AD plants ‘at serious risk of closing down’ as subsidies phased out
ADBA warns more smaller plants may close, despite the industry projected to produce over 30TWh of energy by 2030 and playing a key role in UK’s net-zero plan.
In a letter sent to the Chancellor Rachel Reeves, sent ahead of the Spring Statement (on 26 March), the AD trade body warns that the industry has already faced many closures over the last year, and the lack of action to support clean power production is making the government’s net zero and clean energy targets "increasingly difficult to meet”.
A survey conducted by the ADBA in late 2024 suggested that hundreds of small green gas plants are at risk of closure by 2031, with over 160 plants expected to come to the end of their existing support schemes within the next five years.
“Several anaerobic digestion plants have closed, and many more are at serious risk of shutting down—jeopardising over 2TWh of renewable electricity that could be lost before 2030," the letter, written by ADBA Chair Chris Huhne and Chief Executive Charlotte Morton OBE and co-signed by nearly 100 industry representatives and members, states.
A particular driver behind the anticipated wave of plant closures is the phasing out of older government support schemes, including the Feed-in Tariff (FiTs) and Renewable Obligation Certificates (ROCs) that provide revenue for many smaller plants.
The FiTs scheme, which provided payments to small-scale renewable electricity generators, and ROCs scheme, which placed obligations on licensed electricity suppliers to source a proportion of their electricity from renewable sources, are no longer open to new applicants, with over 400 plants expected to come to the end of their support in the next ten years.
Anaerobic digestion’s contribution to clean energy targets
Currently, AD produces more than 13TWh of biogas used to generate renewable electricity, comparable to solar which produced 14TWh in 2024, and over 7TWh of renewable gas. According to ADBA, this is expected to reach a combined total of at least 30TWh by 2030, "significantly contributing to … clean power objectives".
The letter explains that AD power is often generated in rural areas, supporting small businesses, farms, and communities across the country while also playing a role in decarbonising wastewater treatment, food recycling, and the food and drink manufacturing sector.
A recent study by ADBA and Business Modelling Applications (BMA) found that the UK government could save nearly £300 billion by the greater use of green gas, which offers an alternative option to offshore and onshore wind investment and to traditional fossil gases.
The organisation claims the sector is “poised for rapid growth” but requires positive government action to realise its potential.
“If your government makes the right decisions and the Treasury provides further support to the Department for Energy Security and Net Zero, the AD sector will experience significant growth, attracting billions of pounds of investment in the coming years. This will ultimately help you achieve your key growth mission," the letter states.
Policy requests to grow the biogas sector
The letter outlines three specific areas where urgent support is needed for AD and biogas to fulfill their role in achieving net zero:
- Equal treatment with other renewables under the UK Emissions Trading Scheme
- Suitable support schemes to replace existing tariffs and certificates due to expire in the next few years
- Recognition as a key component of the UK’s national energy infrastructure
Under the UK Emissions Trading Scheme currently, a zero emissions factor is applied to biomethane produced through AD and directly combusted at installations covered by the scheme. However, ADBA has suggested that when biomethane is injected into the gas grid, there is no mechanism to account for its use within the UK ETS.
This differs from renewable electricity generators like wind and solar that fall under the ETS if their capacity exceeds a certain threshold.
Morton and Huhne conclude the letter by stating: "The sector is alive, ready, and capable of playing its part in delivering net zero while generating homegrown, cheaper, greener, and more secure energy for the future. However, it requires action from you and your government to reach its full potential."
