Richard Nan
Head of UK Environmental Sales Trading, CSC Commodities
Resilient growth, strategic investment and regulatory clarity define Europe’s biomethane landscape as the market moves toward 2026.
A resilient market amid global uncertainty
The past year has marked a turning point for Europe’s biomethane market. Despite the International Maritime Organization’s (IMO) decision to postpone a global carbon levy on shipping, a move that unsettled some market participants, the European market has proven remarkably robust. Regulatory consistency, investor confidence and strategic procurement are aligning to create one of the most dynamic growth stories in renewable energy.
FuelEU Maritime as a catalyst for demand
Under the EU’s Fit for 55 package and the introduction of FuelEU Maritime, shippers operating within European waters face clear obligations to reduce emissions, with targets set to tighten through 2050. This clarity has already driven a major shift in market behaviour. Since April 2025, demand for low-carbon biomethane has increased sharply, driven by the maritime sector’s decarbonisation needs and reinforced by national blending mandates across transport and industry.
At CSC Commodities, we have seen a notable rise in trading activity and pricing over the past six months, reflecting both limited supply and growing competition for compliant fuels. In several segments, biomethane prices have more than doubled compared with early-year levels. This surge is not speculative; it reflects a structural transformation in how energy buyers plan long-term procurement strategies.
Europe leading the way
While the IMO’s delay created short-term uncertainty, it has also reaffirmed Europe’s leadership in designing practical, enforceable climate policy. FuelEU Maritime now stands as a blueprint for potential global frameworks. If the IMO revisits its proposal in 2026, it may well align with the European model, introducing clearer obligations and more ambitious emission-reduction pathways. This would further strengthen the role of low- and negative-carbon fuels such as biomethane, already embedded within the EU’s compliance systems.
Supply constraints and investment opportunities
Supply remains the key constraint in the years ahead. The EU’s target of 35 billion cubic metres of biomethane by 2030 demands sustained investment in feedstock logistics, upgrading capacity, and cross-border trading infrastructure. Yet the policy direction is unmistakable: tighter carbon accounting and the expansion of compliance markets from maritime to road transport and heavy industry, are establishing a durable, multi-sector demand base.
This environment rewards early movers. Fuel buyers who maintain or expand their biomethane exposure today are better positioned to secure reliable supply and manage future price uncertainty. Those who wait risk procurement bottlenecks as regulation tightens and competition intensifies.
What to expect in 2026
Several trends are likely to shape the next stage of growth. The first full-year compliance data from FuelEU Maritime, expected in April, will provide valuable insight into biofuel usage and trading volumes across European shipping. Increased investor participation, especially from utilities and infrastructure funds, is set to accelerate project development and regional capacity. Meanwhile, the integration of renewable gases into the EU ETS and national blending mandates will likely deepen market liquidity and support price transparency.
Conclusion: momentum built on fundamentals
Despite shifting global politics, Europe’s biomethane story remains one of consistency and progress. Regulatory stability, maturing trading frameworks, and strong corporate commitment to decarbonisation continue to propel the European market forward.
The lesson from 2025 is clear: Biomethane has firmly established itself as a cornerstone of Europe’s energy transition and its importance will only grow stronger through 2026 and beyond.
CSC Commodities, a division of Marex, supports market participants in the European and UK biomethane space, providing access to liquidity to secure supply and manage risks.
Contact us to learn more about how the team can support you.
