Synthetic Natural Gas Market - Global Forecast 2026-2032

The Synthetic Natural Gas Market size was estimated at USD 27.36 billion in 2025 and expected to reach USD 33.22 billion in 2026, at a CAGR of 23.92% to reach USD 122.78 billion by 2032.

Synthetic natural gas, often referred to as substitute natural gas, is a manufactured product that closely mimics the chemical composition and energy characteristics of conventional natural gas, making it interchangeable with pipeline-quality natural gas for a wide range of uses. According to the U.S. Energy Information Administration, substitute natural gas results from the conversion or reforming of hydrocarbons and can be seamlessly integrated with existing infrastructure, providing flexibility during periods of supply volatility. Its emergence has been driven by a confluence of factors, including the pursuit of energy security, the need to diversify away from imported fossil fuels, and the ambition to achieve significant greenhouse gas reductions by leveraging renewable or low-carbon feedstocks.

The synthetic natural gas landscape is undergoing a profound transformation fueled by rapid advancements in carbon capture technologies, the expansion of power-to-gas facilities, and ambitious policy frameworks aimed at accelerating the energy transition. Notably, initiatives such as Europe’s ENHANCE project in the Port of Antwerp-Bruges have secured over €110 million from the European Innovation Fund to produce low-carbon hydrogen from ammonia, retrofitting industrial units to switch from natural gas feedstock to renewable ammonia cracking and hydrogen liquefaction. Concurrently, new research and development have propelled the viability of e-methane-synthetic methane produced by combining captured carbon dioxide with green hydrogen-underscoring its potential as a carbon-neutral fuel that can be distributed through existing gas networks. These technological shifts are complemented by evolving regulatory incentives, such as enhanced tax credits and grants under recent infrastructure legislation, which are catalyzing commercial scale-up of power-to-gas systems and bio-SNG plants. As a result, market participants are transitioning from conventional coal-based gasification to innovative waste-to-energy and biomass gasification pathways, while industrial conglomerates and utilities forge new partnerships to de-risk capital intensive pilot projects and drive down production costs.

In early 2025, the U.S. government reinstated Section 232 tariffs, imposing a flat 25% duty on all steel imports in February and subsequently raising that duty to 50% in June, with the stated aim of bolstering domestic steel and aluminum industries. While these measures seek to protect domestic metal producers, they have had pronounced consequences for synthetic natural gas project developers by elevating material costs, constraining supply chain options, and extending lead times for essential equipment such as pressure vessels, heat exchangers, and gasifiers. Industry analysts warn that these tariffs could increase capital expenditures for clean energy infrastructure by up to 20%, with ripple effects across financing, procurement, and project scheduling. Moreover, the broad application of tariffs to downstream products amplified uncertainties, prompting many developers to renegotiate contracts, seek tariff exemptions through complex waiver processes, and accelerate investment in local manufacturing to insulate future projects from trade disruptions. As a cumulative impact through mid-2025, stakeholders are recalibrating project budgets, adjusting deployment timelines, and exploring modular, off-site fabrication methods to mitigate these evolving trade policy risks.

Diving deeper into the synthetic natural gas market requires an understanding of how distinct feedstocks and applications shape strategic priorities and investment decisions. On the feedstock side, producers are studying options across biomass, coal, natural gas, oil, and shale gas, each offering unique cost structures, carbon footprints, and supply security considerations. Biomass-derived SNG appeals to sustainability-focused stakeholders, leveraging agricultural residues to produce bio-SNG with near-zero emissions, whereas coal-to-SNG remains an established route where coal reserves are abundant but carries higher carbon intensity and faces stricter environmental scrutiny. Natural gas-based SNG pathways benefit from existing upstream supply chains but must contend with methane leakage concerns, while oil and shale gas feedstocks provide complementary options in regions with underutilized hydrocarbon assets. Transitioning to applications, it is evident that the market’s versatility extends from chemical intermediates used in methanol and fertilizer production to industrial heating processes that demand reliable, high-temperature fuel. Beyond these segments, synthetic natural gas serves as a drop-in solution for power generation facilities seeking to balance intermittent renewables, displaces conventional fuels in residential and commercial heating networks, and emerges as a cleaner option for heavy-duty transportation fuel in compressed or liquefied form. The interplay between feedstock selection and target application drives project economics, carbon abatement potential, and regulatory alignment, compelling market participants to tailor integrated strategies rather than adopt one-size-fits-all solutions.

Regional market dynamics for synthetic natural gas are shaped by resource endowments, policy incentives, and infrastructure maturity in three primary geographies: the Americas, Europe Middle East & Africa, and Asia-Pacific. In the Americas, the United States has emerged as a leader in pilot power-to-gas facilities and waste-to-energy SNG plants, with companies leveraging abundant natural gas infrastructure while advancing biomethane projects in states such as Pennsylvania and Michigan, where new anaerobic digesters convert dairy farm waste into renewable natural gas. Across Europe Middle East & Africa, the European Union’s Innovation Fund and IPCEI programs underwrite large-scale electrolyzers, exemplified by the ELYgator and Zeeland projects in the Netherlands that aim to produce over 50,000 tonnes of renewable hydrogen annually and integrate advanced carbon capture, driving lower-carbon SNG solutions for refineries and heavy industry. In the Asia-Pacific region, massive coal reserves in China continue to support coal-to-SNG capacity expansions, while Japan and South Korea emphasize power-to-gas pathways to diversify energy imports and bolster resilience, reflecting a hybrid approach that blends commercial scale investments with national decarbonization commitments. These regional variations underscore the need for localized technology roadmaps and policy frameworks to unlock synthetic natural gas potential at scale.

