With Budget 2026 less than a week away, attention is once again turning to the second tranche of the biomethane capital grants scheme.

In 2024, the Department of Agriculture introduced an initial €40m capital grant scheme, providing up to 20% capital funding towards the cost of building anaerobic digestion (AD) plants, with a promise of a much larger grant scheme to come at a later date.

Earlier this year, principal officer at the Department of Environment, Climate and Communications (DECC) Seán Kinsella confirmed that the department is working on the larger second capital grant scheme and said that it will run from 2026 to 2030.

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The DECC has sought consultants to complete a business case for a new biomethane programme, with the tender valued at €70,000.

The business case was expected to provide a clear articulation of a final preferred option for a biomethane support programme from 2026 to 2030.

Funding

The funding is expected to be sourced from the infrastructure, climate and nature fund and was mooted to be in the hundreds of millions of euro in order to support the development of 150 to 200 AD plants needed under the Climate Action Plan.

The DECC explained that the scheme will operate in similar fashion to the initial €40m scheme, but will be considerably larger and operate over four years.

If the scheme does go ahead, provisions will need to be made in Budget 2026.

Where to for DAFM’s underspend

The Department of Agriculture is facing a significant underspend of its €40m scheme. The €40m in funding came from the EU to provide capital grants to farmers and developers for constructing biomethane plants.

Some 18 projects received offers for the capital grant, including new-build AD plants and upgrade works to existing AD plants.

Under the terms of the scheme, the projects have to be built and capable of producing biomethane by December 2025.

However, the Irish Farmers Journal understands that as few as three projects may be able to avail of the funding, as construction hasn’t started on many of the others.

The remainder of the funding will have to be sent back to Europe, it is understood.