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UPDATE: Guidance Dispute May Halt Decarbonization Efforts in the Natural Gas Sector

Update: September 26, 2023

The GHGP has withdrawn Annex B (the biomethane appendix) of the draft Land Sector and Removals Guidance and will defer decisions on biomethane to broader revisions on the GHGP now underway. Final decisions are unlikely before Q1 2025. In addition, GHGP summarized comments and held webinars on the Corporate Standard and Scope 2 and 3 guidance recently. The market-based accounting/Scope 1 survey summary webinar is expected soon.

Global and regional sustainability initiatives, institutions and regulation are likely going to follow suit once the final decision is made. Our expert opinion is that biomethane/RNG credits may be counted towards Scope 1 emission after all, albeit the details of this are unclear at this time.

Update July 3, 2023

While the IEA projects biomethane demand will double between 2025 and 2030, things may take a very different turn in light of a debate over the fate of biomethane certificates. Since the pilot guidance of the Greenhouse Gas Protocol (GHGP) on Land Sector and Removals (LSR) was published in Q3 2022, we’ve seen heated debates between biogas industry stakeholders and the GHGP over whether market-based accounting measures (e.g., the use of biomethane certificates) shall count towards Scope 1 emission reduction.

The pilot guidance explicitly disallows the use of these certificates — a stark contrast to how renewable electricity certificates (RECs) are treated for greenhouse gas (GHG) emission reductions. Why is this important? Institutions, such as the RE100 or the Science Based Targets initiative (SBTi) are following the guidance from the GHGP to determine their accounting standards for GHG emissions.

The GHGP secretariat received overwhelming data and feedback from the Pilot Testing from more than 150 participating organizations and thus the development of a final version for the LSR guidance governing the use of biomethane certificates for Scope 1 emission reduction (amongst other topics) has been postponed — originally from Q2 to Q3 2023, but more recently until Q2 of 2024. In the meantime, the GHGP secretariat will continue to analyze all data and feedback from the review and pilot testing groups to prepare key issues to discuss with the technical working group and advisory committee, where the draft guidance will be revised.

At this stage, things could go either way:

  • If the current guidance remains, it would essentially mean companies adhering to SBTi rules could only account for Scope 1 emission reduction via biomethane supplied by a designated pipeline (vs. the natural gas grid) or by enclosed transport methods (rail, trucks, tankers).
  • Alternatively, the final guidance may provide a pathway for companies to use market-based accounting methods like renewable natural gas certificates for Scope 1 reduction. This outcome could channel investment in biogas and biomethane production resulting in a decrease in costs and use of these certificates as a standard tool for decarbonization, just like GOs and RECs are for electric power.   

Our team of market intelligence analysts and our experts in renewables will continue to collaborate to monitor these developments.

For more information on this emerging topic, check out our video on decarbonization and Scope 1 emissions or download our whitepaper.