Shell is planning to grow its low-carbon business with a nearly $2 billion acquisition of Nature Energy Biogas, the largest producer of renewable natural gas (RNG) in Europe.

The company said Nov. 28 that Shell Petroleum NV reached an agreement with Nature Energy’s consortium of investors—Davidson Kempner Capital Management LP, Pioneer Point Partners and Sampension—to buy the biogas company. The transaction is set to close in first-quarter 2023 subject to regulatory approvals, moving Shell closer to its decarbonization goals with expectations of delivering double-digit returns.

The deal would also make Shell the largest RNG producer in Europe.

“Acquiring Nature Energy will add a European production platform and growth pipeline to Shell’s existing RNG projects in the United States,” said Huibert Vigeveno, downstream director for Shell. “We will use this acquisition to build an integrated RNG value chain at global scale, at a time when energy transition policies and customer preferences are signaling strong growth in demand in the years ahead.”

The deal is among several billion-dollar acquisitions announced in recent months in the RNG space as companies look to lower their carbon profiles and reach net-zero emissions by 2050. RNG, which is biogas that has been upgraded to pipeline quality, can be used in the same way as conventional natural gas derived from fossil fuels. Considered carbon neutral, RNG assets capture naturally occurring methane from places like landfills and dairy farms.

Founded as a natural gas distributor more than 40 years ago, Nature Energy has 14 plants in operation producing about 6.5 million MMBtu/year. It also has a pipeline of about 30 new plant projects—mainly in Europe and North America—that could deliver up to 9.2 million MMBtu/year by 2030, according to Shell.

That’s equivalent to about 4,400 boe/d. Shell’s integrated gas unit reported production of about 924,000 boe/d in third-quarter 2022.

“Nature Energy has grown into a leading producer of biomethane from organic waste and has pioneered a standardized large-scale commercial production process in Denmark that creates higher on-farm crop yields,” said Jesper Lok, board chair for Nature Energy. “Under the new ownership of Shell, our team will continue to advance its unique vision of unlocking additional valuable resources from waste materials while offering secure and affordable energy to customers and promoting a circular economy.”

The acquisition, which Shell said is within its current capital range, will accelerate the company’s existing biogas business, including in the U.S. where Shell has one RNG site operating and four more under construction.

Similar RNG moves have been made by others recently.

In October, BP said it would acquire RNG producer Archaea Energy for $4.1 billion. Renewable energy powerhouse NextEra Energy Inc. also in October shared news of its plans to buy RNG assets from Energy Power Partners Fund I LP and North American Sustainable Energy Fund LP in a $1.1 billion deal plus debt.