The biogas sector has been gaining importance in Europe in recent years. This paper provides novel insights into the development of the biogas, biomethane and digestate markets in the EU. It applies the MAGNET model, extended to accommodate a separate biogas sector, to analyse different long-term scenarios related to the proposed increase in biomethane production in Europe. We assess the impact of the projected REPowerEU plan investments (€37 billion) on biomethane production, as well as the remaining key industries that compete for the same feedstocks (e.g., the livestock sector). Furthermore, we analyse the evolution of digestate production and its potential consequences for the use of synthetic fertilizers in Europe. Finally, we evaluate the environmental and macroeconomic impacts of biogas investment policy. It is found that, under the current pace of implementation, the 2030 RePowerEU biomethane production target (35 bcm) will not be met, although it appears achievable by 2040, provided that the necessary investments can be secured. Moreover, there is a clear need to facilitate the use of manure by the biogas sector. Currently only a small part of livestock manure is processed in Europe – available estimates situate this share at around 10%. Finally, to maximize the benefits from biogas production (both financial and environmental), more focus on digestate is required. The potential substitution of synthetic fertilizers by digestate may significantly improve the biogas production net GHG emissions balance. Consequently, our results provide further insights into the feasibility of the RePowerEU plan and the untapped potential of the manure-biogas-fertilizer complex.