Biomethane and sustainable fuels in general have garnered significant attention from policymakers and investors as solutions, including for the decarbonisation of the transport sector in the European Union. The German and Danish biomethane markets have attracted interest by producers, including in adjacent countries. Both markets have seen significant decarbonisation ambitions and significant recent volatility due to various regulatory and market changes. At the same time, the EU has expanded its focus to the decarbonisation of aviation and maritime transport, creating new marketing and off-take opportunities for biomethane-based fuels.

The Japanese Sumitomo Corporation is one of the world’s largest trading and investment companies, investing in renewable and carbon-free energy related businesses. As part of its European activities, Sumitomo agreed to a collaboration with Skovgaard Energy, a Danish renewable energy group focused on producing sustainable fuels and developing innovative, scalable energy solutions.

To support its due diligence process, Sumitomo Corporation commissioned a NERA team led by Director Dominik Hübler and Consultant Leonie Janisch to conduct due diligence of the Danish, German, and EU regulatory frameworks for biomethane and renewable fuels.

Among other things, NERA analysed the revised and extended Danish CO2 tax schemes and their implications for feedstock sourcing and the attractiveness of the Danish biomethane/biofuel market. NERA’s analysis also covered the economic implications of regulations for biomethane and biofuel imports to the German market and GHG quota system as well as intra-EU trade more generally. In light of the government change in Germany and the new European Commission taking office, the NERA team analysed potential regulatory developments affecting mid- to long-term investments.

The team assessed key parameters such as main GHG quota design elements, time horizons of regulatory provisions, and measures against fraudulent biofuel imports. Based on this analysis, NERA developed scenarios for the future development of the regulatory framework for European biomethane production and trade, summarising key risks and potential policy developments relevant for biomethane/biofuel investors in the European and German markets.

In early June 2025, Sumitomo Corporation announced the acquisition of portfolio shares and a strategic partnership with Skovgaard Energy. The collaboration will focus on developing and scaling up biogas, sustainable aviation fuels (SAF), and green hydrogen production.

NERA experts regularly advise on transactions in renewable energy and energy infrastructure sectors, providing due diligence advice on biomethane/biogas projects, renewable electricity projects, and electricity and gas transport assets.