Half of the UK's homes could be heated with renewable gas made from waste such as sewage and food scraps, according to a report from the National Grid.
The study claimed that delivering biogas to UK households would have a similar cost to developing other renewable technologies.
Both wet and dry waste can be processed to create biogas and the leftover matter can be used as fertiliser.
At the moment, biogas is burned to generate electricity at a few sites, though the report claims injecting it into the gas networks would be a more efficient use.
Janine Freeman, head of National Grid?s Sustainable Gas Group: "Biogas has benefits on so many fronts. It is renewable and could help to meet the target of 15 per cent of all our energy coming from renewable sources by 2020.
"It provides a solution for what to do with our waste with the decline in landfill capacity and it would help the UK with a secure supply of gas as North Sea sources run down."
Heating a house and water is one of the biggest ways in which energy is consumed and carbon is emitted in the home.
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