Energy giant Shell has agreed to buy Europe’s largest renewable gas producer in a deal worth two billion US dollars (£1.66 billion).

Shell will acquire a 100% stake in Denmark-based Nature Energy, which produces renewable natural gas (RNG) from agricultural, industrial and household waste.

The move will help Shell speed up its plans to be a net-zero emissions energy business by 2050, it said.

RNG uses methane that could otherwise be released into the atmosphere from the decomposition of waste, meaning it has sustainability benefits, Shell said.

It is also chemically identical to conventional natural gas and can be used in existing infrastructure to help decarbonise sectors such as commercial road transport, marine and heating.

Huibert Vigeveno, Shell’s downstream director, said: “Acquiring Nature Energy will add a european production platform and growth pipeline to Shell’s existing RNG projects in the United States.

“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 signalling strong growth in demand in the years ahead.”

Following the acquisition, which is subject to regulatory approvals, Shell will take on the Danish firm’s 14 operating plants, supplies and infrastructure, as well its pipeline of around 30 new plant projects in Europe and North America.

Nature Energy’s 420 employees will also operate as a subsidiary of Shell, “initially” under the existing brand, the group said.

The agreement was reached with Davidson Kempner Capital Management, Pioneer Point Partners and Sampension, and the acquisition will be absorbed within Shell’s current capital range, which remains unchanged.

The deal is expected to complete in the first quarter of 2023.