Engie, PepsiCo ink 10-year biomethane purchase agreement

Engie has signed a 10-year biomethane purchase agreement with PepsiCo UK, the companies said Jan. 21.

Under the deal, the French energy company will develop an anaerobic digestion plant in Northern England to supply about 60 GWh/ year (5.7 million cu m) of biomethane for PepsiCo's supply chain. Sales are set to commence in 2027, once the plant is operational.

The companies said the biomethane agreement is the "first of its kind for the UK food and drink industry" and PepsiCo's first in Europe, the Middle East and Africa.

The deal is expected to help reduce PepsiCo's CO2 emissions by over 10,900 metric tons/ year compared to 2022.

"This new project illustrates Engie's strategy to accelerate the development of biomethane for Industry through a long-term biomethane purchase agreement, which is essential to Europe's energy sovereignty and the decarbonization of its economy," said Cecile Previeu, Engie's executive vice president for network activities.

Previeu added that the project would advance Engie's goal of developing 10 TWh/ year of biomethane production capacity in Europe. The company currently runs 1.2 TWh of capacity across France, England, Belgium, and the Netherlands, it said.

"As a low carbon, domestically produced energy source, biomethane will be a key lever in our broader decarbonisation strategy," PepsiCo UK's Sustainability Senior Manager, Sian Hamson, said.

"This GBP70 million [$93.9 million] investment in clean energy will drive growth across the North of England," said Alan Whitehead, minister for energy security and net zero. "Biomethane production and partnerships between companies such as Engie and PepsiCo show that the industry is backing this government's mission for clean, homegrown energy."

Platts, part of S&P Global Energy, assessed the UK crop Renewable Gas Guarantees of Origin spot price at Eur11.676/MWh on Jan. 20, down 0.98% day over day.

Lagging growth

The UK deal comes amid a recent lag in European biogas and biomethane expansion. Regulatory headwinds slowed the sector's growth in 2024, according to the most recent data from the European Biogas Association.

The EBA's latest statistical report, published in December 2025, showed total European production hitting 22 Bcm in 2024, up 1.4% compared to 2023. The annual growth rate was the lowest on record, going back to 2011.

However, the EBA stressed it sees the deceleration as temporary. By 2030, it expects Europe to add 7.3 Bcm/year of biomethane production capacity from 900 new plants across the continent.