Abstract

Over the last decade, demand-side policies are increasingly implemented to correct market failures and overcome the systemic problem in complex social-technical systems such as energy transition. This paradigm shift in policy approach results from realizing that relying solely on supply-side policy instruments to push innovative solutions into the market is insufficient. As part of the energy transition, many developed countries have considered Biogas from Waste (BfW) based on the Anaerobic Digestion (AD) process as a realistic renewable energy source and aim to create social, economic, and environmental benefits for their communities. Despite several policy instruments in the UK over the last ten years, the growth of BfW schemes remains subdued and faces market failures. This paper aims to evaluate elements of demand-side policies focused on addressing market failures to increase the diffusion of BfW schemes in the UK. We discussed effective demand-side policies related to the biogas sector in other European countries like Sweden, Denmark, and Italy. In the analysis, we observed UK’s policy instruments do not effectively address market externalities in the biogas sector. We also observed the biomethane market share in the UK is minimal; there is no market policy for green gas labeling towards demand articulation. The paper also made recommendations for policymakers in the UK to address market failures by proposing a push-pull policy model that combines demand-side policy interventions with supply-side policies.

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