Leading industry stakeholders are deploying diverse strategies to advance synthetic natural gas and related technologies. Air Liquide, for instance, is expanding biomethane capacities in the United States with two new waste-to-RNG production units that will inject 74 GWh of renewable gas into regional grids, aligning with its ADVANCE strategic plan through 2025. The company also prioritized two out of six U.S. hydrogen hubs focusing on hydrogen from natural gas coupled with carbon capture after federal funding halts, underscoring its agility in reallocating resources to viable projects. ExxonMobil’s partnership with Air Liquide on the world’s largest low-carbon hydrogen initiative demonstrates the value of strategic alliances in scaling production and leveraging industrial expertise to reduce CO₂ emissions in integrated gas processes. Sasol, facing a looming gas cliff in South Africa, is redirecting methane-rich gas from its Secunda operations to supply contracted external customers, effectively bridging supply gaps while engaging with regulators to adjust pricing models and sustain industrial continuity during the transition. Additionally, Shell is commissioning the Holland Hydrogen I facility in Rotterdam-a 200 MW electrolyzer set to produce 60,000 kilograms of renewable hydrogen daily-which will serve as a blueprint for large-scale green hydrogen and synthetic methane projects across Europe. These initiatives exemplify how incumbents and new entrants are navigating technological complexity, regulatory shifts, and capital intensity to accelerate synthetic natural gas evolution.

To navigate the synthetic natural gas landscape effectively, industry leaders should adopt a multifaceted approach that balances technology deployment, policy engagement, and supply chain resilience. First, investing in modular power-to-gas pilot plants and co-located carbon capture units can reduce capital risk while demonstrating performance at commercial scale. Second, fostering strategic partnerships across the value chain-linking feedstock suppliers, equipment manufacturers, and off-takers for chemical intermediates or power utilities-can strengthen collaborative cost-sharing arrangements and secure offtake commitments. Third, actively participating in policy dialogues to shape incentive frameworks, such as advocating for expanded tax credits or streamlined permitting for renewable SNG projects, will ensure conducive regulatory environments and access to government support. Fourth, prioritizing digitalization and advanced monitoring tools to detect and mitigate methane leaks will safeguard environmental integrity and align projects with corporate sustainability targets. Finally, developing flexible procurement strategies that diversify equipment sourcing-leveraging both domestic and international fabricators-can mitigate tariff exposure and shorten lead times in an evolving trade policy climate. By executing these recommendations, stakeholders can de-risk investment portfolios, unlock new business models, and accelerate the transition toward cleaner, more secure synthetic natural gas systems.

Our research methodology integrates both qualitative and quantitative techniques to deliver a robust understanding of the synthetic natural gas landscape. We began by conducting in-depth interviews with senior executives, technology providers, and policy experts to capture firsthand perspectives on emerging trends, project experiences, and regulatory hurdles. These primary insights were augmented with extensive secondary research, drawing on publicly available data from government agencies, peer-reviewed journals, and reputable industry news outlets. We applied a structured framework to categorize findings by feedstock type, application segment, and regional dynamics, enabling comparative analysis across diverse market contexts. Quantitative data was validated through cross-referencing multiple sources and triangulated against historical project performance metrics to ensure accuracy. Scenario analysis was employed to explore the potential impact of policy shifts-such as changes to trade tariffs or new subsidy programs-on project economics. Finally, all findings were reviewed by an expert advisory panel, including technical advisors and industry veterans, to refine conclusions and verify that our insights align with real-world operational experiences.

As the global energy transition accelerates, synthetic natural gas emerges as a versatile tool for enhancing energy security, decarbonizing critical sectors, and optimizing renewable resource integration. The convergence of advanced gasification technologies, power-to-gas innovations, and supportive policy mechanisms is reshaping the viability of SNG solutions across diverse geographies. However, barriers such as trade-related equipment costs, project financing complexities, and feedstock availability constraints require strategic foresight and collaborative problem-solving. By aligning technological deployment with targeted segmentation strategies and regional policy incentives, stakeholders can overcome these hurdles and unlock sustainable growth pathways. The collective momentum observed among leading companies-from major gas suppliers expanding biomethane capacity to integrated energy firms building large-scale hydrogen electrolyzers-demonstrates the transformative potential of synthetic natural gas when supported by coordinated action. Ultimately, stakeholders who embrace flexible, data-driven strategies and maintain proactive policy engagements will be best positioned to capture long-term value and drive meaningful decarbonization across the energy landscape.

To explore the comprehensive synthetic natural gas market research and secure a tailored briefing, reach out to Ketan Rohom, Associate Director of Sales & Marketing, whose expertise will guide you through the latest industry insights and strategic opportunities. Embark on a data-driven journey to optimize your energy portfolio, mitigate emerging risks, and capitalize on new technological advancements by contacting Ketan today and unlocking the full potential of our in-depth analysis.