cows or more than 6,300 hogs if 20% maize was used.
For comparison: the average German farm with livestock held just above 100 cows in beef production or about 80 animals in dairy production in 2023, with significant regional differences.
This means that a considerable number of animals must be concentrated on one farm or nearby to run even a small biogas plant in Germany. This may be at odds with recommendations by the 2021 German and 2024 EU stakeholder dialogue on the future of agriculture that recommended addressing areas with particularly dense livestock populations.
Match biogas to the agriculture system — not the other way around
Integrating such perspective into the planning of biogas infrastructure is critical to avoid spending public funds on infrastructure that does not fit with a sustainable agriculture and food system.
One can make an interesting theoretical thought experiment of the current German biogas infrastructure and what the ideal infrastructure would look like if the goal was to process the animal manure currently available in Germany.
A 2018 EU analysis came to the conclusion that such theoretical infrastructure in Germany would require about 1,400-2,000 biogas plants, providing a total installed capacity between about 800-940 megawatts (MW).
In comparison, Germany currently already has 8,600 biogas plants (excluding biomethane plants) with an installed capacity of 6,500 MW, suggesting that Germany’s infrastructure is built up far beyond what would be needed to rely purely on manure as biogas feedstock. In addition, the existing plants might not be at the location or meet the needed capacity and technological requirements.
A future reduced and more dispersed animal herd — potentially even more grazing livestock rather than permanently housed herds, further reducing the amount of collectable manure — would aggravate this fact.
Biogas must be part of a larger livestock strategy for 2050 and beyond
Manure-based biogas is best supported where it creates additional benefits of reducing unavoidable emissions from livestock rearing while covering gaps in energy systems.5 Yet, identifying where that may be most beneficial requires thinking about biogas as part of a long-term livestock strategy, rather than from a pure energy focus.
A recently published report by Agora Agriculture asserts that manure-based biogas production can be part of the picture. But biogas production must not be the goal; rather, it is incorporated into a vision for a larger transformation of the livestock sector, including a reduction of the overall number of livestock as well as of livestock density. The analysts recommend approaching Germany’s biogas potential from what agricultural materials are available, where they’ are available, and whether they offer additional environmental benefits.
Ultimately, policymakers need to reconsider the primary purpose of subsidizing manure-based biogas: supporting a non-fossil fuel-based source of energy, with the added benefit of potential emission reductions from manure and waste; or primarily reducing emissions from livestock operations, with the added benefit of generating energy.
At a time when public funds are sparse, policymakers should carefully evaluate biogas subsidies. The specific inclusion of biogas in the European Commission’s proposal for the next Common Agricultural Policy makes the question of good use of public funding particularly relevant.
At the very least, the EU’s livestock strategy, expected in mid-2026, should include a clear vision for the sector that takes broader environmental and climate impacts into account, where at best, biogas production has a niche role.
Footnotes
1. It also has 220 biomethane plants that represent about 15% of the EU’s biomethane plants. Statistics about the concrete number of biogas plants across the EU and Germany differ slightly depending on the source. The percentages refer to the 2022 statistics from the German Fachagentur Nachwachsende Rohstoffe e.V. and 2023 statistics from the European Biogas Association, cited by Rabobank.
2. With the Russian invasion into Ukraine, the upgrade of biogas to biomethane — a gas that is chemically equivalent to fossil gas — is receiving increased support across Europe. While often being conflated in public discourse, biogas and biomethane serve different purposes and require different infrastructure to produce and distribute. For example, biogas is mostly turned into electricity or heat locally. Germany produces a significant share of biomethane in the EU, yet France has recently overtaken Germany’s output. This blog focuses on biogas, not biomethane.
3. See also: Bundesverband Solarwirtschaft, 2025, Übersicht Vergütungen für PV-Anlagen nach EEG 2023; Fraunhofer IEE, 2024, Evaluationsbericht 1. Zwischenbericht (Rev 05) Vorbereitung und Begleitung bei der Erstellung eines Erfahrungsberichts gemäß § 99 Erneuerbare-Energien-Gesetz (EEG 2023) zum spartenspezifischen Vorhaben „Stromerzeugung aus Biomasse, Gülle, Biomethan sowie Klär-, Deponie- und Grubengas“
4. The 5% that does not directly sell to the market receives fixed government subsidies, mostly smaller manure-based plants.
5. For example, biogas is discussed as an energy source to balance out price hikes when solar and wind produce less energy. Manure-based biogas production is, however, not ideal for flexible and seasonal biogas production since it requires continuous digestion and the resulting gas can only be stored for few days.
This article is republished with permission from the Institute of Agriculture and Trade Policy.
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