• ENGIE to invest roughly $90 million to build a new biomethane plant in Northern England
• 60 GWh of annual biomethane contracted to PepsiCo through a 10 year BPA structure
• Transaction expected to reduce PepsiCo UK emissions by more than 10,900 tonnes per year

Northern England Facility Anchors Long Term BPA

ENGIE has signed a 10 year Biomethane Purchase Agreement with PepsiCo UK and has begun construction on a new anaerobic digestion plant in the North of England. Once operational in 2027, the facility will produce 60 GWh of biomethane annually and feed PepsiCo’s supply chain through a mass balance mechanism. The deal is being described as the first Biomethane Purchase Agreement for the UK food and drink sector and PepsiCo’s first of its type across EMEA.

PepsiCo estimates the contracted volumes could reduce its UK emissions by more than 10,900 tonnes of CO₂ each year. The facility’s output is equivalent to the annual gas consumption of more than 5,000 households. ENGIE expects the project to support the UK’s broader strategy to expand domestic green gas production for industrial decarbonisation and energy security.

The initiative adds to ENGIE’s existing biomethane footprint in the country. The company already operates four anaerobic digestion plants in the southwest of England and injects more than 210 GWh of biomethane into the national network annually.

Policy and Corporate Strategy Alignment

The transaction reflects converging priorities between corporate actors, investors, and government on securing low carbon fuels for difficult to abate supply chains. For industrial buyers such as PepsiCo, biomethane expands the toolkit for energy procurement strategies that have historically been dominated by renewable power purchase agreements. The BPA structure provides a hedge on carbon exposure and commodity pricing while supporting infrastructure build-out for green gases that are still in their scaling phase.

Government policy is also leaning on biomethane as part of energy sovereignty objectives. Lord Whitehead, Minister for Energy Security and Net Zero, said the deal aligned with the UK’s ambitions to stimulate clean, domestically produced energy. He added: “This £70 million investment in clean energy will drive growth across the North of England. Biomethane production and partnerships between companies such as ENGIE and PepsiCo show that industry is backing this government’s mission for clean, homegrown energy.”

RELATED ARTICLE: PepsiCo Doubles Regenerative Farming Footprint to Over 1.8 Million Acres: 2023 PepsiCo ESG Report

Corporate Perspectives and Industry Implications

ENGIE positioned the agreement as evidence of biomethane’s maturation as a cross-sector solution for decarbonisation and European energy resilience. Cécile Prévieu, Executive Vice President responsible for Networks activities, said: “This new project illustrates ENGIE’s strategy to accelerate the development of biomethane for industry through long term Biomethane Purchase Agreements, which is essential to Europe’s energy sovereignty and the decarbonization of its economy. It also strengthens the Group’s position as a leading player in biomethane in the United Kingdom. This new project will contribute to our ambitious goal of reaching 10 TWh of annual biomethane production capacity in Europe.”

PepsiCo described the procurement as part of its organizational climate programme. Sian Hamson, Sustainability Senior Manager at PepsiCo UK, said: “As part of our PepsiCo Positive ambitions, reducing our greenhouse gas emissions remains a key priority within our UK operations. As a low carbon, domestically produced energy source, biomethane will be a key lever in our broader decarbonisation strategy and we are proud to be partnering with ENGIE as they build this facility and drive additional biogas into the UK network.”

Financing, Scale, and Market Outlook

ENGIE currently operates 1.2 TWh of annual biomethane production capacity across 42 sites in France, England, Belgium and the Netherlands. The company supplies more than 7 TWh of green gas solutions to customers and aims to reach 30 TWh by 2030. For investors and utilities, these targets suggest growing corporate demand for green molecules rather than solely green electrons.

Global and C Suite Takeaways

Biomethane transactions structured as multi year purchase agreements are gaining traction as industrials seek credible pathways for emissions reduction outside the power domain. The UK deal also points to growing competition between European jurisdictions to scale domestic green gas production as part of energy security planning. For supply chain heavy multinationals, the case demonstrates that location specific procurement strategies can support both emissions targets and government industrial policy.

The broader implication is that renewable gas markets are moving from pilot stage to bankable infrastructure and contract models. Corporate offtake is likely to be a central lever in that transition.

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