Around 300,000 homes could be heated for a year by the natural gas that can be produced from grass and household waste, a new study has found.
The study, from Bord Gais, reveals 7.5pc of Ireland's annual natural gas demand could be met by processing waste into cheap, green and renewable energy.
Biogas is produced when organic waste such as grass, 'brown' bin waste and agricultural slurry is processed in a sealed environment and converted into natural gas.
Once processed, the gas can be injected directly into the national gas network for use in homes, or can be used as transport fuel.
The study, which was undertaken by University College Cork and Ernst and Young, suggests the biomethane industry could make a significant contribution to the 'green tech' sector in Ireland, producing enough power for 300,000 homes.
Already used in Sweden, Germany and Denmark, it helps reduce the importation of fossil fuels and can help tackle climate change.
The Government has set ambitious targets to increase the amount of power produced from renewable sources such as biogas, wind and wave power.
By 2020, it wants 10pc of all transport fuel to be from renewable sources such as biogas and up to 12pc of heating power should be renewable.
The study found there was "significant unexploited potential" to produce gas. In 2007, 40 million tonnes of biodegradable waste was produced -- and 3.9 million hectares of land are being used to grow grass, a potential energy crop.
But the process would be costly. The study said "significant capital expenditure" would be required to build the gas processing plants, and that the technology would be "largely dependent" on financial supports, at least in the short-term.
Using a 'baseline' scenario where 5pc of all cattle, pig and sheep slurry, 75pc of poultry slurry, 50pc of abattoir waste and 25pc of household waste was turned into gas, 183 plants processing 50,000 tonnes of waste a year would be needed.
The total investment cost would be €1.4bn. Each plant would require three employees, but jobs would also be created in haulage and technology development.
However, with 640,000 customers already using natural gas, there would be no need to build a distribution system. If the gas was mixed with 'natural' gas, costs could also be reduced for customers.
Bord Gais said obstacles to developing the industry, including setting a price for feeding the gas into the national grid, could be overcome.
"Capturing this renewable gas resource would be a considerable step in addressing Ireland's challenging renewable energy and waste management objectives," said chief executive John Mullins.
"It would also help reduce our dependence on energy imports, provide jobs in the construction and operation of biomethane plants, and create new business opportunities."