Summary
Last Updated: June 22, 2026
- What is Biomethane?: Biomethane, also known as “Renewable Natural Gas”, is upgraded biogas that is emerging as a lower-carbon alternative to fossil gas in Canada.
- Suitable Industries: Biomethane is expected to support emissions reductions in buildings and hard-to-electrify industries alongside electrification and hydrogen.
- Current Usage: Canada is currently using only about 14% of its feasible biomethane potential, yet full development could reduce emissions by roughly 40.2 Mt by 2050.
Related services: Research Services
Biomethane Supply & Demand
Most biomethane is currently produced via anaerobic digestion technologies, as well as methane recovery systems in landfills and wastewater treatment plants; this is considered a first generation biofuel. Second generation biofuels include biomethane produced from biomass gasification technologies, which can leverage organic feedstocks such as woody biomass.
In response to demand for low-carbon replacements to conventional gas heating, some provinces have responded proactively; BC and Québec mandated distributors to supply minimum blends of biomethane across their gas grids, and New Brunswick has begun exploring a similar policy. Provincial policies have led to increased biomethane procurement by several Canadian gas utilities. FortisBC, BC’s largest fossil gas supplier and a North American leader in biomethane delivery, signalled in 2022 that it may need to procure up to 60 Petajoules (PJ) by 2030 to meet provincial climate targets. In Québec, gas utility Énergir committed in 2023 that all new gas connections would use 100 per cent biomethane. As of now, national biomethane capacity was approximately 9 PJ in 2022 and is expected to rise to 18.1 PJ per year by 2026, with the launch and expansion of annual consumption reach 2,789 PJ by 2050 (~63 per cent of current gas consumption).
Biomethane as a decarbonization solution in Canada’s built environment and heavy industry
As previously described, biomethane can be used to decarbonize commercial, industrial and residential heating, as well as a substitute for fossil gas in heavy industry. Because of the limited adoption of natural gas vehicles in Canada, transportation is omitted from this review.
The built environment accounted for approximately 13 per cent of Canada’s emissions in 2021; the third-most, behind only Oil & Gas and Transportation. Over 78 per cent of building emissions in Canada are produced from space and water heating equipment, most of which are gas-fired appliances. Apart from building retrofits and other energy efficiency measures, building emissions can be reduced by fuel-switching, either by replacing gas appliances with electrified counterparts such as heat pumps or by replacing fossil gas with low-carbon and/or renewable gases such as biomethane. As mentioned, BC and Québec are already blending varying amounts of biomethane into their gas grids to reduce customer emissions.
Heavy industry comes in right behind buildings, at 11 per cent of national GHG emissions. Despite the push for electrification, there are some sectors that lack viable medium-term electrification solutions for industrial processes; according to the IEA, technologies that would be used for direct electrification in the cement, chemicals and iron/steel-making industries are between a TRL of 4-5. These industries can use biomethane and syngas as direct replacements for fossil gas until such time electrification technologies reach commercial viability. For example, pulp and paper facilities can use renewable gas as a alternative for their gas-fired boilers, cement manufacturers can use renewable gases as heat sources for clinker production, and LNG facilities can substitute biomethane for the fossil gas used in upstream production.
To demonstrate the potential of biogas and biomethane on Canada’s GHG emissions, the Canadian Biogas Association commissioned a study in 2022 that modeled the effects of an expanded suite of supportive policies. This work indicated that only 14 per cent of feasible potential was currently being used, and that if 100 per cent of technical potential (estimated by Navius Research to be 524 PJ of biomethane in 2050) was leveraged, these gases could deliver 40.2Mt of GHG reductions by 2050.
Technology gaps and opportunities
Biomethane’s most convenient attribute as a climate solution is that it serves as a drop-in fuel for existing infrastructure, meaning no new demand-side technology is needed to use it. Once upgraded from biogas to biomethane, the product is identical to fossil gas and utilities can blend it in as a portion of the gas delivered to customers. Nonetheless, supply-side technology limitations remain a barrier.
One of the most significant challenges policymakers and planners have to contend with when considering biomethane as a future climate solution is the lack of certainty in the technology readiness of gasification technologies. Both BC’s 2022 renewable gas supply study and TorchLight’s national study considered second-generation biofuel technologies to be pre-commercial. The first and only demonstration project to-date has been the GoBiGas plant in Sweden. Based on current findings from the IEA, biomass gasification technologies producing biomethane currently range from TRL 5-9, globally. This presents a challenge, as in BC’s case, the vast majority of long-term projected biomethane supply is second-generation.
Nonetheless, Canada has a number of innovators who are tackling this challenge. REN Energy is leading low cost production of biomethane using gasification technologies; their plants in BC are a first in North America and expected to be operational by 2025. G4 Insights, also based in BC, is developing PyroCatalytic Hydrogenation technology, another means to convert forestry waste into biomethane and other renewable gases. Other Canadian companies scaling RNG include Anaergia, which develops advanced anaerobic digestion systems, and Nexterra, which develops small-scale gasification systems.
Next steps for biomethane production
Due to the supply constraints previously outlined, it is reasonable to expect that biomethane will not replace Canada’s current demand for fossil gas. However, when it comes to the built environment, the substitutability of heat pumps for gas appliances as well as the public and private sector efforts to maximize energy efficiency allow for that to be overcome by positioning biomethane as a complementary solution rather than a principal source of Canadian GHG reductions.
Given these challenges and opportunities, there may be reasonable grounds to consider how to optimize biomethane’s use in Canada. As discussed in the review of sectoral applications, there are several opportunities for renewable gases such as biomethane to play a role in the decarbonization of heavy industry.
Particularly because, at this time, electrification solutions are not expected to be primary drivers of GHG reductions in those sectors. While we await widespread commercialization of CCUS and hydrogen technologies, fuel-switching to biomethane could make interim progress.
Furthermore, as some provinces reach short-term limits in clean electricity supply, an optimized approach that uses biomethane strategically in coordination with electrification and clean hydrogen investments could be even more critical to energy security. Sectors that have readily-available electrification solutions could prioritize that route, while biomethane supply could be directed towards the most hard-to-electrify sectors.
Whether a “best-use” approach is used or not, continued investment and innovation in biomethane technologies will be necessary. Ongoing support will need to be directed towards clean technology companies that are attempting to breakthrough on gasification, and to Canada’s utilities as they invest in growing all new sources of supply.
