A Tougher Test for Biogas Power Under Section 48E

Section 48E links incentives to zero emissions electricity and prompts developers to reassess biogas project strategies

4 Dec 2025

The US biogas industry is reassessing investment plans as the Section 48E clean electricity credit comes into force for projects placed in service after 2024. The incentive applies only to facilities that generate electricity or provide energy storage and can show an emissions rate at or below zero, a sharp break from earlier schemes that supported many biogas and renewable natural gas plants regardless of output.

Standalone gas-producing sites no longer qualify. Facilities converting biogas to electricity may be eligible, but only if they satisfy the credit’s emissions test. Analysts note that, despite the policy shift, public disclosures through late 2025 show no broad wave of conversions or redesigns, with most developers focused on evaluation rather than rapid change.

The emissions requirement adds technical complexity. Verification depends on lifecycle analysis or an emissions-rate petition. Combustion-based systems could struggle to comply, although projects that capture methane that would otherwise escape may achieve net negative results. Advisors say outcomes will vary by feedstock, technology and site conditions.

Legacy incentives continue to shape decisions. Projects that began construction before December 31 2024 can rely on older Section 48 or Section 45 rules if they meet safe-harbour standards, easing pressure for immediate redesigns and influencing financing strategies.

Public bodies may still use direct pay if they meet the new emissions threshold. Advocacy groups warn that some agricultural and waste-sector methane mitigation projects could face added hurdles, though improved modelling or equipment upgrades may help others adapt.

Developers are now examining compliance pathways, investors are reassessing risk, and policymakers are tracking industry responses. The coming period will show which biogas technologies remain viable as incentives shift toward verified zero-emissions electricity