Biomethane is being driven by incentives and the National Recovery and Resilience Plan, but national targets are at risk

Biomethane production targets in Italia will not be met within the set timeframe, but the sector is playing an increasingly strategic role in transport, industry and energy security. Together with biofuels, it represents a high-potential sector which, however, according to the 2026 edition of the “Biomethane & Biofuels Report’ published by Energy&Strategy at the Polimi School of Management in Milan, these sectors are not yet mature; they face high costs (as they rely on imported raw materials) and are held back by regulatory uncertainties.

Biomethane is one of the most mature options for replacing fossil gas, and whilst its main area of use is transport, it can be used in both industry and the residential sector. Whilst the European leaders in this field are France, in terms of the number of plants and production capacity, and Denmark, in terms of average plant size, in Italia, as of June 2026, there were 176 plants in operation, 115 of which were established under Ministerial Decree 2018, which, together with Ministerial Decree 2022, has encouraged investment in biomethane. Current production capacity stands at approximately 115,000 Smc/h (just over 1 billion Smc/year) and the geographical distribution remains heavily skewed towards Northern Italia, where the majority of plants – both operational and under development – are concentrated.

Despite this progress, which has also been driven by funds from the National Recovery and Resilience Plan (PNRR), sAccording to the Polimi report, Italia will not manage to meet the target set out in the Integrated National Energy and Climate Plan (Pniec), which envisages the production of 5 billion cubic metres of biomethane by 2030. The shortfall could range between 1.2 and 2.1 billion cubic metres per year, whilst achieving the targets appears more realistic only around 2035. To bridge this gap, it would be necessary not only to streamline authorisation procedures but also to harmonise legislation that has become fragmented over the years (measures have been varied and short-term) and has prevented operators from planning long-term investments.

“The market is characterised by a highly complex regulatory framework, low project bankability, a poorly integrated supply chain, fragmented production and low cost competitiveness compared to fossil-based natural gas,” said Paolo Maccarrone, the report’s scientific director. “Policy-makers still lack a long-term strategic vision that would provide the necessary stability for operators: not just production incentives, but tools that address the unresolved issues of structured demand and supply chain integration.”

The same applies, in a sense, to the biofuel sector. Over the last 20 years, global production of liquid biofuels has increased sevenfold, reaching 157 million tonnes in 2024 (of which 19 million tonnes were produced in Europe, where consumption stood at 21 million tonnes), but the production of fossil fuels for transport, however, remains much higher: according to the World Bioenergy Association and the Global Biofuel Alliance, it exceeded 2.5 billion tonnes in 2024.