Ulysse David

Biomethane production has expanded rapidly in France, making it the leading producer in Europe in 2024, largely supported by feed-in tariffs. Recent institutional reports nevertheless argue that these policies generate excessive profits, particularly for agricultural producers. This paper revisits these claims by examining how inter-organizational arrangements shape profitability measurement in the biomethane sector. Drawing on the literature on transfer pricing and business models, we argue that profitability measured at the legal-entity level may diverge from underlying economic performance when production is organized across interconnected entities. Combining a quantitative analysis of ownership structures for 273 biomethane units with 23 in-depth case studies, we identify two main sources of distortion. First, arrangements affecting fixed assets and biomass inputs may disconnect recorded costs from market conditions. Second, productive activities such as biomass handling, transport, and digestate spreading may be performed outside the biomethane entity itself, shifting labor and operating costs across organizations. We further show that these arrangements are strongly shaped by ownership structures, giving rise to three distinct business models of biomethane production that bias profitability indicators in different ways. These findings question the robustness of firm-level profitability measures used to recalibrate feed-in tariffs and, more broadly, highlight the need to integrate organizational structures into renewable energy policy evaluation.