Could biomethane give small businesses another path to lower-emissions energy?
Australia’s energy transition is creating a new set of challenges for businesses.
Many businesses are being asked to reduce their emissions, but moving away from gas is not always straightforward. For some small and medium-sized businesses, switching to electric equipment could mean significant upfront costs, changes to existing operations or replacing equipment that is still working perfectly well.
For businesses that rely on gas for heating, cooking, hot water or industrial processes, there is another option worth knowing about: biomethane.
What is biomethane?
Biomethane is a renewable gas made from organic waste, including food waste, agricultural residues and wastewater.
The important thing for businesses is that it can work much like the natural gas they already use. It can be supplied through existing gas networks and used in many existing gas appliances and equipment without requiring a complete change to the way a business operates.
That means businesses could potentially reduce emissions without having to replace all their existing gas infrastructure at once.
A more practical way to reduce emissions
For a small business, decarbonisation isn't simply about choosing the technology with the lowest emissions. Cost, reliability and disruption matter too.
Imagine a business that relies on gas for commercial cooking, heating or hot water. Moving entirely to electric equipment could require new appliances, electrical upgrades, changes to the premises and significant upfront investment.
Biomethane offers a different pathway.
Rather than replacing everything at once, businesses could potentially continue using their existing equipment while progressively purchasing renewable gas as supply becomes available.
This could make emissions reduction more achievable for businesses where electrification is technically difficult, expensive or disruptive.
It turns waste into energy
One of the interesting things about biomethane is where it comes from.
Organic waste that would otherwise go to landfill or require disposal can be used to produce renewable gas. This includes food waste, agricultural waste and other organic materials.
So biomethane isn't just about finding another source of energy. It can also support better waste management and create new economic opportunities for regional communities, farmers and waste businesses.
For Australia, which produces significant amounts of agricultural and organic waste, there is considerable potential to develop this resource domestically.
Australia has the resources to produce it
Australia has the potential to produce significant quantities of biomethane from resources already available here.
A 2025 study by Blunomy estimated that Australia's available feedstock could theoretically produce enough biomethane to meet up to 96 per cent of current east coast gas demand. Other estimates are more conservative, but still point to a substantial potential domestic supply.
The opportunity is particularly relevant as businesses face ongoing uncertainty around energy prices and supply.
Producing more renewable gas domestically could help diversify Australia's energy supply and reduce reliance on international energy markets.
It's already being used overseas
Biomethane isn't a new or experimental concept.
Countries across Europe are already producing and using renewable gas at commercial scale. Denmark, France, Germany, Italy and the UK have all developed policies and markets to support its growth.
Denmark's gas network, for example, already contains a significant share of biomethane and the country is working towards an increasingly renewable gas supply.
This international experience provides an indication of what could be possible in Australia as production and infrastructure develop.
What could this mean for your business?
For businesses that currently rely on gas, biomethane could eventually provide another way to reduce emissions without completely redesigning their operations.
That could be particularly relevant for businesses such as:
- restaurants, cafes and commercial kitchens
- food manufacturers and processors
- manufacturers using gas for heating or high-temperature processes
- hospitality businesses using gas for hot water or heating
- agricultural and food businesses
- other businesses where replacing gas equipment with electric alternatives is difficult or expensive
The opportunity will depend on the availability and cost of renewable gas, as well as how the market develops.
But the key point is that businesses don't necessarily have to view electrification and renewable gas as an either/or choice.
Different businesses will have different energy needs, and a combination of technologies may ultimately provide the most practical pathway to reducing emissions.
What happens next?
The biggest challenge for biomethane in Australia isn't whether the technology works. It's developing the market at the scale needed to make renewable gas readily available to businesses.
Governments and industry are beginning to support this development. In New South Wales, for example, the Government has set a target for industrial processes to consume 15 per cent renewable gas by 2035 and has established a $40 million Renewable Gas Production Program.
As production increases, the hope is that renewable gas becomes a practical option for more businesses.
For small businesses, this could mean having another tool available when considering how to manage rising energy costs, emissions requirements and the transition to a lower-emissions economy.
A transition that works for business
The energy transition will not look the same for every business.
For some, electrification will make sense. For others, existing gas equipment will remain an important part of their operations for many years.
Biomethane could help bridge that gap — providing a renewable alternative that can work with existing gas infrastructure while turning organic waste into a useful source of energy.
As Australia's renewable gas industry develops, small businesses should keep an eye on how biomethane could fit into their own energy strategy.
The goal isn't necessarily to replace one energy source with another overnight. It's about giving businesses more practical options to reduce emissions, manage costs and keep their operations running as Australia moves towards a lower-emissions energy system.